Economic sectors are determined based on which of the following criteria?

• A. The amount of capital invested in each sector
• B. The size of the workforce employed in each sector
• C. The level of government regulation in each sector
• D. The nature of the production process and the type of goods or services produced

Answer: (D)

Verified step by step guidance

1. Understand that economic sectors are classified based on the characteristics of their production activities rather than quantitative measures like capital or workforce size.
2. Recognize that the key criterion is the nature of the production process, which refers to how goods or services are produced in each sector.
3. Identify that the type of goods or services produced is essential because it distinguishes sectors such as primary (raw materials), secondary (manufacturing), and tertiary (services).
4. Note that factors like the amount of capital invested, workforce size, or government regulation are not the primary basis for sector classification, although they may influence sector dynamics.
5. Conclude that the correct way to determine economic sectors is by examining the nature of production and the type of output, which aligns with standard economic definitions.