Production

In microeconomics, production is simply the conversion of inputs into outputs. It is an economic process that uses resources to create a commodity that is suitable for exchange. This can include manufacturing, storing, shipping and packaging. Some economists define production broadly as all economic activity other than consumption.

Production is a process, and as such it occurs through time and space. Since it is a flow concept, production is measured as “a rate of output per period of time”. There are three aspects of production processes:

1. the quantity of the commodity produced;

2. the form of the good produced;

3.the temporal and spatial distribution of the commodity produced.

There are three stages in the process of making saleable products from raw materials:

1.Extractive industry.

The raw materials are extracted from natural resources, for example the miner mines iron ore and the farmer grows wheat.

2. Processing industry.

The raw materials are processed into a form suitable for further use, for example iron is made into steel and the wheat is made into flour.

3. Manufacturing industry.

The results of the processing stage are made into semi-finishedand finished goods, for example the steel is made into knives and the flour is made into bread. Finished goods are goods which are complete in themselves, for example steel spoons. Semi-finished goods must be assembled before they can be used, for example wooden knife handles and steel knife blades.

All the goods can be grouped into two general categories – consumerand industrial.Goods purchased to satisfy personal and family needs are consumer goods. Goods bought for the use in a firm's operations or to make other products are industrial goods. The buyer's intent – or the ultimate use of the product – determines the classification of an item. An electric drill is a consumer good if you use it at home. At the same time an electric drill is an industrial good if you use it in the maintenance of your business.

Normally the word good brings to mind a physical object, such as an automobile, a television set, or a soft drink. And we usually use the expression goods and services to distinguish between physical objects and intangible ones. But in thinking about physical products, their importance lies not so much in owning them as in using them to satisfy our wants. We don't buy a car to look at but because it supplies a transportation service. We don't buy a blender to admire but because it supplies a cooking service. Thus, physical products are really vehicles that deliver services to us.

Services are also supplied by other vehicles, such as persons. These people do not contribute directly to production, but are needed for example to transport the goods from the manufacturer to the customer, to insure the goods etc. These people render services. There are several types of services:

1.Public services

People in public services are employed by the government, for example civil servants and teachers.

2. Private services

Private services are rendered by skilled people with their own organizations, for example lawyers and doctors in private practices.

3. Consumer services

Consumer services are services used by people in their everyday life, e.g. electricians and hairdressers.

4.Commercial services

Commercial services are rendered by people who are needed for the efficient distribution of goods, for example exporters, bankers, agents.

V. Answer the following questions.

1.What is production?

2.What are the aspects of production process?

3. How many stages are there in the production process of making
products?

4. What is the difference between semi-finished and finished
goods?

5.What categories can all the goods be grouped into?

6.What is a good?

7.What is a service?

8.What are the vehicles that deliver services to people?

9.What types of services do you know?

10. What is the difference between a good and a service?

VI. Give English equivalents for the following Ukrainian words and word-

combinations.

виробництво, процес перетворення, створювати товари та по­слуги, зберігання товару, відвантаження, темпи випуску продукції за період часу, товари, придатні для продажу, сировина, переробна промисловість, готовий продукт, напівфабрикати, надавати по­слуги, задовольняти особисті потреби, намір покупця, розрізняти матеріальні та нематеріальні предмети, засіб надання послуги, споживчі послуги, комерційні послуги.

VII. Match the term from the left-hand column with its definition from

the right-hand column.

VIII. What kind of industry do you work in?

1.You are a carpenter.

2.You make leather.

3.You make jewellery.

4.Your company produces computers.

5.In your spare time you spin wool and sell it to companies which make exclusive knitwear.

6.You work on an oil rig in the North Sea.

7.You are a miner of manganese ore.

8.You are a cotton weaver.

IX. a) What kind of service do you render?

1.You are a teacher.

2.You are a plumber.

3.You work for a shipping company.

4.You are an insurance broker.

5.You are a solicitor.

6.You are an architect.

7.You work in a warehouse.

8.You own a wholesale company which sells footwear.

9.You are a customer officer.

10. You are a mechanic.

b) Which type of service do you think is the most important? If possible, rank them in descending order of importance (most important to least important) and explain why.

X. Choose one or more of the following products and describe (in as much

details as possible) the process it undergoes from the time the natural

resources are extracted to the time it reaches the consumer.

1. Bread

2. Paper

3. Leather shoes

4. Woolen jackets

5. Wooden tables

6. Cooper pipes

Don't forget about the three stages of industry and the chain of distribution (manufacturer — wholesaler — retailer — consumer).

XI. Read a magazine article about James Dyson's product and complete it with suitable words from the box.