Production comprises all activities that provide goods and services which people want and for which they are prepared to pay a price. The composition of the total output can be classified into consumer goods and produce goods and services.

Consumer goods are commodities that satisfy human needs directly .They can be:

  1. Durable consumers’ goods provide a steady stream of satisfaction and their value diminishes slowly through age and usage.
  2. Non- durable consumer good are consumed and destroyed in the very act of being used e.g. Food, juice, cigarettes.

Producer goods are commodities that do not directly satisfied wants but they are used for the contribution they make to the production of other goods. Example: factories, buildings etc. Services are intangible economic goods e.g. banking, transport, tourism and administration. Services are non transferable i.e. they can not be purchased and then resold at a different price.

Production can be categorized into three:

Extractive industries, examples are farming, fishing and forestry. Primary products result from such industries
Manufacturing industries these include engineering, vehicle manufacture, chemical and food processing.
Distribution industries; these incorporate the activities of wholesaling and retailing.

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