What is the importance of production in economics?

What is the importance of production in economics?

Answer: It creates what is generally referred to as ‘utility and value’.

Production as a process is an inseparable element of the economic processes and impacts directly on the creation of utility and value in the economy. It entails the process of turning inputs of materials, human resources, capital and other factors into outputs in the form of goods and or services to meet human wants and needs. Thus, the emphasis is made on the fact that the importance of the production activity can be estimated only through the fact that it produces the value anew and adds the overall value to the common sum of the social overall value. In production, various resources are transformed through processing to become more valuable and useful to the user. It also furthers economic development, generates employment, and opens up the possibilities of technologies progress. Also, the utilization of efficient production processes results in better output and less cost hence better standards of living. Establishing articles that the consumers need, production constitutes the structure of the flow of resources in the economy in addition to trading processes.