Scientific paper ID 2694 : 2025/4

Production and consumption are two interconnected pillars of the economy - there is no consumption without production, and there is no production without consumption. The basis of the economic process are the needs of people, which are constantly changing, renewing, multiplying and diversifying. This s a constant choice to be made between different options for using resources, with the goal being to extract maximum utility from given resources or to satisfy given needs with minimal resources.

Production is a sphere of the economy in which resources are purposefully acquired, combined and transformed into goods (goods and services) in accordance with social needs, manifested in the market as demand. From a functional point of view, production consists of three moments: input (reception of resources from the external environment), transformation process and output (product, service, effect).

The concepts of production factors, production method and production function are of fundamental importance in the theory of production. The three production factors are inherent to each production process - labor, land (natural resources) and capital. Modern theory adds to them information, knowledge and their transformation into technologies and professional skills.

The contradiction between unlimited needs and scarce resources gives rise to the problem of what to produce.