Explore CBSE Notes

Economic Activities Around Us

Chapter 14. Economic Activities Around Us

This chapter explains how economic activities are classified into three sectors—primary, secondary and tertiary—and how these sectors are interconnected and depend on one another.

Chapter Review

Economic Activities

Economic activities are activities that create monetary value. Over time, economic activities have increased and become more diverse, including agriculture, manufacturing, banking, transportation, software development and many other services.

Economic Sectors

Economic activities with similar characteristics are grouped into broader groups called economic sectors. There are three main economic sectors:

• Primary Sector
• Secondary Sector
• Tertiary Sector

Primary Sector

The primary sector includes economic activities in which people are directly dependent on nature to produce goods.

• Agriculture
• Mining
• Fishing
• Raising livestock
• Forestry
• Greenhouse farming
• Fish farming

Examples: Cultivating grains and vegetables, collecting wood from forests, extracting coal from mines, obtaining fish from fisheries and getting eggs from poultry farms.

Secondary Sector

The secondary sector includes economic activities that depend on the outputs of the primary sector and transform raw materials into goods.

• Manufacturing
• Construction
• Processing of agricultural products
• Water supply
• Electricity production
• Solar power

Examples: Making flour from grains, extracting oil from groundnut, processing tea leaves, converting wood into furniture and paper, making clothes from cotton and automobiles from steel.

Tertiary Sector

The tertiary sector provides services that support people involved in the primary and secondary sectors. It is also called the service sector.

• Healthcare
• Banking
• Transportation
• Trade and logistics
• Communication
• Software development
• Education
• Hotels and restaurants
• Repair and maintenance services

Examples of Tertiary Activities

Truck drivers transport goods from farms to factories or markets. Doctors, nurses, teachers, lawyers and pilots provide services. Mechanics, electricians and technicians also provide important services. Banking, communication, software development, transportation, retail and warehouse services are also part of the tertiary sector.

Primary, Secondary and Tertiary Sectors – Difference

Primary Sector	Secondary Sector	Tertiary Sector
Depends directly on nature.	Transforms raw materials into products.	Provides services.
Produces or obtains raw materials.	Processes raw materials and manufactures goods.	Supports primary and secondary activities.
Agriculture, fishing, mining, forestry.	Manufacturing, construction, processing.	Banking, transportation, healthcare, communication.

Interdependence Among Sectors

The three economic sectors are interconnected. They work together to convert natural raw materials into finished products for final consumption.

• The primary sector provides raw materials.
• The secondary sector processes raw materials and produces goods.
• The tertiary sector provides transportation, trade, banking and other services needed by both sectors.

AMUL – Dairy Cooperative

The chapter uses the example of Anand Milk Union Limited (AMUL) to explain the interdependence of the three sectors.

• Farmers obtain milk from cows and buffaloes – Primary Sector.
• Milk is processed into products such as milk powder, ghee, cheese and butter – Secondary Sector.
• Transportation, trading and retailing of these products – Tertiary Sector.

Cooperative

A cooperative is a group of people who voluntarily come together to meet their economic and social needs. The members collectively own the cooperative and take decisions together.

AMUL and Farmers

In the early 1940s, farmers in Anand district faced difficulties in selling milk and depended on middlemen. On the advice of Sardar Vallabhbhai Patel, they formed a cooperative to become independent of middlemen.

AMUL was set up in 1946 under the leadership of Tribhuvandas Patel and Dr. Varghese Kurien.

Role of the Cooperative

• Farmers collectively managed the production and sale of milk.
• They made decisions together.
• They shared different tasks.
• Their income gradually increased.
• They became less dependent on middlemen.
• Milk was processed into different products.
• Products were transported and sold across India and exported to other countries.

Middlemen

Middlemen are persons who buy goods from producers and sell them to consumers. They charge a fee for this service.

Pasteurisation

Pasteurisation is a process in which milk is preserved by heating it to a specific temperature to kill harmful bacteria.

Factory

A factory is a building or group of buildings where goods are manufactured or components are put together to make a final product.

