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Describe how economists divide the economy into sectors for purposes of analysis. 

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kristenmarieb... | Student, Grade 10 | Valedictorian

Posted July 12, 2013 at 4:53 AM via web

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Describe how economists divide the economy into sectors for purposes of analysis. 

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted July 12, 2013 at 5:20 AM (Answer #1)

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Economists can divide the economy into a number of different sectors.  However, the most important division, perhaps, is the three-part division between the primary, secondary, and tertiary sectors of the economy.  I will assume that this is the division about which you are asking.

The primary sector of the economy is the sector in which people extract things from the earth.  This sector includes such activities as mining, timber, and agriculture.  The secondary sector of the economy is the manufacturing sector.  In this sector, people take things that have come from the earth and make them into other things.  For example, when people take iron ore and make it into steel and then into cars, they are working in the secondary sector of the economy.  Finally, there is the tertiary sector.  In this sector of the economy, people work in services.  They are not actually producing goods.  Instead, they are doing things for others.  This sector includes teachers, doctors, lawyers, architects, and others who are not making actual goods.

Economists use this division to help them understand how advanced an economy is.  In general, the more modern an economy is, the more it has workers in the tertiary sector.  The least modern economies are those which have a large percentage of their workers in the primary sector.

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