Production is the process of combining various inputs, both material and immaterial, to create output. Ideally, this output will be a good or service that has value and contributes to the utility of individuals. The area of economics that focuses on production is called production theory, and it is closely related to the consumption theory of economics.
The inputs used in the production process are known as factors of production, and they include land, labor, entrepreneurship, and capital. These primary inputs are not significantly altered in the output process, nor do they become a whole component in the product. Materials and energy are categorized as secondary factors as they are byproducts of land, labor, and capital.
In economics, a business that produces goods is known as a "producer," and these companies take the inputs available to them (both material and immaterial) to produce products that the consumer will want to buy. Inputs dont have to be raw materials either; they can also be knowledge, plans, or other intangible resources.
Production has economic value because it creates an output that has value and will satisfy human wants and needs. Put simply, production creates products that humans want and are willing to pay for, which boosts the economy and allows manufacturers to continue producing more and more outputs.
