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Tangible goods stacked in a warehouse Mediq Sverige Kungsbacka warehouse.jpg
Tangible goods stacked in a warehouse

In economics, goods are materials that satisfy human wants [1] and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods that are tangible property, and services, which are non-physical. [2]

Economics Social science that analyzes the production, distribution, and consumption of goods and services

Economics is the social science that studies the production, distribution, and consumption of goods and services.

The idea of want can be examined from many perspectives. In secular societies want might be considered similar to the emotion desire, which can be studied scientifically through the disciplines of psychology or sociology. Want might also be examined in economics as a necessary ingredient in sustaining and perpetuating capitalist societies that are organised around principles like consumerism. Alternatively want can be studied in a non-secular, spiritual, moralistic or religious way, particularly by Buddhism but also Christianity, Islam and Judaism.

Within economics, the concept of utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or satisfaction within the theory of utilitarianism by moral philosophers such as Jeremy Bentham and John Stuart Mill. The term has been adapted and reapplied within neoclassical economics, which dominates modern economic theory, as a utility function that represents a consumer's preference ordering over a choice set. It is devoid of its original interpretation as a measurement of the pleasure or satisfaction obtained by the consumer from that choice.


A good may be a consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it. In contrast, free goods, such as air, are naturally in abundant supply and need no conscious effort to obtain them. Private goods are things owned by people, such as televisions, living room furniture, wallets, cellular telephones, almost anything owned or used on a daily basis that is not food related.

A consumer good or "final good" is any commodity that is produced or consumed by the consumer to satisfy current wants or needs. Consumer goods are ultimately consumed, rather than used in the production of another good. For example, a microwave oven or a bicycle that is sold to a consumer is a final good or consumer good, but the components that are sold to be used in those goods are intermediate goods. For example, textiles or transistors can be used to make some further goods.

Commodity marketable item produced to satisfy wants or needs

In economics, a commodity is an economic good or service that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.

Consumer Person or group of people that are the final users or consumers of products and or services; one who pays something to consume goods and services produced

A consumer is a person or organization that uses or consumes economic services or commodities.

Microwave oven kitchen appliance

A microwave oven is an electric oven that heats and cooks food by exposing it to electromagnetic radiation in the microwave frequency range. This induces polar molecules in the food to rotate and produce thermal energy in a process known as dielectric heating. Microwave ovens heat foods quickly and efficiently because excitation is fairly uniform in the outer 25–38 mm(1–1.5 inches) of a homogeneous, high water content food item.

Commercial goods are construed as any tangible product that is manufactured and then made available for supply to be used in an industry of commerce. Commercial goods could be tractors, commercial vehicles, mobile structures, airplanes and even roofing materials. Commercial and personal goods as categories are very broad and cover almost everything a person sees from the time they wake up in their home, on their commute to work to their arrival at the workplace.

Commodities may be used as a synonym for economic goods but often refer to marketable raw materials and primary products. [3]

Synonym Words or phrases having the same meaning

A synonym is a word or phrase that means exactly or nearly the same as another lexeme in the same language. Words that are synonyms are said to be synonymous, and the state of being a synonym is called synonymy. For example, the words begin, start, commence, and initiate are all synonyms of one another. Words are typically synonymous in one particular sense: for example, long and extended in the context long time or extended time are synonymous, but long cannot be used in the phrase extended family. Synonyms with exactly the same meaning share a seme or denotational sememe, whereas those with inexactly similar meanings share a broader denotational or connotational sememe and thus overlap within a semantic field. The former are sometimes called cognitive synonyms and the latter, near-synonyms, plesionyms or poecilonyms.

Raw material Basic material that is used to produce goods, finished products, energy, or intermediate materials

A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished products, energy, or intermediate materials which are feedstock for future finished products. As feedstock, the term connotes these materials are bottleneck assets and are highly important with regard to producing other products. An example of this is crude oil, which is a raw material and a feedstock used in the production of industrial chemicals, fuels, plastics, and pharmaceutical goods; lumber is a raw material used to produce a variety of products including all types of furniture. The term "raw material" denotes materials in minimally processed or unprocessed in states; e.g., raw latex, crude oil, cotton, coal, raw biomass, iron ore, air, logs, or water i.e. "any product of agriculture, forestry, fishing and any other mineral that is in its natural form or which has undergone the transformation required to prepare it for internationally marketing in substantial volumes."

