Form 5 Economics – PRODUCTION

Production is the process of creating utility.

In production there are four types of utilities which are form utility, time utility, place utility and possession utility.

• To the general public, production refers to the process of making goods either for sale or for direct consumption.e.g.cultivation of maize partly for domestic consumption and other part for sale.
  
• In economics, production is the process of making goods for sale. It is also known as indirect production.
  

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Direct production refers to the process of making goods and services for direct consumption or use.

General production involves employing the factors of production by combining them to produce goods and services which aim to satisfying wants.

TYPES OF PRODUCTION

There are two major types of production these are;-

1. Direct production.
   
2. Indirect production.
   

   A. DIRECT PRODUCTION
   

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Direct production is the type of production carried by a person in order directly to satisfy his or her own wants or production for own consumption. It is mainly for subsistence of which the production is very low.

          B.
INDIRECT PRODUCTION

Indirect production means production is not attempted to satisfy own wants directly except to a very limited extent. The production of goods is aimed for selling.

STAGES OR LEVELS OF PRODUCTION

There are three major levels of production, which are;-

1. Primary production.
   
2. Secondary production.
   
3. Tertiary production. 
   

   PRIMARY PRODUCTION
   

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Involves extraction of natural resources and making them useful in their own form to human beings.e.g Agriculture, mining, and fishing and quarrying.

The output from the primary stage is used as inputs or raw materials in the secondary stage.

         SECONDARY PRODUCTION

Involves transforming raw materials into semi finished or finished goods. It includes;- manufacturing and construction. The output of primary production is used as inputs of secondary production. E.g. cotton produced in primary production is used in textile industries to produce clothes.

• Construction includes;- construction of roads buildings, bridges e.t.c .The material used in construction industry is obtained from the primary production.
  

  TERTIARY PRODUCTION
  

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Involves provision of services production is incomplete till the final goods reach the final consumers or final users.

• It involves provision of services which will enable the final goods to reach to the hands of their final users. These services are further divided into consumerism and personal service.
  
• Consumerism refers to the service of whole sales, retailers, banks, insurance, transport etc. personal services refers to the services of doctor, advocates, teachers etc.
  

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SPECIALIZATION AND DIVISION OF LABOUR

DIVISION OF LABOUR.

Is the process of splitting one particular job into several tasks, trade or processes.

SPECIALIZATION

Is the process of assigning one task or trade or process to one particular worker or a group of workers and the whole job accomplished with the help of several workers.

FORMS / NATURE OF SPECIALIZATION

1. Specialization by gender: – e.g. during the Old Stone Age, man was hunting and women were gathering.
   
2. Specialization by process or complex specialization.e.g In car assembling manufacturing etc.
   
3. Regional / territorial specialization. Different parts of the country produce different crops depending on the climatic conditions of a place.e.g. in Tanzania;-
   

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• Mwanza – cotton
  
• Mbeya – rice
  
• Tanga – fruits
  

  4. Occupational specialization such as teachers, doctors, lawyers etc.
  

  5. Specialization by product.
  

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ADVANTAGES OF SPECIALIZATION AND DIVISION OF LABOUR

1. It increases output.
   
2. It improves the skills of the workers.
   
3. The workers become more efficient.
   
4. It helps to increase employment opportunities. The jobs create many tasks to be performed by several workers.
   
5. Cost per unit is reduced as the result of large scale production.
   
6. It leads to less fatigue to the workers. I.e. less tiredness due to repeating the same job now and then.
   
7. It leads to employment to a specialist. One will go to the real field for which she/he is competent.
   
8. It enables the employment of the facilities such as machines.
   
9. It is easy to train a worker in one field rather than several fields of specialization.
   
10. Time saving since it does not involve movements.
    

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DISADVANTAGES OF SPECIALIZATION

1. It can lead to unemployment, due to the result of changes in demand for labour caused by changes in demand for goods or changes in technology.
   
2. Less of craftsmanship being a result of increased use of the machines. The workers’ skills are reduced due to the use of machines.
   
3. It results into high cost of production as a result of increased number of workers who have to be paid.
   
4. Boredom. Doing the same thing now and then leads to one getting bored.
   
5. Dulls the workers. The thinking capacity of the workers is reduced i.e. they are getting to know very few things but lack to know many others.
   
6. Lack of responsibilities, in case anything happens to be wrong there is no possibility of locating the sources of the fault.
   

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LIMITATION OF SPECIALIZATION

1. Size of the firm.
   

   For specialization to be economically feasible the size of the firm must be large enough to keep the specialized labour, machines or plants fully employed.
   

2. The size or extent of the market.
   

   The size of market also presents the division of labour to take place beyond a certain unit. It shows the degree in terms of the area, length, range or size of the markets for given products or goods and services.
   

   FACTORS AFFECTING THE EXTENT OF THE MARKET
   

   -Lack of improved mass of communication.
   

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• Change in the population size of a given area either through natural disasters or by net migration will affect the extent of the market.
  
• Inadequate monetary.
  

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1. Nature of the some industries. Some industries by their nature have been less scope per division of labour ma be forced to be used for different tasks, otherwise the workers are underutilized.
   
