Goods in Economics | Definition and Types:- In economics , the concept of property refers to those physical elements that somehow satisfy human needs. There is a wide typology of goods according to their characteristics, and to speak of them we must sort them by categories. Therefore, we have goods according to their degree of scarcity, their function, their degree of transformation, the ease of access to them or their relationship with income.
We will detail all the goods that exist under different classifications often found on economics, but before we leave this scheme to have a clear idea of the distinction between them. It should be noted that a good must be only once, but in all classifications. For example, a well may be economical, consumption , final, private and normal.
Goods According to their Degree of Scarcity
If we consider the degree of scarcity we can speak of free goods and economic goods:
- Free goods: They are unlimited, hence its name. This means that your access is free and everyone can access it. An example of free good is oxygen, air.
- Economic goods: are goods that not everyone can access, given its characteristics. For example, oil.
Goods According to Functionality
If we look at the functionality of the goods we can distinguish between consumer goods, intermediate goods and investment goods:
- The consumer goods refer to goods we use every day. For example, a motorcycle, go to some restaurant, a house …
- The investment goods normally serve for a further benefit. For example, if we buy a computer because it is necessary for our work, or some funds fixed term in the bank, etc.
Sometimes they are also included in this classification of intermediate goods, which are goods through its transformation become other intermediate goods or consumer goods. For example, wooden boards, flour, etc. However, we consider it more appropriate to include the intermediate goods in the following classification.
Goods According to their Degree of Transformation
We have also mentioned goods according to their degree of transformation. We can distinguish between intermediate goods or final goods:
- The intermediate goods or raw materials are goods that are used to produce other goods. That is, his life is not finished in the productive cycle. For example, the flour, since later we will be used to produce bread.
- The final goods are themselves ready to be consumed. For example, bread.
Goods According to their ease of Access
We can also distinguish the goods according to the ease of access. We can differentiate between public, private and privately owned goods:
- The public goods are the most accessible because they belong to the society in general. For example, a school.
- The private assets are less accessible because it can only be used by their owners. For example, a house.
- And private property , which are private property owners but intended for use by the general public. Like, for example, a hotel.
Goods According to Rent
Finally, one of the most important distinctions are the goods according to income. That is, the demand for goods as disposable income. We can differentiate, in this section, between normal goods and inferior goods.
- In normal goods , their demand increases because it increases the income of individuals. It is given in most of the goods. For example, some shoes. Within normal goods we must distinguish two other types:
- The luxury goods or higher: Your demand increases faster than does the income of consumers. It is given mostly in leisure services.
- The necessities : Your demand grows at a slower pace than does the income of consumers. For example, bread.
- On the other hand, inferior goods are those whose demand decreases as income increases consumers. This is because having more income consumers prefer higher quality products. For example, fast food, used cars, etc.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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