Public goods and type of goods, Slides of Economics

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PUBLIC GOODS

&OTHER GOODS

….

What are Public goods?

• (^) Public goods are materials, products or services that anyone in a given society can access. Government agencies typically provide and distribute public goods.
• (^) Economists categorize a good as a public good if it is both non-excludable and non-rivalrous. Non-excludable means all individuals and groups of people within that society have access to the items or services, while non- rivalrous refers to how the use of the item or service does not lead to a shortage of that good for others.

OTHER GOODS

CAPITAL GOODS

• (^) Capital goods are physical assets that a company uses in the process to manufacture products and services that consumers will later use.
• (^) Capital goods are also produced for the service sector, including hair clippers used by hairstylists and coffee machines for coffee shops.

Intermediate goods

• (^) Intermediate goods are products that are used in the production process to make other goods, which are ultimately sold to consumers.
• (^) When calculating GDP, economists use the value-added approach with intermediate goods to guarantee that they are not counted twice—once when purchased, and once when the final good is sold.

Examples of Intermediate goods

• (^) A business could incorporate a car component a car component into a vehicle, which would be an intermediate goods or sell the car components to the consumer as a spare part which would be a final goods.
• (^) Food ingredients
• (^) Construction material

Examples of FMCG(s)

• (^) Food and drink products
• (^) Cleaning products
• (^) Toothpaste, etc.

Luxury goods

• (^) The private goods that are more expensive than normal goods.
• (^) When a consumer income rises they tend to spend a higher percentage of their income on a luxury good.
• (^) When their income facts they tend to purchase fewer luxury goods. Demand of luxury goods is more volatile than normal goods.

Inferior goods

• (^) They are opposite to luxury, inferior goods are private goods that are cheaper than normal goods.
• (^) When a consumer’s income fall, they often buys more inferior goods.
• (^) Many companies manufactures various grades of goods to target different consumers segments.
• (^) Understanding the differences in consumer behaviour across segments can help you to create more effetive marketing strategy.

Example of inferior goods

• (^) Canned vegetables
• (^) Instant coffee or generic brands, etc.