The primary sector of the economy includes any industry involved in the extraction and collection of natural resources; such as farming, forestry, mining and fishing.

Although in economic theory all goods are considered tangible, in reality certain classes of goods, such as information, only take intangible forms. For example, among other goods an apple is a tangible object, while news belongs to an intangible class of goods and can be perceived only by means of an instrument such as print or television.

Information that which informs; the answer to a question of some kind; that from which data and knowledge can be derived

Information is associated with data and knowledge, as information is data in context and with meaning attached. Data represents the values attributed to parameters, and knowledge signifies understanding of an abstract or concrete concept. "

An intangible asset is an asset that lacks physical substance; in contrast to physical assets, such as machinery and buildings, and financial assets such as government securities. An intangible asset is usually very hard to evaluate. Examples are patents, copyright, franchises, goodwill, trademarks, and trade names. The general interpretation also includes software and other intangible computer based assets; these are all examples of intangible assets. Intangible assets generally—though not necessarily—suffer from typical market failures of non-rivalry and non-excludability.

Apple edible fruit of domesticated deciduous tree

An apple is a sweet, edible fruit produced by an apple tree. Apple trees are cultivated worldwide and are the most widely grown species in the genus Malus. The tree originated in Central Asia, where its wild ancestor, Malus sieversii, is still found today. Apples have been grown for thousands of years in Asia and Europe and were brought to North America by European colonists. Apples have religious and mythological significance in many cultures, including Norse, Greek and European Christian traditions.

Utility and characteristics of goods

Goods may increase or decrease their utility directly or indirectly and may be described as having marginal utility. Some things are useful, but not scarce enough to have monetary value, such as the Earth's atmosphere, these are referred to as 'free goods'.

In economics, utility is the satisfaction or benefit derived by consuming a product; thus the marginal utility of a goods or service is the change in the utility from an increase in the consumption of that good or service.

A free good is a good that is not scarce, and therefore is available without limit. A free good is available in as great a quantity as desired with zero opportunity cost to society.

In normal parlance, "goods" is always a plural word, [4] [5] but economists have long termed a single item of goods "a good".

In economics, a bad is the opposite of a good.[ citation needed ] Ultimately, whether an object is a good or a bad depends on each individual consumer and therefore, it is important to realize[ according to whom? ] that not all goods are good all the time and not all goods are goods to all people.

Types of goods

Types of goods in economics. Types of goods.svg
Types of goods in economics.

Goods' diversity allows for their classification into different categories based on distinctive characteristics, such as tangibility and (ordinal) relative elasticity. A tangible good like an apple differs from an intangible good like information due to the impossibility of a person to physically hold the latter, whereas the former occupies physical space. Intangible goods differ from services in that final (intangible) goods are transferable and can be traded, whereas a service cannot.

Price elasticity also differentiates types of goods. An elastic good is one for which there is a relatively large change in quantity due to a relatively small change in price, and therefore is likely to be part of a family of substitute goods; for example, as pen prices rise, consumers might buy more pencils instead. An inelastic good is one for which there are few or no substitutes, such as tickets to major sporting events[ citation needed ], original works by famous artists[ citation needed ], and prescription medicine such as insulin. Complementary goods are generally more inelastic than goods in a family of substitutes. For example, if a rise in the price of beef results in a decrease in the quantity of beef demanded, it is likely that the quantity of hamburger buns demanded will also drop, despite no change in buns' prices. This is because hamburger buns and beef (in Western culture) are complementary goods. It is important to note that goods considered complements or substitutes are relative associations and should not be understood in a vacuum. The degree to which a good is a substitute or a complement depends on its relationship to other goods, rather than an intrinsic characteristic, and can be measured as cross elasticity of demand by employing statistical techniques such as covariance and correlation.

The following chart illustrates the classification of goods according to their exclusivity and competitiveness.

Excludable Non-excludable
Rivalrous Private goods
food, clothing, cars, parking spaces
Common-pool resources
fish stocks, timber, coal
Non-rivalrous Club goods
cinemas, private parks, satellite television
Public goods
free-to-air television, air, national defense

Trading of goods

Goods are capable of being physically delivered to a consumer. Goods that are economic intangibles can only be stored, delivered, and consumed by means of media.

