BASIC TERMS AND CONCEPTS
GOODS AND SERVICES
Anything that satisfies a human want can be considered as "good" in economics, In economics, the term "goods" refers to material and non-material things which satisfy human wants. Just as an apple or a chair is good, music or the services of actors, musicians and teachers are some of the examples of goods (services). Goods may be further classified as:
1. Material and Non-material Goods: The goods which the consumers can see or feel or which have some definite shape are called material goods. For example, a pencil, copy, car, etc.
Goods are material things are tangible while services intangible
The goods which do not have definite shape and size are called non-material goods. For example, business goodwill, kindness, love, etc.
2. Free and Economic Goods: The goods provided by nature without any cost are called free goods. They are not scarce. So they do not command a price in the market. They are known as free goods. For example, air, sunlight, water, etc. are free goods.
Economic goods are the goods produced with cooperation between various factors of production. Such goods are found in limited quantities and have value in exchange. Economic goods command a price in the market and have value-in-exchange. They are scarce in relation to demand. The goods like shoes, clothes, medicines, are.. economic goods.
Economic goods are the goods produced with cooperation between various factors of production. Such goods are found in limited quantities and have value in exchange. Economic goods command a price in the market and have value-in-exchange. They are scarce in relation to demand. The goods like shoes, clothes, medicines, are.. economic goods.
We have to remember that what is a free good in one place can become an economic good in another place. It all depends on the supply of a good and the demand from, For example, water which is a free good in villages becomes an economic good r it there is a scarcity of water.
3. Transferable and Non-transferable Goods: The goods and services whose ownership can be changed from person to person are called transferable goods. For example, land, house, book, television, etc. are transferable goods.
The goods and services whose ownership cannot be changed are called non-transferable goods. For example the ability of teachers, doctors, nurses, singers, dancers. non-transferable goods.
The goods and services whose ownership cannot be changed are called non-transferable goods. For example the ability of teachers, doctors, nurses, singers, dancers. non-transferable goods.
In the case of transferable goods, ownership can be transferred.
4. Consumer and Producer Goods: If people get immediate satisfaction by consuming goods, they are called consumer goods. Food, clothes, shoes, movies, etc. are consumer goods. They are also called goods of the first order as they satisfy our wants directly.
If the goods are used in the production of other goods and services, they are called producer goods. Machinery, tools, etc. are producer goods. They are called goods of second-order as they satisfy our want indirectly by aiding the production of consumables.
If the goods are used in the production of other goods and services, they are called producer goods. Machinery, tools, etc. are producer goods. They are called goods of second-order as they satisfy our want indirectly by aiding the production of consumables.
5. Private and Public Goods: If a person has a sole right to the production and distribution of goods, It is called private good. Such goods are used by the owner according to their wish and will. House, car, bike, land, etc. are private goods.
If a person does not have a sole right on the production and distribution of goods, It is called a public good, Such goods are used by the whole society. Road, public hospital. public schools, colleges, etc, are public goods.
If a person does not have a sole right on the production and distribution of goods, It is called a public good, Such goods are used by the whole society. Road, public hospital. public schools, colleges, etc, are public goods.
6. Perishable and Non-perishable Goods: If a good cannot be reused after using it once, it is called perishable good. The value of such good, disappears with time. Petroleum products. firewood, product are some perishable goods.
If a good can be used again and again for some specific purpose, It is called durable or non-perishable good. The value of such goods does not decrease over time. Land, house, vehicles, etc. are non-perishable goods.
If a good can be used again and again for some specific purpose, It is called durable or non-perishable good. The value of such goods does not decrease over time. Land, house, vehicles, etc. are non-perishable goods.
7. Necessary, Comforts and Luxury Goods: The goods which are highly necessary for managing the daily life of the consumers are called necessary goods. Food. house, clothes, fire. fuel, water, electricity, etc, are some necessary goods.
The goods which make the work easy and simple are comfort goods. Such goods increase the efficiency of workers. Calculator, computer, cycle, etc. are some comfortable goods.
The goods which are not necessary for managing daily life are called luxury goods, motorcycle, television, car, furniture, etc. are luxury goods for a laborer.
The line of demarcation between necessities comforts and luxury is thin, A television which was a luxury in the past is now a necessity. Likewise, a car is a luxury to a student and a necessity to a business executive.
The goods which make the work easy and simple are comfort goods. Such goods increase the efficiency of workers. Calculator, computer, cycle, etc. are some comfortable goods.
The goods which are not necessary for managing daily life are called luxury goods, motorcycle, television, car, furniture, etc. are luxury goods for a laborer.
The line of demarcation between necessities comforts and luxury is thin, A television which was a luxury in the past is now a necessity. Likewise, a car is a luxury to a student and a necessity to a business executive.
8. Substitute Goods and Complementary Goods: Substitutes are the goods which have the same uses. One can be used in place of the other. Tea and coffee are examples of substitutes. Complementary good is a good which is consumed with another good. They are used jointly. Pen and Ink, car and petrol are examples of complementary goods.
9. Normal Goods and Inferior Goods: The quantity demanded of such commodities increases as the consumer's income increases and decreases as the consumer's income decreases.
Such goods are called normal goods. An inferior is a good of law quality consumed by the poor the demand for whose varies inversely to change in consumer's money income. An example of an inferior good is millet which is consumed by the poor in place of rice.
Such goods are called normal goods. An inferior is a good of law quality consumed by the poor the demand for whose varies inversely to change in consumer's money income. An example of an inferior good is millet which is consumed by the poor in place of rice.
10. Giffen Good: A Giffen good is a special case of an "inferior good" of which people buy less when their income rises. It does not have easily available substitutes, as a result of which the income effect dominates the substitution effect. The term is named after the economist Robert Giffen.
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