Meaning and Types of Goods and Services

GP Chudal
0

Meaning of Goods and Services

In common terms, physical, tangible items such as tables, chairs, coffee tables, and the like are referred to as goods/ commodity “Vastu ( वस्तु ).” Intangible services that elude the senses are also encompassed within the term “goods.” This extends beyond physical objects and encompasses services provided by professionals such as teachers, doctors, and lawyers. Essentially, any entity, either physical or intangible, that possesses utility is deemed a goods/ commodity.

goods-and-services

Types of Goods and Services

Economics classifies goods into various categories:

  1. Economic and Free Goods:
    • Economic Goods: These are finite in nature and produced in response to demand and supply dynamics. Economic goods are characterized by a supply that lags behind demand. Examples include pens, pulses, rice, mobile phones, computers, and televisions, etc.
    • Free Goods: These are naturally acquired without exertion or resource expenditure. They are goods obtained effortlessly.
  2. Physical and Intangible Goods:
    • Physical/ Tangible Goods: These are tangible, visible items with distinct shapes and forms. Houses, sheds, wood, paper, and books are examples of physical goods.
    • Intangible Goods: Items that lack a definitive form, weight, and are not perceivable by the senses fall into this category. Services such as education, healthcare, artistic performances, and natural elements like air, water, and sunlight are examples of intangible goods.
  3. Consumable and Productive Goods:
    • Consumable Goods: These are items intended for immediate consumption, purchased to satisfy immediate needs. Pulses, rice, pens, coffee, mobile phones, watches, and radios fall under this category.
    • Productive Goods: These goods are utilized in production processes without being depleted upon use. They serve the purpose of generating other goods. Examples include tractors, sewing machines, and flour used in bread production.
  4. Transferable and Non-Transferable Goods:
    • Transferable Goods: These items can change ownership from one individual or group to another. Houses, cars, machinery, and tools are transferable goods.
    • Non-Transferable Goods: Ownership of such goods cannot be transferred from one entity or group to another.
  5. Private and Public Goods:
    • Private Goods: These are possessions owned by individuals, such as houses, motorcycles, and cars.
    • Public Goods: These goods pertain to the collective ownership of the entire community or nation rather than an individual. Examples include roads, sidewalks, bridges, and public infrastructure.
  6. Perishable and Durable Goods:
    • Perishable Goods: These items are typically single-use and have a limited shelf life. Vegetables and fruits are prime examples.
    • Durable Goods: These goods endure for extended periods and can be used repeatedly. Clothing, furniture, houses, and appliances fall into this category.
  7. Normal, Inferior, and Luxury Goods:
    • Normal Goods: The demand for these goods rises with increased consumer income and falls as income decreases. Examples include Basmati rice, meat, and fruits.
    • Inferior Goods: The demand for these goods increases when consumer income declines and decreases when income rises. Examples include basic foods, lower-quality items, and coarse rice.
    • Luxury Goods: These are non-essential items associated with prestige and honor. Diamonds, gold and silver jewelry, and other high-end items fall into this category.
  8. Substitute Goods, Complementary Goods, and Giffen Goods:
    • Substitute Goods: These are goods that can be used interchangeably with one another. Examples include tea and coffee.
    • Complementary Goods: Consumption of one commodity necessitates the consumption of another. For instance, pens and ink are complementary goods.
    • Giffen Goods: These are lower-end products but needful to the daily lives of low-income consumers. A positive correlation exists between price and demand for such goods. This concept was introduced by British economist Sir Robert Giffen.
  9. Veblen Goods:Veblen goods are a unique category of goods in economics that defy the conventional law of demand. Unlike most goods, where an increase in price leads to a decrease in demand, Veblen goods exhibit the opposite behavior. These goods are considered status symbols, and their demand actually increases as their price rises.

    Key characteristics of Veblen goods include:

    1. Conspicuous Consumption: Veblen goods are associated with conspicuous consumption, which means that individuals purchase them primarily to display their wealth and social status. Owning these goods is a way of signaling affluence to others.
    2. Status Symbol: The higher the price of a Veblen good, the more desirable it becomes for some consumers. This is because the high price itself is seen as a status symbol, and owning such an expensive item enhances one’s social standing.
    3. Limited Accessibility: Veblen goods are often exclusive and not easily accessible to the general public. Their high prices contribute to their exclusivity, making them even more appealing to certain consumers.
    4. Demand Increase with Price: Unlike typical goods, where demand falls as prices rise, Veblen goods experience an increase in demand as their prices go up. People are willing to pay a premium for these goods because of their prestige value.
    5. Luxury and Designer Products: Many luxury and designer products, such as high-end fashion, luxury cars, jewelry, and watches, can be classified as Veblen goods.

Your reaction on this article:


Post a Comment

0Comments

Please leave your comments or ask your queries here. The comments shall be published only after the Admin approval.

Post a Comment (0)

#buttons=(Accept !) #days=(10)

Our website uses cookies to enhance your experience. Check Now
Accept !
Join Our Telegram Group