It may seem smooth at the edges and a thing of amazing technological beauty, but every iPhone begins its life long before you buy it at the Apple store. Just like every man-made product, the iPhone is actually just a collection of purposefully placed raw materials, all of which had to come out of the earth at some point. A quick glance at the diagram below and you can see which materials go into it. You can also see that the total cost of these materials is only a little over a dollar, which should make you wonder why the price tag is around 1000 times more!
Before these materials can be used in the production of goods and services, they need to be extracted from the earth. This process of extraction makes up what we call the Primary Sector. This is one of the three sectors that make up all of our economies around the world. In the case of our iPhone, its life begins with the extraction of materials which will later be transformed into clever components such as microprocessors, silicon chips, batteries and so on.
The most abundant material found in an iPhone is Aluminium. Whilst Apple doesn’t mine the material themselves, they do purchase ready-made components from other manufacturers. This is where our second sector of the economy comes in, appropriately named the Secondary Sector. In this sector, raw materials such as the Aluminium found in iPhones is converted into finished or semi-finished goods. Continuing its journey in the secondary sector, Apple factories then take all of the components and convert them into a fully functioning iPhone.
Before the iPhone arrives in our hands, there is one more sector of the economy that is required to aid this process. This is called the Tertiary sector. This third sector of the economy includes the provision of services such as transport, distribution, and retailing.
Every economy in the world is made up of these three sectors, all working in unison to provide goods and services for our increasingly material driven lifestyles.
Think like an economist!
Q1: List five jobs which would be found in the primary sector
Q2: Explain why a less-developed economy is likely to have a relatively larger primary sector.
Q3: Given that that the value of the raw materials which make up one iPhone are only $1.03, explain why the cost of the iPhone is so much more.
