Categories: Economics

Types of Goods

Goods are the products that are made to fulfill the market needs and can be sold by a seller to a buyer for some monetary value. There are two types of goods free good and economic goods. Free goods are those which are not scarce and therefore such good are of non-monetary value such as air, water and sunlight. Although air, water and sunlight are natural and are not scarce but these things are sometimes not available at some places like water in deserted areas are imported from different places therefore people have to pay for it. Similarly if fans are used to get the air then such air will not be free people have to pay for the fan and the electricity. All those goods that have a monetary value are economic goods. Normally goods tend to have a diminishing marginal utility; this means that consumers ultimately decline to consume a product after a certain period of time even if the price of the product is lowered near to zero. This is because of the consumers satisfaction as if too much of good is consumed it will start reducing the satisfaction of consumer as there won’t be a desire for that good anymore. (Beatty, Pg 1100, 2007)
Goods can be classified as follows:

Consumer Goods

Consumer goods are those goods which are bought for personal use. Goods such as food, clothing etc are consumer goods. These goods are mostly for immediate use.

Shopping Goods

Shopping goods includes relatively high risk products therefore; the buyers do a thorough research about the product quality and availability and visit different places where such products are being sold to compare prices before actually buying the product. These may be homogenous goods i.e. the same product having same packaging, color, company etc which cannot be distinguished are sold by different sellers. Or heterogeneous goods which are close substitutes i.e. they differ in size, shape, quality, company etc.

Capital Goods

Capital goods are those goods that are required by others industries for the production their goods. Capital goods require a huge investment. Machineries and plants are the examples of capital goods.

Intermediate Goods

Intermediate goods are those goods which are manufactured by industries to be used in the manufacturing or production of another good that has a need in the market. Aluminum, rubber, plastic etc are the examples of intermediate goods.

Specialty Goods

Specialty goods are those goods which are not bough very frequently as they require a large amount of investment therefore; the buyers do an extensive research on all the similar products that are available in the market before actually making a decision to buy the product.

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Normal Goods

Normal goods are those goods which have a direct relationship with the consumer’s income. The consumer’s tends to demand more of the normal goods when they get an increase in their income and their demand decreases with a decrease in their income.

Inferior Goods

Inferior goods are those goods that have an inverse relationship with the consumer’s income. The demand for inferior goods increases with the decrease in consumer’s income and the demand decreases with the increase in consumer’s income.