What to produce?

I think you would have got a random idea on economics, consumers and producers. From now on we shall go in detail. We shall see what producer has to produce and how much he has to produce.

The considerations that decide for the producer which goods he should produce and in what quantities are called the considerations of supply and demand. The first condition for a good to be produced is, of course, that the productions technology, the necessary skills, the raw materials, the equipment necessary for production and land are all available to the producer.

When this condition is fulfilled we say that the production of the good is feasible. But feasibility is not enough. All goods that the producer can produce will not actually be produced. The producer will produce only goods and in that quantity which he will find most profitable. In the upcoming posts we will take a simple example to show how the producer would decide what to produce.