market production
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In a general sense, market production refers to the production of a
product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Pr ...
or
service Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a ...
which is intended for sale at a money-
price A price is the (usually not negative) quantity of payment or Financial compensation, compensation given by one Party (law), party to another in return for Good (economics), goods or Service (economics), services. In some situations, the pr ...
in a market. The product or service in principle has to be tradable for
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
. However, in
national accounts National accounts or national account systems (NAS) are the implementation of complete and consistent accounting Scientific technique, techniques for measuring the economic activity of a nation. These include detailed underlying measures that ...
the term has a more specific meaning, because many producing organizations exist in the economy which either do not produce for any distinct market, or which partly produce for the market, and partly don't. These are ''non-commercial'' or ''partly commercial'' organizations, which can be mainly self-funded, but
not-for-profit A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
, or mainly funded by sources other than their own revenue. Statisticians therefore have to define "market production" much more exactly, in order to be able to separate out market production in a consistent way, and distinguish it from non-market production. If they would be unable to do so, they would be unable to measure market production in a meaningful and consistent way. In the United Nations System of National Accounts (UNSNA), market production includes all those producing units who sell most or all of their output at prices which are "economically significant" (i.e. at prices which influence how much producers are willing to supply, and how much purchasers wish to buy). United Nations, ''System of National Accounts 2008'', Pre-edited version of Volume 1, p. 75. For example, a school or a university would be a market producer if it charges fees which are based on their
production cost Cost of goods sold (COGS) is the carrying value of goods sold during a particular period. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost. ...
s, and which are sufficiently high to influence demand for their services. The school or university would have to generate a definite operating surplus (profit) or loss. Non-market production, by contrast, includes producing units which provide most of their output to others ''either'' free of charge, ''or'' at prices which are "not economically significant" - for example, government institutions,
household A household consists of two or more persons who live in the same dwelling. It may be of a single family or another type of person group. The household is the basic unit of analysis in many social, microeconomic and government models, and is impo ...
s, or non-profit institutions. If prices are charged for services supplied, these prices mostly do not change in response to fluctuations in supply or demand (as in the case of administered prices) or else they are prices which do not cover the
cost In Production (economics), production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one o ...
of supply. The organizations in this category do not provide a financial gain (a source of income or profit) to the units which control or manage them. In addition, they depend mostly on funding ''other than'' sales revenue to cover their costs of production, or of other activities they might carry out (for example, funding such as
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal person, legal entity) by a governmental organization in order to fund government spending and various public expenditures (regiona ...
es, authorized levies,
subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
,
subscription The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a Product (business), product or Service (business), service. The model Publication by subscription, was pionee ...
s, donations etc.). Non-market production can also include subsistence production where producers produce something for their own use, rather than trading what they produce for something else.


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See also

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Market (economics) In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in Exchange (economics), exchange. While parties may exchange goods and services by barter, most markets rel ...
National accounts Official statistics {{econ-stub