2. Willingness and ability of a labour to work in different places and climate.
   
3. Availability of training facilities and employment security.
   
4. Nature of demand of some products. I.e. if the production are for individual demand production can take place on small scale hence limited division of labour
   

   FACTORS OF PRODUCTION
   

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These are resources or inputs which are used during the production process.

The factors of production are classified into;-

• Land
  
• Labor
  
• Capital
  
• Entrepreneurship
  

  LAND
  

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Refers to all unworked natural resources which are found either in or on the earth’s surface and used in the production for goods and services. It includes mineral resources, water bodies, soils vegetation etc.

FEATURES OF LAND

1. Land is a gift of nature. That it is not a product of human labour. It is naturally found e.g. gold deposits are naturally found.
   
2. Land cannot be moved from one place to another but land has several uses such as farming, grazing, construction etc.
   
3. Land is fixed in supply. it is not possible to measure the size of land. E.g. increase of rent will not call for more land to be available or supplied.
   

   Other argues that land can be increased through land reclamation.
   

4. Land differ interns of fertility. It is of different grades depending on the natural fertility.
   
5. Land provides a site for production. That is all production activities are carried out on land.
   
6. Land obeys the law of diminishing marginal returns. It states that “Other factors remaining constant,” application of more and more units of variable inputs on a given fixed inputs (land), will lead to the marginal product of the variable input to diminish after s sometime”.
   

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LABOUR

Labour is the human effort applying in production of goods and services to satisfy human wants.Labour is the human effort but all human effort is not labour until applying on production and rewarding considerations.

TWO TYPES OF LABOUR
(i)Manual labour:are physical effort and very small % of mental uses on application of productions works in a factory or otherwise contributes his effort.
e.g Handcraft
(ii)Mental labour:These are intellectual works 70% applying mental/brain and very little effort on production of goods and services.
e.g Teachers,Doctors and engineers.

FEATURES OF LABOUR

1. Labor cannot be separated from a labourer.
   
2. Labor is highly mobile (can move from one place to another or shift from one job to another).
   
3. Labor cannot be stored if not employed.
   
4. Labor is not homogeneous. They differ in efficiency.
   
5. The reward for labour is wages
   
6. Labor is not motivated only by material incentives but also moral incentives.
   

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EFFICIENCY OF LABOUR OR LABOUR EFFICIENCY

It refers to the quantity and quality of output a worker can produce for a given period of time. It refers to how productive the worker is.

It is measured as the ratio between total product and number of labour employed.

Efficiency of labour is also called productivity of labour.

    Efficiency of labour =  (Total product)/(no .of labour employed)

FACTORS WHICH INFLUENCE PRODUCTIVITY OF LABOUR

1. Efficiency of other cooperating factors such as the efficiency of the working tools / capital.
   
2. Health of the workers. Hunger and sickness lower the workers efficiency.
   
3. Wage rate. High wage rate motivates a worker to become efficient.
   
4. Incentives. That the provision of incentives such as frees meals, free housing, helps to rise the efficiency of a worker.
   
5. The level of education and training. Workers who are highly educated or trained are more efficient than those who are not educated or trained.
   
6. Natural talents or abilities. Some people are born intelligent of which become more efficient.
   
7. Working conditions. Good job supervision will help in increasing the efficiency of the workers
   
8. Working experience. Workers with experience tend to be more efficient than those without experience.
   
9. Weather conditions. A bad weather condition such as drought lowers the efficiency of labour while favorable weather conditions raises the efficiency of the worker.
   

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MOBILITY OF LABOUR

It refers to the case with which a labour or worker either moves from one geographical area to another or shifts from one employment to another.

It is the ease in which labour can move either geographically or occupationally.

TYPE OF LABOUR MOBILITY

 (i)Occupational mobility.i.e. a labour moves from one employment to   Another employment such as from being a doctor to teaching.

(ii)Geographical mobility. A worker moves from one working place to another working place.

(iii)Vertical mobility. Move from lower position to a higher position.This may be due to long period of education training and promotion.

(iv)Horizontal mobility. A worker moves from one work place to another work place with the same working rank or position. Example if an account leaves his present job and joins another for the same job.

IMPORTANCE OF LABOUR MOBILITY

1. It helps the workers to increase their earnings.i.e. Move from lower paying to the high paying jobs.
   
2. It helps to reduce the problem of unemployment. People move from areas with no employment to areas with employment opportunities.
   
3. It promotes the sense of national hood and international community.
   
4. It promotes the transfer of technology and culture.
   
5. It enables the workers to move to those areas which are competent or specialized.
   

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FACTORS WHICH LIMITS MOBILITY OF LABOUR

     1. Lack of required education and training. Occupational mobility becomes difficult.

     2. Age. The old people are less mobile.

1. Family Ties. The married people are less mobile people that is they do not prefer to stay away  from their families.

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     4. Cost of movement. The cost of movement (transport) of a worker and her / his family may be high.

     5. Housing problems. It may be difficult to occupy a residential house for the family.

1. Health difficulties. Workers with health problems such as diseases tend to be less mobile.

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     7. Political boundaries. It requires legal passports and certificates to enable one to migrate to another country and to be allocated to get employment which limits labour mobility.