Production

Needs and wants

All businesses exit to satisfy needs and wants. There are five basic needs that are essential for our existence: WATER< FOOD< SHELTER< CLOTHES AND WARMTH>
However, in addition to these five basic needs, we have dozens of different wants, which are increasing all the time. People want to travel to foreign countries, to have will equipped sports centers, to have instant treatment for any illness, to name just a few.

Our idea of needs and wants in always changing. For example, we could five without a television, a video recorder, a telephone or a washing machine, but practically all homes have them now. As a result, they have become an essential part of modern life, a modern need and no longer a want.

Goods and Services

Modern business has responded to our increased wants by providing literally thousands of different kinds of products for us to buy. There are two main types of product: goods and services. Goods are physical object that we can see and touch, such as a football. Services are non-physical products, such as education or gardening. There are three main kinds of goods:

Non durable goods are goods, provided mainly for consumers, which do not last very long, as they are used almost as soon as they are bought, for example food.

Durable goods are those which last much longer and will be kept until they break, wear out or are replaced, such as cars and fumitory.

Organizational, or industrial, goods are goods which are supplied to other firms or organizations to help them to make the goods they produce.

Factors of production

Four factors of production are involved in making every product. They

Land (including the sea)

Labor (the physical and mental efforts of workers)

Catital (the plant and machinery which allows workers to do their jobs).

Enterprise (the skills of entrepreneurs who can see business opportunities and take the risk of exploiting or using them)

All of these factors are in short supply, either because there is a natural shortage or because the resources are in the wrong place or of the wrong kind.

The Many uses of land

Land is used to grow food, graze animals and grow trees. The land also contains a variety of natural substances, such as oil, gold, iron ore, sand and clay, which are used to manufacture goods.

Although it might appear that there is a surplus of land, much of it cannot be used because it is uncultivated rainforest, desert or permanently  covered by ice. There may be a great surplus of land which no one particularly wants in some parts of the country, such as the Scottish islands, but a great scarcity of land in other places, such as the centre of Birmingham or London.