A good is a material thing used to satisfy a human want or in other words, a good is a material thing which has utility to satisfy any human want. For example, chair, table, book, table lamp, paper, pen etc. are all goods which are used to satisfy different wants.
Economic goods can be divided into these categories:
Consumer goods are the things which have utility to satisfy human wants. These goods are directly used by the people themselves to satisfy wants. For example, food, shelter, clothing, T.V., radio, refrigerator etc. are goods while the services are of doctors, lawyers, engineers etc.
(a) Single-use Consumers’ Goods:
These are goods which are used up in a single act of consumption. Such goods are foodstuffs, cigarettes, matches, fuel, etc. They are the articles of direct consumption because they satisfy human want directly. Similarly, the services of all types such as those of doctors, actors, lawyers, waiters, etc. are included under single use goods.
(b) Durable-use Consumers’ Goods:
These goods can be used for a considerable period of time. It is immaterial whether the period is short or long. Such goods are pens, tooth brushes, clothes, scooters, TV sets, etc.
Capital goods do not directly satisfy human wants. These goods are used to produce more goods or, in other words, capital goods are a source of generating income for the owner, for example, machinery, raw material, manufactured goods as inventories in shops are capital goods.
There are three types of capital goods.
(i) Raw material e. g cotton, rubber, petroleum etc.
(ii) Semi manufactured goods e. g. cotton yarn. These are made of raw material and are used to make fully manufactured goods.
(iii) Fully manufactured goods e.g. building, machinery, equipment etc.
To distinguish capital goods from consumer goods we have to see as to ” how is it being used? If we use it to satisfy our wants it is a consumer good and if it is being used to generate income it will be a capital goods. For example, our own car is. a consumer good because it directly satisfies our want for transportation. But if we convert it into a taxi, it will
The use of a good decides whether it be called consumer good or producer good. A good may be a consumer good al one time and in one use while it is producer good at a different time and in another use. For example, a car when used to visit a friend will be considered as consumer good but when the same car is used as taxi, it will be called producer good.
Non-Economic Goods/Free Goods:
The goods which are not scarce in relation to demand for them are called free goods or non-economic goods. Many natural goods are free e.g. air, sunshine, wild flowers. They are not bought and sold and they do not create economic problem.
The goods that are scarce in relation to demand are called Economic goods. They have price and bought and sold in the market.
A good may be free at one place and time but an economic good at some different time and place. For example, water is free good to take bath in the river, but when it is supplied to houses in the town, it becomes an economic good.
Private Goods are excludable goods i.e. the people who do not pay for them can be excluded from their use; A car is a private good
A public good is that whose benefits are indivisible i.e. when this is provided to some people others cannot be excluded from using it Highways, national defense, pollution reducing programs parks etc. are public goods. A particular person cannot claim exclusive right to use it.
Common goods are non-excludable and rival. Because of these traits, common goods are easily over-consumed, leading to a phenomenon called “tragedy of the commons.” In this situation, people withdraw resources to secure short-term gains without regard for the long-term consequences. A classic example of a common good are fish stocks in international waters. No one is excluded from fishing, but as people withdraw fish without limits being imposed, the stocks for later fishermen are depleted.
Club goods are excludable but non-rival. This type of good often requires a “membership” payment in order to enjoy the benefits of the goods. Non-payers can be prevented from access to the goods. Cable television is a classic example. It requires a monthly fee, but is non-rival after the payment.
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