Definition:

1. Chapter 7: Production Definition: Production is the process of turning resources into goods or services.

2. Production Types of goods Capital (producer) goods = goods produced for helping production. Consumer goods = goods produced for direct consumption

3. Production Three types / stages of production Primary production Secondary production Tertiary production

4. Primary Production Primary production refers to all productive activities that directly utilise natural resources in production. Examples: farming, fishing and mining

5. SecondaryProduction Secondary production is the process of turning raw materials into semi-finished or finished products. Examples: paper-making, garment-making and production of MP3

6. Tertiary Production Tertiary production refers to the provision of different kinds of services. Examples: teaching services, transport services and medical services

7. Interdependence of the Three Types of Production Consumer goods and producer goods Secondary Production Food and raw materials Consumer goods and producer goods Primary Production Services Food Tertiary Production Services

8. Specialisation (division of labour) Definition: Division of labour means a worker concentrates on producing (specialises in doing) a good, or part of a good.

9. Classification of division of labour Three types ofdivision of labour: • Simple division of labour • Complex division of labour • Regional division of labour

10. Classification of division of labour Simple division of labour: When a worker specialises in producing aparticular product or service. - Usually found in primitive societies

11. Classification of division of labour Complex division of labour: When each worker specialises in a particular production stage of a good or service. - Found in modern societies

12. Classification of division of labour Regional division of labour: When a region, district or a country specialises in producing a good or service. e.g.

13. Advantages of division of labour 1. Raising labour productivity 2. Saving resources from the production of capital goods 3. Improving the standard of living

14. Classification of division of labour 1. Raising labour productivity Measurement of productivity: quantity of output produced per unit of labour over a period of time e.g. Labour A: 3 toys per labour per hour Labour B: 5 toys per labour per hour Which labour is more productive?

15. Classification of division of labour 1. Raising labour productivity Labour productivity is increased if: a. more output / labour or same output is produced with less labour

16. Classification of division of labour 1. Raising labour productivity Reasons: a. Choosing the most suitable person for a job b. Practice makes perfect c. Saving time in training

17. Classification of division of labour 1. Raising labour productivity d. Saving time in moving around operations e. Making full use of capital goods f. Mechanisation Any difference between e. and f.?

18. Classification of division of labour 2. Saving resources from producing capital goods Fewer tools and equipment are Required save resources

19. Classification of division of labour 3. Raising the living standard Division of labour  larger output Exchange  broaden consumption variety ∴ higher living standard

20. Defects / disadvantages of division of labour (P.11) 1. Work becomes dull and monotonous  lower labour productivity 2. Greater degree of interdependence Disruption in one stage badly affects other stages.

21. Defects / disadvantages of division of labour (P.11) 3. Greater risk of unemployment - when the demand for their skill drops 4. Decline in the quality of craftsmanship - standardized products versus hand-made products

22. Limitations of division of labour (P.13) a. Size of the market - Mass production requires huge (large) market b. Nature of the product - Work that requires individuality is not suitable for division of labour