This topic covers the following: Purposes and meaning of production in Economics. Production as a process of creating wealth. Factors of production. The relative importance of each in the process of production. The mobility of factors of production - occupational and Geographical - the necessity for mobility and barriers to each type of mobility.

Division of labour as a tool of production - its disadvantages and advantages; development of specialization and exchange as a result of division of labour. Subsistence production versus production for market. Forms of business organizations.

Sources of business finance. Factors influencing the localization of business unit. Elementary theory of the firm. Definition of a firm as a production unit. Factors influencing the long-term and short-term decisions of the firm's demand for a factor of production. Input-Output relationship of the firm - the simple production function. The law of diminishing returns. Economies and diseconomies of scale; costs of production - short term and long run cost curves. Maximization of profits of the firm under the following market structures: Perfect Competition, Monopolistic Competition, Pure Monopoly, Oligopolistic competition. The relationship between a firm and an industry, e.g. the distinction between their supply curves. Private enterprise versus Public enterprise particularly with regard to developing economies.