Production can be carried out on three basic levels.

Primary production: This is the extraction of raw materials from natural sources. It involves activities such as mining, hunting, farming, fishing etc. Thus, getting goods and services in their natural form.
Secondary production: It is the transformation of raw materials into finished products ready for use. Commodities are changed into the right form desirable by man through construction, processing and manufacturing etc.

Tertiary production: It involves creating and availing services for the satisfaction of human wants. These include direct services like those of lawyers, doctors, teachers, accountants Musicians etc or commercial services like transportation, advertising, banking, insurance etc.

Factors of Production and their relative importance

Factors of production are the resources or inputs required in the production of goods and services. They are those resources or those things that make production possible. Factors of production include land (N) Labour (L), Capital (K)and entreprenuership (E).

The production function

This is a technical relationship betwee4n factor inputs and output .The production function is a mathematical or technological relationship between the factors of production and the resulting output.

It can be given as Q = f (K, L, N, E)

Where Q - out put, K - capital, L - Labour, N - Land ,E - Enterprises

The above expression shows that out put is a function of the factors of production.