Production involves transforming factors of production like land, labor, capital, and entrepreneurship into goods and services to satisfy human wants. There are two types of goods - free goods which are naturally occurring and economic goods which require human effort. The factors of production include land, labor, capital, and entrepreneurs. Factors can be fixed, remaining constant regardless of production volume, or variable, changing based on production volume.

1. PRODUCTION

2. What is Production?
Production is the
creation of goods and
services to satisfy human
wants.

3. 2 KINDS OF GOODS
- free goods
- economic goods
complimentary goods
substitute goods

4. Factors of Production
LAND - is an original gift
from nature.
LABOR – is an exertion of
physical and mental efforts
of individuals.

5. CAPITAL – is a finished
product which is used o
other goods.
ENTREPRENEUR – is the
organizer and coordinator
of the land, labor and
capital.

6. entrepreneur = profit
laborers = wages
landlords = rents

7. Factor of Production is also
called inputs of production.
Outputs of Production
- goods and services that
has been created by the
inputs.

8. Fixed Factor
- A fixed factor/fixed input
remains constant
regardless of the volume of
production.

9. Variable Factor
- Variable factor/variable
input changes in
accordance with volume of
production.

10. Theory of Production
- is the process of
transforming both fixed
and variable inputs into
finished goods and
services.