TYPES OF GOODS

Final Goods: Final goods refer to those goods, which are used either for consumption or for investment.

For example,

  • Goods purchased by consumer households as they are meant for final consumption.
  • Goods purchased by firm for capital formation or investment like machinery purchased by a firm.

Intermediate Goods: Intermediate goods refer to those goods which are used either for resale or for further production in the same year.

For example,

  • Goods purchased for resale like milk purchased by a dairy shop.
  • Goods used for further production like milk used for making sweets.

NOTE: The distinction between intermediate goods and final goods is made based on the use of product and not on the basis of product itself. For example, sugar is an intermediate good when it is used by sweet shop for making sweets. However, if consumers use it, then it becomes a final good.

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