The First Stage Of Production After Discovery Is Ex Ante.

The producer, acting like an entrepreneur in a competitive environment, searches high and low for profit opportunities. The producer (as if it is easy) merely needs to know where to buy resources at a price worthwhile to produce, such that the product can be sold at an attainable price in the future! Once found the producers’ actions signal that a discovery was made.

The first stage of production just after this ‘discovery’ is ex ante; estimating, speculating, planning and investing. The second stage follows, which is the act of physical production signaling that a previously unperceived revenue possibility may indeed have been found. This is the ‘announcement’ made by beginning production.

 

As part of the production process there is what is called a derived demand for factors of production. Resource owners who find the payment offered by producers sufficiently attractive to make them willing to sell their resources do so. Wage earners fit into this category. Resource owners can also play the role of a capitalist if they are willing to sell their resources under an agreement which promises them revenue only at some time in the future.

 

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