purpose of production

The main purpose of production is the satisfaction of human wants and needs through creation of utility of goods and services.

Needs

These include all goods and services which are necessary for human existence. Needs of modern society are broadly grouped into five groups namely food, accommodation, clothes, education and health care.

Wants

These include all goods and services that are required to supplement the needs of human beings.

Characteristics of wants

1. Wants are insatiable

   This means wants cannot be satisfied. There are always new wants to satisfy. Man always cultivates new wants and he/she is never satisfied at all i.e. wants are plenty and infinite.

2. Wants are habitual

   Certain wants are created and sustained through a habit e.g. cigarettes, smokers, drinkers etc. and in many cases they depend on the financial position of a person.

3. Wants are recurrent

   Wants cannot be satisfied once and therefore they keep on recurring quite often.

4. Wants are complementary

   Satisfaction of single want may make it necessary to consume a number of products e.g. hot drinks will require tea leaves or cocoa, milk, sugar, water and fuel to boil.

5. Wants are competitive

   There are many products to satisfy a single want e.g. a want for soft drink. There are Coca Cola, Pepsi etc. hence he/she has to make selection from many goods.