Examkin

Question

Difficulty: MediumMeaning and Types of Production

A timber logging enterprise in Ondo State extracts raw wood logs from a forest and sells them to a furniture manufacturing factory in Ibadan, which processes the wood into executive office desks for commercial banks. In economic terms, which stage of production does the activity of the Ibadan furniture factory represent?

  1. A
    Primary production, because the raw material originates directly from natural forest resources.
  2. Secondary production, because it transforms raw materials into finished manufactured goods, thereby creating form utility.Answer
  3. C
    Tertiary production, because the finished desks are ultimately utilized by financial service providers.
  4. D
    Direct production, because the factory produces goods without involving commercial distribution intermediaries.

Answer

The activity of the Ibadan furniture factory represents secondary production, because it involves converting raw timber into manufactured office desks, creating form utility.
Secondary production entails turning raw materials extracted from nature into semi-finished or finished products through manufacturing and processing, which creates form utility.

Step-by-Step Solution

1
Identify the economic nature of the activity
The factory takes raw timber (an extractive primary output) and manufactures executive office desks (a finished product).
Production is categorized into primary (extraction), secondary (manufacturing/processing), and tertiary (services).
2
Classify the production stage and utility created
Changing the physical form of timber into desks creates form utility, which defines secondary production.
Secondary production covers all processing, manufacturing, and construction industries.

Key Concept

Meaning and Types of Production (Primary, Secondary, Tertiary)
Estimated Time:1m 0s
Rate this question

Topics

Meaning and Types of Production

More questions from this topic