Factors Of Production Class 9th Economics

• INTRODUCTION
• METHODS OF CREATION OF UTILITY
• IMPORTANCE OF UTILITY
• DIFFERENCE BETWEEN PRODUCTION AND CONSUMPTION
• FACTORS OF PRODUCTION

In modern world the term production is used in a wider sense. Production is the study of economic theory. It helps to create the national wealth and welfare depends upon. Generally by production people refer to the creation of wealth or utility. But strictly speaking creation is the work of God and not of human beings . In Economics, production means the addition of utilities to the things that already existing.

METHODS OF CREATION OF UTILITY

Before knowing the methods of creation of utility, let us know about the meanig of utility. Thus utility, according to Hibden. "Utility is the quality of a good to satisty a want" .However the utility of a commodity can be created in the following ways:

1. By changing its shape, size and design (Form/Utility)
2. Changing its place (Place Utility)
3. Storing it for a certain period (Time Utility)
4. Satisfying human wants (Service Utility)
5. Keeping under possession (Possession Utility)
6. By having quality of a thing (Knowledge Utility)

Let us explain above stated utilities in detail:

1. FORM UTILITY : It reflects to the production of goods done by changing the size, or shape or color or the form of a commodity. The pot or jar produced out of the soil , chair made out of a log of wood and grinders made out of iron ore are examples of form utility.

2. PLACE UTILITY: It is added to a commodity by transporting it from the place where it is in plenty to the place where it is scarcity. For example, the deposits of minerals and yellow and white metals under earth become more valuable, whwn they are brought to the market. Traders and merchants create place utility.

3. TIME UTILITY: Time utility is another form of production in which utility is added to the goods by change of time. For example , fruits and vegetables are stored in cold storage so that they may be sold in off season.

4. SERVICE UTILITY: Service Utility refers to those services of man which satisfy human wants . A teacher teaching in a class room, a Doctor curing the patient, a tailor stiching a shirt are the instances of service utility.

5. POSSESSION UTILITY: If the change of possession of a commodity increases its utility, it is termed as possession utility. The utility of needles is not so great for dealers as it is for the households, tailors etc. The utility of needles increases by the change of possession . Thus it will be called the possession utility.

6.KNOWLEDGE UTILITY: When the utility of a commodity increases by increasing the people's knowledge--it is called the knowlege utility. For instance, we come to know about the qualities of Anacin ,Lux Soap, Toothpastes etc. from their advertisements . Thus, an advertiser also helps production by creating knowledge utility.

Importance Of Utility

Utility is an economic term defined as the reason anyone gets anything, or pleasure and necessity. However, utility is not happiness as in a normal conversation. Utility is a purely economic term. It helps to project future data so that economists can make an educated decision when it comes to where and when money can be spent whether in the stock market or just recycling money back into the economy for standard economic benefits.

If utility were represented through a graph, an economist can see skewed data when some individuals unexpectedly contradict their own utility—sometimes small unconformities but sometimes large. Why would they? Economists saw an explanation to this: short term utility. People sometimes heavily weigh their judgment on the present, rather than what good can come from an action now. For example, drugs. Individuals use drugs to get happiness, even though, in the long run, they will need more medical help earlier in their lifetime than the average man or woman who does not smoke.

There are four types of utility: time, place, form, and possession. Possession utility is the kind of utility which gives economists a real run for the company’s money. “The utility of possession refers to the benefit customers derive from ownership of a company’s product once they have purchased it”. The utility of possession is what every person wants and that same statistic can also skewer company data when selecting their next strategical move with their finances. It’s imperative that the data not be skewered so the company can gain the maximum profit possible but that’s not always the case. That being said, the utility of possession is quite an enigma for many economists, resulting in an unexpected economic development.

Difference Between Production And Consumption

Generally, production and consumption are considered to be different activities. consumption is an activity in which the utility is used whereas production is an activity in which utility is created. In reality, but theses are two aspects of the same activity. For instance, when a carpenter makes a table, he performs an act of production by increasing the utility of log of wood. At the same time , he has also consumed the log of wood by destroying utility. In this way, we can conclude that production and consumption are the two sides of the same coin.

According to Prof.J.K.Mehta:

" When the utility of a good is used for the direct satisfaction of want it is called consumption and its use for the indirect satisfaction of want is called production "

Factors Of Production

All those( Factors Of Production) which are required to get a commodity are the results of productive activity and are known as Inputs. With the help of these, we get the output. So., the sources of services which enter into the process of production are called factors of production. For instance , raw material, labour etc. Thus any consumer good or intermediate good is the result or combination of many inputs . Every production activities involves utilization of certain basic resources. These resources are termed as the Agents or Factors of Production or Inputs of the Process

According to Prof.Benham

"All goods and services which help in the process of production are called factors of production"

The Factors Of Production are classified as under:

1. Land
2. Labour
3. Capital
4. Enterprise

Factors Affecting the volume of production

The sum total of the market value of the entire production, in a year is called the national output of a particular country. These days, many Arab countries are considered among the rich countries of the world due to the availability of natural resources like petroleum. Thus, the volume of production is affected by such factors as natural resources, capital ,labour-organisation, enterprise, etc. and many other economic, social, and political factors.

However , the main factors affecting the volume of production are stated below

1. NATURAL RESOURCES
2. LABOUR
3. CAPITAL
4. TECHNIQUE
5. ORGANISATION
6. ENTERPRISE
7. GOVERNMENT POLICIES