Various Types of Goods

In economy, any object that is ‘useful’ is good. Useful here means utility, not good or bad in moral sense. A good is different from service because while former is a tangible object, later is an action that benefits someone. A service is non-material equivalent of a good. Since Physical objects can be touched, they are called tangible goods. Intangible goods cannot be touched but only experienced. So, services come under the category of intangible goods. We note here that both goods and services can be collectively called “products”.

Free Goods

If one does not need to pay anything for a good, it is called “free good“. Best example of free good is air – which we breathe. It has its utility but it is so abundant in nature that we don’t need to pay a price for its production as well as usage. However, good sold for free for promotion is not a free good in economic sense.

Good Versus Bad in Economy

For goods other than free goods, we need to pay a positive price, because of their utility. However, there are many instances, in which we need to Pay negative price for goods. For example, garbage has no utility but we need to pay garbage + some money to the garbage collector. In economic sense, that becomes a ‘bad’, an antithesis of good.

Basic Good

Basic good means a good, which itself may not have utility but other good derived from it have that utility. For example, cotton / textile is a basic good because apparels made from it has utility. In other sense, bulk or raw material products used for further production of new items in agriculture, manufacture or construction are called basic goods.

Intermediate Goods

Intermediate good is incomplete good which goes as input for further finishing. Thus, in production chain, Intermediate goods lie between raw material and finished goods.

Raw material

The term raw material refers to both basic and intermediate goods, which are used as input to produce finished goods.

Finished Goods

A Finished goods has completed required manufacturing and is ready to provide its utility.  Finished goods are ready to be consumed or distributed.

Capital Goods

The term Capital Goods is used for Plants, machinery and other assets which are used for conversion of basic goods to finished goods. We note here that Capital Good provides service without losing its essential functional characteristic, form or shape except wear and depreciation. Further, a Capital Good itself is a finished good because it itself does not need any further processing.

Producer Good

A producer good is any good that is used to produce other goods as well as services. Thus, all basic goods, intermediate goods and capital goods are Producer goods because they are used to produce other goods. Among these three, the basic and intermediate goods are raw materials but NOT capital goods.

Consumer Goods

While the producer goods are used to produce other goods, consumer goods are used by individuals for their consumption. Consumer goods are generally, not always “Finished Goods” as they are ready to use without undergoing further processing or changes. There may be some consumer goods which need further processing – for example cloth, that needs to be sent to a tailor, is a consumer good but also an intermediate good. There are two main categories of consumer goods viz. Consumer Durable Goods and Consumer Non-durable Goods.

Consumer Durable Goods (aka. Consumer Durables)

The non-perishable goods such as electronics come under the category of Consumer durables. Such goods don’t need to be purchased frequently because they are made to last for long period, at least three years. They are generally of higher price in comparison to the non-durables.

Consumer Non-durable Goods (aka. Consumer Non-durables)

The perishable goods such as fruits, vegetables, cosmetics, food items etc. which we need to purchase frequently are consumer non-durables.

Convenience Goods, Shopping Goods and Specialty Goods

Convenience Goods

The items which are bought frequently, immediately and with minimum shopping efforts are convenience goods. These include candy, ice-cream, cold drinks, cigarettes, magazines, medicines etc. Shopping Goods are those which are bought after selection, purchase and comparison of various goods. Generally, the shopping goods are durable goods e.g. furniture, dresses, electronic items & appliances etc. Speciality goods posses special features (and prices) and incur special purchasing efforts. Speciality goods examples are rare art collectibles, antiquities, style goods etc.