Production Overview:

Production in Commerce is a fundamental concept that involves the creation or generation of goods and services to satisfy human wants. Understanding production is vital as it plays a significant role in the economic activities of any society. The process of production requires the utilization of various resources known as Factors of Production, which are land, labour, capital, and entrepreneurship. These factors are essential in the production process as they contribute distinctively and are rewarded accordingly. Land provides the natural resources needed for production; labour involves the human effort and skills; capital represents the man-made tools and equipment utilized in production, while entrepreneurship entails the innovation and risk-taking aspect of coordinating the other factors. Identifying these factors and their rewards is crucial in comprehending the production process. Moreover, production involves the classification of sectors into primary, secondary, and tertiary sectors. The primary sector deals with the extraction and utilization of natural resources, such as agriculture and mining. The secondary sector involves the processing and manufacturing of raw materials into finished products, while the tertiary sector focuses on providing services to consumers. Understanding the types of production and their categorization aids in analyzing the various economic activities within an economy.
Factors, Characteristics And Rewards:
In production, the factors of production possess distinct characteristics and receive rewards based on their contributions. Land, as a factor, exhibits characteristics such as fixed supply, immobility, and heterogeneity. Land is rewarded in the form of rent for its utilization in the production process. Labour, with characteristics like human capital and mobility, receives wages as a reward for the services provided. Capital, which includes tools, machinery, and buildings, has the characteristics of durability and multiple uses, and it is remunerated through interest or profits. Entrepreneurship, characterized by innovation and risk-taking, earns profits for the initiation and coordination of production activities.
Division Of Labour And Specialization:
Division of labour and specialization are significant concepts in enhancing efficiency and productivity in production. Division of labour involves breaking down the production process into smaller tasks performed by different individuals, leading to expertise in specific functions. Specialization, on the other hand, focuses on individuals or organizations concentrating on producing specific goods or services in which they have a comparative advantage. Both concepts aim to improve productivity and output quality in the production process. In conclusion, production is a multifaceted concept that involves the utilization of various resources to generate goods and services. Understanding the factors of production, types of production, division of labour, and specialization is vital in comprehending the dynamics of economic activities within an economy. To excel in the field of Commerce, mastering the intricacies of production is crucial for individuals aiming to contribute effectively to the economic growth and development of society.


  1. Distinguish Between Division of Labour and Specialization
  2. Classify the Types of Production
  3. Identify the Factors of Production and Their Rewards

Lesson Note

Production is the process of converting raw materials into finished goods and services. It is a crucial concept in commerce and economics, as it directly impacts the economy’s ability to meet the needs and wants of its citizens. In this section, we will explore the various aspects of production, including the division of labor, specialization, types of production, and factors of production and their rewards.

Lesson Evaluation

Congratulations on completing the lesson on Production. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.

You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.

Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.

  1. What are the Factors of Production? A. Land, Labour, Capital, and Entrepreneur B. Goods, Services, Money, and Technology C. Demand, Supply, Price, and Market D. Investment, Marketing, Sales, and Revenue Answer: A. Land, Labour, Capital, and Entrepreneur
  2. What is the main reward for Land as a factor of production? A. Interest B. Profit C. Rent D. Wages Answer: C. Rent
  3. Which characteristic best describes Capital as a factor of production? A. Tangible B. Intangible C. Mobile D. Variable Answer: A. Tangible
  4. Why is the Entrepreneur considered a crucial factor of production? A. They provide land resources B. They handle all physical work C. They organize and innovate business activities D. They only invest money Answer: C. They organize and innovate business activities
  5. Which type of production involves the extraction of raw materials directly from nature? A. Primary production B. Secondary production C. Tertiary production D. Quaternary production Answer: A. Primary production
  6. What is the main objective of Division of Labour? A. Increase job satisfaction B. Reduce efficiency C. Improve productivity D. Encourage multitasking Answer: C. Improve productivity
  7. Differentiate between Division of Labour and Specialization. A. Division of Labour involves workers focusing on different tasks in a production process, while Specialization refers to workers becoming experts in a specific task. B. Division of Labour reduces efficiency, while Specialization increases efficiency. C. Division of Labour leads to confusion, while Specialization leads to teamwork. D. Division of Labour is temporary, while Specialization is permanent. Answer: A. Division of Labour involves workers focusing on different tasks in a production process, while Specialization refers to workers becoming experts in a specific task.
  8. What are the factors that determine the choice of occupation for individuals? A. Weather, Location, and Technology B. Interest, Skills, and Education C. Government Policies, Competition, and Taxes D. Population, Age, and Gender Answer: B. Interest, Skills, and Education
  9. How can you classify the types of production based on their processes? A. Manual, Mechanical, and Chemical B. Local, National, and International C. Private, Public, and Government D. Economic, Social, and Environmental Answer: A. Manual, Mechanical, and Chemical

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Past Questions

Wondering what past questions for this topic looks like? Here are a number of questions about Production from previous years

Question 1 Report

The commission on a postal order is

Question 1 Report

An individual that links the producer with the retailer is

Question 1 Report

Public debt management is one of the functions of a ----- bank

Practice a number of Production past questions