How do bonuses such as "+20% production" affect factories?

Solution 1:

I've played through various Tropicos, including 3 and 4.

I've always understood it to be #1, but I guess I haven't explicitly tested it. Some buildings have upgrades that separately affect production and resource consumption, so from that I would extrapolate that one does not automatically affect the other.

One example would be the Sports Line upgrade for the Car Factory in Tropico 4 (emphasis added):

Sports Line: For $12,000 and 5 megawatts of power, the factory can produce flashy, high-powered sports cars, increasing production by 50% but increasing the amount of raw materials needed to make cars by 25%.