Classification of goods

Classification of goods

  

Free goods and economic goods

        Free goods are the gift of nature and these goods are unlimited in supply. Free goods are available in abundance and do not involve any cost of production. Therefore, we do not have to pay a price. Free goods have no opportunity cost. Examples are air, sunlight, river water, ice in Polar Regions… etc.

        Economic goods are limited in supply and these goods are man-made goods. These goods require cost of production and needs human effort to produce. Therefore we have to pay a price. Economic goods have opportunity cost. Examples are computer, books, pen, mobile phones…etc.

Consumer goods and capital goods

        Consumer goods are the goods used for our direct consumption. These goods are consumed for our own sake. Capital goods are used to produce consumer goods. The demand for consumer goods is direct demand. Examples are private car, Home furniture, mobile phones… etc.

        Producer goods are the goods used to produce other goods and services. These goods are not wanted for their own sake. Producer goods are also known as capital goods. The demand for capital goods is derived demand or indirect demand. Examples are machinery, office building …etc.

Durable consumer goods and non-durable consumer goods

        Durable consumer goods are the consumer goods which last for a long period of time. Examples include, Computer, TV...etc.

        Non-durable consumer goods are the consumer goods which do not last for a long period of time. These goods have a very short life. Examples include, foods, pencils...etc.

Merit goods and public goods

Merit goods are the goods the government considers every citizen ought to have. Government should play an important role in providing merit goods and services as these goods cannot be provided fairly by the private sector. Example: Education and health services.

Public goods are the goods consumption by one individual cannot be restricted by the consumption of another. It means these goods are non-exhaustible (non-rivalry) and non-excludable.  These goods are provided by government. Example: Street light, traffic lights, parks, roads, harbours...etc.