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Why is tertiary sector activity the most profitable type?

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harshdeawesome | Student, Grade 9 | (Level 1) eNoter

Posted September 12, 2011 at 7:37 PM via web

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Why is tertiary sector activity the most profitable type?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted September 12, 2011 at 10:40 PM (Answer #1)

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If tertiary sector activities are the most profitable in a given economy it is most likely because there is not enough supply relative to demand.

Tertiary sector activities often involve creating and selling services that can only be done by people with education or specialized knowledge.  Examples of this would be the services sold by lawyers or business consultants.  This sort of tertiary sector activity can only be done by a very limited number of people.

When a product can only be produced by a limited number of people, there will not be a great deal of competition among suppliers of that product.  Therefore, prices will not be driven down as much as they would be if there were more competition.

When tertiary sector activities produce services that can only be done by a relatively few people, they are likely to be quite profitable.

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