Retail

Retail means the sale of goods in small quantities for use by the final consumer rather than for resale.

Export

Export means goods and services produced in one country and sold to buyers or consumers in another country.

Dairy Cooperative – From Farm to Plate

Stage	Activity	Sector
1	Farmers milk cows and buffaloes.	Primary
2	Milk is collected and processed.	Secondary
3	Milk is converted into products such as butter, ghee, cheese and milk powder.	Secondary
4	Products are transported to different places.	Tertiary
5	Products are sold through shops and retail stores.	Tertiary

Making of a Textbook

The chapter also explains how all three sectors work together in making books.

• Wood from trees provides the raw material – Primary Sector.
• Wood pulp is transformed into paper and the paper is printed into textbooks – Secondary Sector.
• Transportation and selling of books involve the Tertiary Sector.

Importance of Interdependence

No sector can function completely independently. The three sectors depend on one another for raw materials, processing, transportation, trade and services.

Important Definitions

• Monetary Value – The value of something that can be measured in terms of money.
• Economic Sector – A broad group containing different economic activities.
• Primary Sector – Activities involving direct dependence on nature to produce or obtain goods.
• Secondary Sector – Activities involving the processing of raw materials into products.
• Tertiary Sector – Activities involving the provision of services that support primary and secondary sectors.
• Cooperative – A group of people who voluntarily come together to meet their economic and social needs.
• Middlemen – Persons who buy goods from producers and sell them to consumers.
• Pasteurisation – Heating milk to a specific temperature to kill harmful bacteria.
• Retail – Sale of goods in small quantities to the final consumer.
• Export – Selling goods or services produced in one country to buyers in another country.

Important Facts

• There are three main economic sectors: primary, secondary and tertiary.
• The primary sector depends directly on nature.
• The secondary sector transforms raw materials into goods.
• The tertiary sector is also known as the service sector.
• AMUL was set up in 1946.
• AMUL was established under the leadership of Tribhuvandas Patel and Dr. Varghese Kurien.
• The AMUL example shows the interdependence of all three sectors.
• Transportation, trading and retail are tertiary activities.

Quick Revision

• Primary → Nature → Raw Materials
• Secondary → Processing → Finished Goods
• Tertiary → Services → Support
• All three sectors are interconnected and interdependent.
• AMUL provides an important example of how the three sectors work together.
• The making of a textbook also involves all three sectors.

Chapter at a Glance

Natural Resources → Primary Sector → Raw Materials → Secondary Sector → Finished Products → Tertiary Sector → Transportation / Trade / Retail → Consumers

Economic Activities Around Us

Chapter 14. Economic Activities Around Us

Economic activities can be classified into different sectors according to their nature and the role they play in the economy.

Economic Sectors

Economic activities with similar characteristics are grouped into broader groups called economic sectors.

There are three main economic sectors:

• Primary Sector
• Secondary Sector
• Tertiary Sector

Primary Sector

The primary sector includes activities in which people are directly dependent on nature to produce or obtain goods.

Examples of Primary Activities

• Agriculture – Growing crops such as grains and vegetables.
• Mining – Extracting minerals and coal from the earth.
• Fishing – Obtaining fish from water bodies.
• Raising Livestock – Keeping animals for useful products.
• Forestry – Obtaining useful resources from forests.
• Greenhouse Farming – Growing plants under controlled conditions.
• Fish Farming – Rearing fish for economic purposes.

Primary Sector – Key Point

The primary sector provides raw materials that are used by other sectors.

Secondary Sector

The secondary sector includes activities in which the outputs of the primary sector are transformed to produce goods.

Examples of Secondary Activities

• Manufacturing – Producing goods in factories.
• Construction – Building houses, buildings and roads.
• Processing – Changing raw materials into useful products.
• Water Supply – Providing water as a utility.
• Electricity Production – Producing electricity for use.
• Solar Power – Producing energy using sunlight.

