Production, Trade and the Chain of Distribution
Production is the creation of goods and services that satisfy wants, and it has three stages: primary (extracting raw materials - farming, fishing, mining), secondary (manufacturing, processing, construction) and tertiary (services such as retail, banking, tourism and transport). Candidates must understand the factors of production - land (natural resources, earning rent), labour (human effort, earning wages), capital (man-made aids to production, earning interest) and enterprise (the entrepreneur who organises the others and earns profit). Also learn the division of labour and specialisation, and the idea of added value: each stage of production should increase the value of the product.
The chain of distribution runs producer → wholesaler → retailer → consumer, with alternative channels such as producer → retailer → consumer or direct producer → consumer. Each link exists because it adds utility or reduces cost: the wholesaler breaks bulk, stores and finances; the retailer provides convenience and local availability.
Traps: students misclassify tourism as secondary (it is tertiary), or forget that capital means tools and machinery rather than money in this context. Another trap is assuming longer chains are always better - direct channels suit perishable or high-value goods. Also remember that 'production' includes services, not just manufactured goods.
Worked example. A farmer grows tomatoes (primary), a factory turns them into sauce (secondary), a wholesaler distributes jars and a supermarket sells them (tertiary). Value rises at each stage; the difference between the final price and the cost of inputs is the added value created along the chain.