Sections in this article

• Class X Economics Chapter 2 | Sectors Of The Indian Economy
• Class X Economics Chapter 2 | Comparing the Three Sectors
• Class X Economics Chapter 2 | Primary, Secondary And Tertiary Sectors
• Class X Economics Chapter 2 | Division of Sectors As Organized And Unorganized
• Class X Economics Chapter 2 | Sectors In Terms Of Ownership

Comparing the three sectors

You can find the first part of this lesson Sectors of Economic Activities here

1. What do you understand by the Gross Domestic Product (GDP) of a country?

The total value of goods and services produced by the three sectors of the economy in a particular year is the gross domestic product of that country for that particular year.

2. How is the GDP calculated?

GDP is the total value of all the final goods and services produced by a country in a particular year. With the help of information collected from various government departments, a central government ministry estimates the GDP.

3. Why are only final goods and services considered while estimating GDP?

The value of final goods and services already include the value of all raw materials and intermediate goods and services used for the production of the final goods or services.

4. What does double counting mean?

Only the value of final goods is counted while estimating the GDP. This is because the value of final goods and service already include the value of all intermediate goods and services. Hence, if the value of intermediate goods and services and final goods and services are calculated separately, it will amount of double counting.

5. What are final goods and services?

They mean various goods and services meant for consumption by consumers.

6. How do we count and calculate the value of goods and services in the three economic sectors? Explain with a suitable example.

GDP is the total value of the final goods and services produced in a country in a particular year.

Example:

A farmer sells tomatoes for Rs. 10/kg.

A company buys these tomatoes and makes tomato sauce by adding some other ingredients as well.

They price the sauce calculating the value of all ingredients, labour cost and intermediate services such as transport and storage.

The company sells this sauce for Rs. 200 for 1 kg.

While calculating the GDP only the price of the final product is calculated. The prices of raw tomatoes, other ingredients and human and mechanical labour that went into the making of the sauce are not calculated as these costs are already included in the final price of the sauce.  

7. Distinguish between final goods and intermediate goods.

Final goods

These are the goods ready for final consumption. Examples are: biscuits, furniture, machines, etc.

The value of final goods is calculated while estimating GDP.

Intermediate goods

These goods need further production before they are ready for consumption.

The value of these goods is not counted while estimating GDP to avoid double counting.

For example, wood is an intermediate good and furniture is the final good.  

8. When a country develops, the contribution of primary sector declines and that of secondary and tertiary sectors increase.

If we analyse the history of developing countries, we can see that in the initial stages of their development, the primary sector was the most important and employed maximum people.

As the methods of agriculture improved, yields increased dramatically and this led to economic prosperity. At the same time, it increased the demand for processed or manufactured goods as people could afford them. For example, the demand for furniture or processed foods increased. This led to the setting up of a number of factories and the secondary sector started playing a greater role than the primary sector in the economies of these countries.

In the last 100 years or so, the focus shifted again from the secondary sector to the tertiary sector as the demand for services exceeded the demand for products.

Thus, today, the tertiary sector is more important than the primary or secondary sector in many developed countries.

Class X Economics Solutions

• Class X Economics Chapter 1 Development | Free NCERT Solutions
• Class X Economics Chapter 2 | Sectors of the Indian Economy | Expected Questions | Part 1
• Class X Economics Chapter 2 | Sectors of the Indian Economy | Expected Questions | Comparing the three sectors
• Class X Economics Chapter 2 | Primary, Secondary And Tertiary Sectors
• Class X Economics Chapter 2 | Division of Sectors As Organized And Unorganized
• Class X Economics Chapter 2 | Sectors In Terms Of Ownership
• Class X Economics Chapter 3 | Money and Credit | Important Questions
• Class X Economics Chapter 4 | Globalization and the Indian economy | Important questions
• Class X Economics Chapter 5 | Consumer Rights | Important Questions