Examples of Transformation

Raw Material	Product
Grains	Flour
Groundnut	Oil
Tea leaves	Tea
Wood	Furniture and paper
Cotton	Clothes
Iron ore	Steel and automobiles

Secondary Sector – Key Point

The secondary sector processes and transforms raw materials obtained from the primary sector into products for sale or consumption.

Tertiary Sector

The tertiary sector includes economic activities that provide services supporting people involved in the primary and secondary sectors.

The tertiary sector is also called the service sector.

Examples of Tertiary Activities

• Healthcare – Services provided by doctors and nurses.
• Transportation – Moving people and goods from one place to another.
• Banking – Providing financial services.
• Communication – Providing mobile, internet and other communication services.
• Trade and Logistics – Helping in the movement and distribution of goods.
• Education – Providing teaching and learning services.
• Software Development – Creating computer applications and software.
• Repair Services – Repairing vehicles, electronic items and machines.
• Hotel and Restaurant Services – Providing food and hospitality services.

Role of the Tertiary Sector

The tertiary sector supports both the primary and secondary sectors by providing essential services such as transportation, communication, banking, trade and logistics.

Primary, Secondary and Tertiary Sectors

Sector	Main Work	Examples
Primary	Obtains goods directly from nature.	Agriculture, fishing, mining, forestry
Secondary	Transforms raw materials into products.	Manufacturing, construction, processing
Tertiary	Provides services.	Banking, transportation, healthcare, communication

Important Terms

• Economic Sector – A broad group of economic activities with similar characteristics.
• Primary Sector – Activities directly dependent on nature to produce or obtain goods.
• Secondary Sector – Activities that process raw materials into products.
• Tertiary Sector – Activities that provide services supporting primary and secondary sectors.
• Service Sector – Another name for the tertiary sector.

Quick Revision

• Primary Sector → Nature → Raw Materials
• Secondary Sector → Processing → Products
• Tertiary Sector → Services → Support
• Agriculture, mining, fishing and forestry belong to the primary sector.
• Manufacturing and construction belong to the secondary sector.
• Banking, transportation, healthcare and communication belong to the tertiary sector.

Economic Activities Around Us

Chapter 14. Economic Activities Around Us

These notes explain the interdependence of the three economic sectors through examples such as AMUL and the making of a textbook.

Interdependence Among Economic Sectors

The three economic sectors are interconnected and interdependent. They work together to convert natural raw materials into finished products for final consumption.

• Primary Sector provides raw materials.
• Secondary Sector processes raw materials into finished products.
• Tertiary Sector provides services such as transportation, trade and retail.

Dairy Cooperative – From Farm to Plate

The chapter uses the example of Anand Milk Union Limited (AMUL) to explain how the three sectors work together.

Milk Production – Primary Sector

Farmers rear cows and buffaloes and obtain milk from them. Since milk comes directly from livestock, this is a primary sector economic activity.

Milk Processing – Secondary Sector

Milk is processed and converted into different products such as:

• Milk powder
• Ghee
• Cheese
• Butter

Processing milk into these products is a secondary sector activity.

Transportation and Selling – Tertiary Sector

AMUL uses lorries, trucks, railways, air and shipping services to transport its products. The products are then supplied to retail shops and sold to consumers.

Transportation, trading and retail are tertiary sector activities.

Cooperative

A cooperative is a group of people who voluntarily come together to meet their economic and social needs. The members collectively own the cooperative and take decisions together.

Middlemen

Middlemen are persons who buy goods from producers and sell them to consumers. They charge a fee for this service.

Problems Faced by Milk Farmers

• Farmers had to travel to nearby villages to sell milk.
• Milk could spoil quickly in hot weather.
• Farmers had to sell milk quickly.
• They received very little money for their milk.
• They depended on middlemen.
• Farmers sometimes felt cheated and harassed by middlemen.

Formation of AMUL

The farmers approached Sardar Vallabhbhai Patel with their problems. He advised them to form a cooperative so that they could become independent of middlemen.

AMUL was set up in 1946 under the leadership of Tribhuvandas Patel and Dr. Varghese Kurien.

