What is Industry in Economics?

An industry is a cluster of firms that produces or sells similar or overlapping goods or services. These industries are usually grouped into sectors.

Sectors can be large or small, but are generally classified into primary, secondary and tertiary. This classification is based on activities, business processes, and the products or services offered. It can also include the use of factors and materials from other sectors.

A primary industry is one that produces goods or services that are consumed directly. Examples of this type of industry include agriculture, fishing, and manufacturing. Other examples include mining and oil extraction. Generally, these industries have a relatively low labor force.

The second sector is the industry that manufactures and processes intermediate and finished goods. Examples of this type of industry include manufacturing, construction, and mining.

These industries use materials from other industries, as well as raw materials sourced from the natural environment. They also may produce nonstandard or nondurable goods.

Another type of sector is the financial sector, which includes businesses that provide services to consumers and enterprises. Historically, this sector has performed well during periods of expansion.

A sector may consist of hundreds or thousands of businesses. Companies are grouped into industries based on their largest revenue sources.

A large-scale industry produces goods that are consumed by a larger consumer market. Businesses in this sector typically have a large capital investment, employ large numbers of people, and recruit workers with varying educational backgrounds.