ABSTRACT
This chapter considers the higher educational system as an industry. It is an industry that has, over time, acquired certain well-defined functions. In performing these functions, it engages in "production." As in other industries, production in higher education uses resources, which are transformed into end products called outcomes. American higher education engages in three principal functions: education, research, and public service. Education includes both the curricular and extracurricular influences on students. Its purpose is to change students in both the cognitive and affective aspects of their personalities and to prepare them for practical affairs. In performing its three functions of education, research, and public service, higher education is engaged in the production of learning. The idea of efficiency for the American system of higher education is not so different from that for heating a house.
