Meaning of production

Utility refers to the ability of goods and services to satisfy human wants.

1. Form utility: This is created when raw materials are changed into finished goods. Example: Turning wood into furniture or cotton into clothes.
2. Time utility: This is created by making goods available at the right time when they are needed. Example: Storing umbrellas and selling them during the rainy season.
3. Place utility: This is created by moving goods from the place of production to the place of consumption. Example: Transporting maize from the farm to the market.
4. Possession utility: This is created when the ownership of goods is transferred through exchange. Example: Buying a phone from a shop and becoming its owner.

Production is classified into two main types:

1. Direct production: This is when people produce goods and services mainly for their own use or consumption. It does not involve exchange or trade. Example: A farmer growing food only to feed his family.
2. Indirect production: This is when goods and services are produced for sale in the market or to be exchanged. It involves specialization and the use of money. Example: A factory producing clothes to sell to consumers.