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Types of goods in economics.

In macroeconomics and accounting, a good is contrasted with a service. In this sense, a good is defined as a physical (tangible) product, capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer, say an apple, as opposed to an (intangible) service, say a haircut. A more general term that preserves the distinction between goods and services is 'commodities,' like a flashlight. In microeconomics, a 'good' is often used in this more inclusive sense of the word.

Contents

Utility characteristics of goods

A good is any object that increases the utility of the consumer/ product directely or indirectely. Goods are usually modeled as having diminishing 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, a bad is the opposite of a good. Ultimately, whether an object is a good or a bad depends on each individual consumer and therefore, it is important to realize that not all goods are good all the time and not all goods are goods to all people.

Types of goods

Goods can be defined in a variety of ways, depending on a number a characteristics. These are listed in the box at the bottom of this article.

See also

Notes

References

  • Bannock, Graham et al. (1997). Dictionary of Economics, Penguin Books.
  • Milgate, Murray (1987), "goods and commodities," The New Palgrave: A Dictionary of Economics, v. 2, pp. 546–48. Includes historical and contemporary uses of the terms in economics.

Simple English

A good or commodity in economics is any object or product (factors of production) that is useful.

A good that cannot be used by consumers directly, such as an office building or capital equipment, can be called a good because it can be useful if it is sold. A 'good' in economic usage does not necessarily mean that the object is good in a moral sense.

If an object or service is sold for a positive price, then it is a good since the purchaser considers the utility of the object or service more valuable than the money. Some things are useful but not scarce such as air and are referred to as free goods.

In macroeconomics and accounting, a good is contrasted with a service. A good here is defined as a physical product that one can deliver to a buyer. The service is not an object, but an action that benefits someone. A more general term that preserves the distinction between goods and services is 'commodities'. In microeconomicss 'good' is often used in this more inclusive sense of a commodity.








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