Types of Production and their meaning.
Production can be divided into two forms namely direct and indirect production.
- Direct Production: this takes place when a family unit produces goods and services mainly to satisfy all its needs and not for sale. This kind of production is very common in a subsistence economy where subsistence farming is predominant. Such subsistence farmers produce not for exchange but for consumption by them and their families.
- Indirect Production: this involves the production of goods and services for exchange in order to use the money realized to satisfy the producers other wants. This type of production takes place because, it is not possible in the modern society for anybody to satisfy all his needs directly with his own goods and services. In modern industrial economy, the society has become inter-dependent. People satisfy their wants indirectly by exchanging their surplus outputs with other producers or selling their goods and services and using the money realized in satisfying their numerous wants.
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