Benefits of the AMUL Cooperative

• Farmers worked together.
• They collectively controlled the production and sale of milk.
• They made decisions together.
• Tasks were shared among members.
• Their income gradually increased.
• They no longer needed to depend on middlemen.
• Milk was processed into various products.
• Products were transported and sold across India and exported to other countries.

Pasteurisation

Pasteurisation is a process in which milk is heated to a specific temperature to kill harmful bacteria and preserve the milk.

Factory

A factory is a building or group of buildings where goods are manufactured or different components are put together to make a final product.

Retail

Retail means selling goods in small quantities to the final consumer rather than for resale.

Export

Export means goods and services produced in one country and sold to buyers or consumers in another country.

Other Milk Cooperatives

The chapter mentions several other milk cooperative brands:

• Nandini – Karnataka
• Mother Dairy – Delhi-NCR
• Aavin – Tamil Nadu
• Vijaya – Andhra Pradesh
• Kevi – Nagaland
• Sudha – Bihar
• Verka – Punjab

Making of a Textbook

The process of making a textbook also shows the interdependence of all three sectors.

Stage	Activity	Sector
1	Obtaining wood from trees.	Primary
2	Converting wood into pulp and paper.	Secondary
3	Printing paper into textbooks.	Secondary
4	Transporting books.	Tertiary
5	Selling books to consumers.	Tertiary

Why Are the Three Sectors Interdependent?

• The primary sector supplies raw materials to the secondary sector.
• The secondary sector converts raw materials into useful products.
• The tertiary sector transports, distributes and sells products.
• Primary and secondary sectors also depend on services such as banking, transportation and communication.
• Therefore, all three sectors support one another.

Paper Recycling

Used paper can be recycled to make new paper. The chapter states that recycling one tonne of paper saves 17 trees and 2.5 cubic metres of landfill space. It also uses 70 per cent less energy and water than making paper from wood pulp.

Judicious Use of Paper

• Use both sides of paper whenever possible.
• Avoid unnecessary printing.
• Reuse one-sided paper for rough work.
• Recycle used paper.
• Avoid wasting paper in classrooms and offices.

Important Definitions

• Cooperative – A group of people who voluntarily come together to meet their economic and social needs.
• Middlemen – Persons who buy goods from producers and sell them to consumers.
• Pasteurisation – Heating milk to a specific temperature to kill harmful bacteria.
• Factory – A place where goods are manufactured or components are assembled.
• Retail – Sale of goods in small quantities to the final consumer.
• Export – Selling goods or services produced in one country to buyers in another country.
• Dairy – A place where milk is collected and stored.

Important Facts

• AMUL stands for Anand Milk Union Limited.
• AMUL was set up in 1946.
• Tribhuvandas Patel and Dr. Varghese Kurien played important roles in setting up AMUL.
• Sardar Vallabhbhai Patel advised farmers to form a cooperative.
• Milk production is a primary sector activity.
• Milk processing is a secondary sector activity.
• Transportation, trading and retail are tertiary sector activities.
• The AMUL example demonstrates the interdependence of all three sectors.

Quick Revision

• Primary → Obtains raw materials from nature.
• Secondary → Processes raw materials into products.
• Tertiary → Provides services, transportation, trade and retail.
• AMUL → Example of interdependence among all three sectors.
• Cooperative → Collective ownership and decision-making.
• Middlemen → Buy from producers and sell to consumers.

Chapter at a Glance

Primary Sector → Raw Material → Secondary Sector → Processing → Finished Product → Tertiary Sector → Transportation / Trade / Retail → Consumer

Economic Activities Around Us

Assignment – Chapter 14: Economic Activities Around Us

Answer the following questions based on the chapter.

