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Production Process The way that businesses create products and services is known as the production process. There are three main parts to the production process as can be seen in the diagram below: A firm must purchase all the necessary inputs and then transform them into the product (outputs) that it wishes to sell. How well a firm does this is known as the productive efficiency of a firm. If it is efficient the cost per unit of production will be lower and allow the firm to sell at a lower price. Ultimately, the objective of the production process is to create goods and services that meet the needs and wants of customers. |