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February 22, 2019 

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GIFT TAX: A tax on the transfer of assets from one person to another. The gift tax is different from estate and inheritance taxes in that it applies to people who are still alive. In fact, the gift tax was created because people sought to avoid estate and inheritance taxes by giving their stuff away before dying. But all gifts are not taxed. There are both annual and lifetime exemptions on gifts subject to this tax. These exemptions are changed from time to time, so you might want to investigate further if you happened to hit the big jackpot on a television game show. Some, but not necessarily all of that prize is likely to be taxed.

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PRODUCTION:

The process of transforming the natural resources of the land into consumer satisfying consumption goods or productive capital goods. This transformation process involves the four scarce resources or factors of production--labor, capital, land, and entrepreneurship. Although production is generally the physical transformation of materials, it often involves the spatial relocation, or transportation, of commodities, as well.
Scarcity is better addressed and living standards are enhanced by transforming natural resources of the land into more valuable and more satisfying goods. In their natural state raw materials generally provide less satisfaction of wants and needs than they do once processed, transformed, or fabricated into products.

For example, most people obtain greater satisfaction from driving around in a finely crafted sports car than what they might be able to obtain directly from lumps of iron ore, silicon dioxide, bauxite ore, and other car-making materials buried in the Earth's crust. Most people prefer eating a finely crafted hot fudge sundae than what they might be able to obtain directly from the raw, unprocessed cocoa beans, vanilla beans, almond nuts, and maraschino cherries hanging on their respective trees and bushes.

Although production is generally seen as the physical transformation of natural resources, it can also involve the spatial transportation of commodities. A commodity must be in the desired form as well as the desired location to be effectively used.

For example, Duncan Thurly enjoys eating hot fudge sundaes (more so than having unprocessed cocoa beans, vanilla beans, almond nuts, and maraschino cherries hanging on their respective trees and bushes). However, the hot fudge sundae provides little satisfaction if it is located in the Hot Mamma Fudge Ice Cream Shoppe, but Duncan Thurly is in home in suburban Shady Valley ten miles away.

Either Duncan needs to visit the Hot Mamma Fudge Ice Cream Shoppe or the hot fudge sundae needs to be shipped to Duncan's suburban residence. Either action requires the use of scarce resources. In the same manner that scarce resources are used to transform materials into a more suitable physical form, scarce resources are also needed to transport a commodity to a suitable spatial location.

<= PRODUCT MARKETSPRODUCTION COST =>


Recommended Citation:

PRODUCTION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: February 22, 2019].


Check Out These Related Terms...

     | factors of production | allocation | resource allocation | three questions of allocation | satisfaction | value |


Or For A Little Background...

     | scarcity | labor | capital | land | natural resources | entrepreneurship | wants | needs | good | service | economic good |


And For Further Study...

     | opportunity cost | production possibilities | fourth rule of competition | distribution standards | specialization | technology | free lunch | gross domestic product |


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