Coupon Accepted Successfully!


Evaluation of Goods and Services in the Three Sectors

The activities of the 3 economic sectors mentioned above produce a large number of goods and services. The economic status of a nation depends on how much goods and services are produced and on how many people work in each sector. Evaluation of the economic sectors is essential to determine the economic status of a nation.

Hundreds of thousands of goods are produced and services are provided, then how can they be evaluated?

To understand the method of evaluation let us take a look at ‘the journey of the biscuit.

(i) Wheat that belongs to the Agriculture sector, is sold for Rs. 8/- per kg., to be converted into flour, in a Mill.

(ii) The flour mill that belongs to the Service sector sells the flour at Rs. 10/- per kg., to the Biscuit Factory.

(iii) The Biscuit Factory that belong to the Industrial sector sells the biscuits to the wholesaler for Rs. 15 /- per packet.

(iv) The wholesaler who belongs to the Service sector sells the biscuit to the retailer for Rs. 17/- per packet.

(v) The retailer who also belongs to the Service sector sells it to the consumer for Rs. 20/- per packet.

The goods that reaches the consumer is called the final goods; namely the biscuits in this case.

The value of the biscuits at Rs. 20/- per packet includes the price of wheat, grinding charges, manufacturing charges, transportation, storage charges and selling charges. So only the value of the final goods (biscuits) should be taken into account for evaluation.

Agricultural products are also sold as such, in which case ; if 10,000 kgs. of wheat is sold at Rs. 8/- per kg. the total value is Rs. 80,000; if 5,000 coconuts are sold at Rs. 10/- per coconut then the total value is Rs.50,000. The total cost includes the cultivation cost, transportation and storage charges and selling charges.

Similarly the value of goods and services in the 3 sectors are calculated and added .

The value of final goods and services produced in each sector during a particular year provides the total production of that sector for that year. The sum production in all the 3 sectors gives what is called the GROSS DOMESTIC PRODUCT (GDP) of a country. The GDP only determines the economic strength of a country.

The mammoth task of evaluating the GDP is done by the Central Government.

Test Your Skills Now!
Take a Quiz now
Reviewer Name