Multiple Choice Questions

1. What are broad groups of similar economic activities called?

   1. Economic sectors
   2. Social groups
   3. Natural resources
   4. Community groups

2. How many main types of economic sectors are discussed in the chapter?

   1. Two
   2. Three
   3. Four
   4. Five

3. Which sector depends directly on nature to produce goods?

   1. Primary sector
   2. Secondary sector
   3. Tertiary sector
   4. Service sector

4. Which of the following is a primary sector activity?

   1. Banking
   2. Manufacturing
   3. Fishing
   4. Transportation

5. Which of the following belongs to the secondary sector?

   1. Mining
   2. Manufacturing
   3. Fishing
   4. Banking

6. The tertiary sector is also known as the:

   1. Agricultural sector
   2. Industrial sector
   3. Service sector
   4. Natural sector

7. Which sector transforms raw materials into finished products?

   1. Primary sector
   2. Secondary sector
   3. Tertiary sector
   4. Natural sector

8. Which of the following is a tertiary sector activity?

   1. Agriculture
   2. Mining
   3. Banking
   4. Manufacturing

9. Who are middlemen?

   1. People who produce raw materials
   2. People who buy goods from producers and sell them to consumers
   3. People who work only in factories
   4. People who provide free services

10. What is a cooperative?

    1. A group of people who voluntarily work together to meet their economic and social needs
    2. A government department
    3. A private factory
    4. A retail shop

11. In which year was AMUL set up?

    1. 1930
    2. 1942
    3. 1946
    4. 1950

12. Who advised the milk farmers to form a cooperative?

    1. Dr. Varghese Kurien
    2. Tribhuvandas Patel
    3. Sardar Vallabhbhai Patel
    4. Kauṭilya

13. Which of the following is a secondary sector activity in the AMUL example?

    1. Milking cows
    2. Processing milk into butter and cheese
    3. Transporting milk products
    4. Selling products in retail shops

14. Which of the following is a tertiary activity in the AMUL example?

    1. Milk production
    2. Milk processing
    3. Transportation and retail
    4. Raising livestock

15. What does pasteurisation help to do?

    1. Increase the price of milk
    2. Kill harmful bacteria in milk
    3. Convert milk into butter
    4. Transport milk

Fill in the Blanks

1. Economic activities are grouped into broader groups called economic __________.
2. Agriculture, mining and fishing belong to the __________ sector.
3. Manufacturing and construction belong to the __________ sector.
4. Banking, transportation and healthcare belong to the __________ sector.
5. The tertiary sector is also called the __________ sector.
6. AMUL stands for Anand Milk __________ Limited.
7. AMUL was set up in the year __________.
8. A group of people who voluntarily come together to meet their economic and social needs is called a __________.

True or False

1. The primary sector depends directly on nature.
2. The secondary sector provides only services.
3. The tertiary sector is also called the service sector.
4. Mining is a primary sector activity.
5. Banking is a secondary sector activity.
6. AMUL is an example of a dairy cooperative.
7. Transportation and retail are tertiary sector activities.
8. The three economic sectors are completely independent of one another.

Match the Following

Column A	Column B
1. Agriculture	a. Service sector
2. Manufacturing	b. Primary sector
3. Banking	c. Secondary sector
4. AMUL	d. Dairy cooperative
5. Retail	e. Tertiary activity

Short Answer Questions

1. What are economic sectors?
2. What is the primary sector? Give two examples.
3. What is the secondary sector? Give two examples.
4. What is the tertiary sector? Give two examples.
5. Why is the tertiary sector also called the service sector?
6. What is a cooperative?
7. Who are middlemen?
8. What is pasteurisation?

Long Answer Questions

1. Explain the three economic sectors with suitable examples.
2. Differentiate between the primary, secondary and tertiary sectors.
3. Explain how the three economic sectors are interdependent.
4. Describe how the formation of the AMUL cooperative helped milk farmers.
5. Explain the journey of milk from the farm to the consumer using the three economic sectors.

Flow Diagram Activity

Complete the following flow showing the interdependence of the three sectors:

Farmers produce milk → __________ → Milk products → __________ → Retail shops → Consumers

Activity

List five economic activities in your neighbourhood. Classify each activity as Primary, Secondary or Tertiary. Then draw arrows to show how any three of these activities are connected to one another.