Economic well-being is created in a production process, meaning all economic activities that aim directly or indirectly to satisfy human needs. The degree to which the needs are satisfied is often accepted as a measure of economic well-being. In production there are two features which explain increasing economic well-being. They are improving quality-price-ratio of goods and services and increasing incomes from growing and more efficient market production.
The most important forms of production are
- market production
- public production
- household production
In order to understand the origin of the economic well-being we must understand these three production processes. All of them produce commodities which have value and contribute to well-being of individuals.
The satisfaction of needs originates from the use of the goods and services which are produced. The need satisfaction increases when the quality-price-ratio of the goods and services improves and more satisfaction is achieved at less cost. Improving the quality-price-ratio of goods and services is to a producer an essential way to enhance the production performance but this kind of gains distributed to customers cannot be measured with production data.
Economic well-being also increases due to the growth of incomes that are gained from the growing and more efficient market production. Market production is the only production form which creates and distributes incomes to stakeholders. Public production and household production are financed by the incomes generated in market production. Thus market production has a double role in creating well-being, i.e. the role of producing goods and services and the role of creating income. Because of this double role market production is the “primus motor” of economic well-being and therefore here under review.
Production is an activity to produce goods or services, and where the goods or services have a use value (utility).
1. Form Utility
The process of increasing the attractiveness of a product to a group of consumers by altering its physical appearance. In a business context, form utility might involve making a product ready for consumption by converting it to a form that is more beneficial to consumers than the raw materials used to make it. We would do some form utility planning and see what things we had to change about the way the product looked, so people would buy more.
2. Place Utility
The process of increasing the attractiveness of a product to a group of consumers by altering its physical location. In a business context, place utility might involve shipping a finished product to a new location that is more accessible to consumers than the place where it was initially manufactured.
3. Possession Utility
Possession utility means to do whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees and follow up services. Of course, this is in a marketing sense.
4. Time Utility
Utility of a good or service created by its availability at a particular time.
Production activities can be grouped based on the business field of processing resources. The types of activities in the production of production according to line of business are as follows :
- Extractive Enterprises
- Agricultural Business
- Industrial Businesses
- Trading Business
- Service Business
An RFID-based project is developing a control system that will help manage logistics in the automotive industry.
There is TWO theory of production :
~ Short-term production,is production using fixed input and variable input.
~ Long-term production is the production of all the input can be changed.
