Production in economics is the set of operations through which primary goods and resources (e.g., raw materials) are transformed or modified, with the use of tangible (e.g., machines) and intangible (e.g., energy and human labor) resources, into value-added goods and final products so as to make them useful or more useful i.e., suitable for satisfying, following their distribution in the marketplace, demand and consumption by final consumers.

The definition is applicable to virtually any human and non-human activity in any discipline, including non-technical ones. Because of the generality of its definition, the term “production” takes on different nuances depending on the type of resources processed, the results obtained, and the context in which it is used. At the macroeconomic level, the level of production, which represents supply, is linked to the level of consumption or demand and the level of employment. Production and consumption tend to equilibrium in response to the balance between supply and demand.

Leave a Comment