Overview

Those involved in the production of goods and services are called producers. The inputs of production are resources called factors of production and the outputs of production are goods and services called commodities.

The main goal of most producers is profit maximization, although producers may also aim to maximize sales, increase market share, provide quality products, provide employment, gain prestige, provide important goods and services to society or be self-employed.

Types of Producers

There are three main types of producers within the economy. These are:

• Firms. These producers are established with the main intention of making a profit and make up a large proportion of producers in most economies. Firms may have different ownership structures, such as sole traders, partnerships, registered companies and co-operatives.
  
• Government. The government provides public goods and some merit goods for the benefit of society, funded by taxation. Government organizations form the public sector of producers, represented by the government sector of the circular flow model.
  
• Non-profit organizations are private and include clubs, societies, churches, charities and committees. The main goal of these producers is to benefit their members or people within society.

Productive Sectors

Producers can usually be grouped into three sectors depending on their activity, although some are involved in two or three sectors. The activities of each productive sector in a production process or industry all contribute to the final consumer commodities being produced.

The three productive sectors are:

• Primary sector. This is the sector that extracts or harvests natural resources, such as farming, horticulture and mining. This sector aims to improve the yield with the use of technology, although it is decreasing in size compared to the rest the economy.


• Secondary sector. This sector is involved in processing and manufacturing, using capital and human resources to combine natural and capital resources. This sector grew dramatically during the Industrial Revolution.


• Tertiary sector. This is provides services, such as retail shops and transport. In most developed countries the tertiary sector is now the largest sector of the economy.