Goods, both tangibles and intangibles, may involve the transfer of product ownership to the consumer. Services do not normally involve transfer of ownership of the service itself, but may involve transfer of ownership of goods developed or marketed by a service provider in the course of the service. For example, sale of storage related goods, which could consist of storage sheds, storage containers, storage buildings as tangibles or storage supplies such as boxes, bubble wrap, tape, bags and the like which are consumables, or distributing electricity among consumers is a service provided by an electric utility company. This service can only be experienced through the consumption of electrical energy, which is available in a variety of voltages and, in this case, is the economic goods produced by the electric utility company. While the service (namely, distribution of electrical energy) is a process that remains in its entirety in the ownership of the electric service provider, the goods (namely, electric energy) is the object of ownership transfer. The consumer becomes electric energy owner by purchase and may use it for any lawful purposes just like any other goods.

See also


  1. Quotation from Murray Milgate, [1987] 2008, "goods and commodities, " The New Palgrave Dictionary of Economics , 2nd ed., preview link Archived 2013-05-27 at the Wayback Machine , in referencing an influential parallel definition of 'goods' by Alfred Marshall, 1891. Principles of Economics , 2nd ed., Macmillan.
  2. Alan V. Deardorff, 2006. Terms Of Trade: Glossary of International Economics, World Scientific. Online version: Deardorffs' Glossary of International Economics, "good" Archived 2013-03-18 at the Wayback Machine and "service". Archived 2017-07-01 at the Wayback Machine
  3. Alan V. Deardorff, 2006, Deardorffs' Glossary of International Economics "commodity". Archived 2007-12-12 at the Wayback Machine
  4. Oxford English Dictionary
  5. eg: Carriage of Goods by Sea Act, goods vehicle, Sale of Goods Act

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In economics, the cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good, ceteris paribus. It is measured as the percentage change in quantity demanded for the first good that occurs in response to a percentage change in price of the second good. For example, if, in response to a 10% increase in the price of fuel, the demand for new cars that are fuel inefficient decreased by 20%, the cross elasticity of demand would be:cross body . An increase in the price of fuel will decrease demand for cars that are not fuel efficient A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two substitute products. Assume products A and B are complements, meaning that an increase in the price of B leads to a decrease in the quantity demanded for A. Equivalently, if the price of product B decreases, the demand curve for product A shifts to the right reflecting an increase in A's demand, resulting in a negative value for the cross elasticity of demand. The exact opposite reasoning holds for substitutes.

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In economics and consumer theory, a Giffen good is a product that people consume more of as the price rises and vice versa—violating the basic law of demand in microeconomics. For any other sort of good, as the price of the good rises, the substitution effect makes consumers purchase less of it, and more of substitute goods; for most goods, the income effect reinforces this decline in demand for the good. But a Giffen good is so strongly an inferior good in the minds of consumers that this contrary income effect more than offsets the substitution effect, and the net effect of the good's price rise is to increase demand for it. A Giffen good is considered to be the opposite of an ordinary good.

Inferior good good that decreases in demand when consumer income rises

In economics, an inferior good is a good whose demand decreases when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those goods for which the demand rises as consumer income rises. This would be the opposite of a superior good, one that is often associated with wealth and the wealthy, whereas an inferior good is associated with lower socio-economic groups.

Rivalry (economics) the property of goods whose consumption by one consumer prevents, makes it harder to, or lessens the benefits of simultaneous consumption by other consumers

In economics, a good is said to be rivalrous or rival if its consumption by one consumer prevents simultaneous consumption by other consumers, or if consumption by one party reduces the ability of another party to consume it. A good is considered non-rivalrous or non-rival if, for any level of production, the cost of providing it to a marginal (additional) individual is zero. A good can be placed along a continuum ranging from rivalrous to non-rivalrous. The same characteristic is sometimes referred to as jointness of supply or subtractable or non-subtractable.

Complementary good good with a negative cross elasticity of demand

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Demand curve graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price

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Goods and services outcome of human efforts to meet the wants and needs of people

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Intangible good good that does not have a physical nature and can be separated from its creators labor

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