Production is a process of using various material and immaterial inputs in order to make output for consumption. Production process creates economic well-being. The satisfaction of needs originates from the output. Production is the result of cooperation of four factors of production (land, labour, capital and organisation). In Economics, production refers to the creation or addition of value. It simply transforms the inputs into output.
Production may be at varying levels. The scale of production influence the cost of production. All manufacturers are aware that when production of a commodity takes place on a larger scale, the average cost of its production is low. This is the reason why the entrepreneurs are interested in enlarging the scale of production of their commodities. They stand to benefit from the resulting economies of scale. There is also the possibility of making their products available in the market at lower prices.