economics 1 Good Types of goods 2 Commodity Characteristics of commodity by jesse996

VIEWS: 111 PAGES: 6

More Info
									       1.Good . Types of goods

       2.Commodity. Characteristics of commodity.

       3.Historical origins of commodity trade

       4. Forms of commodity trade. Pseudo-commodities

                                     1.Good. Types of goods

         A good is product that can be used to satisfy some desire or need. More narrowly but
commonly, a good is a tangible physical product that can be contrasted with a service which is
intangible. As such, it is capable of being delivered to a purchaser and involves the transfer of
ownership from seller to customer. For example, an apple is a tangible good, as opposed to a
haircut, which is an (intangible) service. .

        A good is any object that increases the utility of the consumer/ product directly or
indirectly. 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 as listed
below:



A private good is defined as a good that exhibits these properties:

      Excludable - it is reasonably possible to prevent a class of consumers (e.g. those who
       have not paid for it) from consuming the good.
      Rivalrous - consumptions by one consumer prevents simultaneous consumption by other
       consumers. Private goods satisfies an individual want while public good satisfies a
       collective want of the society.

A private good is the opposite of a public good, as they are almost exclusively made for profit.

An example of the private good is bread: bread eaten by a given person cannot be consumed by
another (rivalry), and it is easy for a baker to refuse to trade a loaf (exclusive).

A public good is a good that is non-rivalrous and non-excludable. Non-rivalry means that
consumption of the good by one individual does not reduce availability of the good for
consumption by others; and non-excludability that no one can be effectively excluded from using
the good.[1] In the real world, there may be no such thing as an absolutely non-rivaled and non-
                                                                                                    2

excludable good; but economists think that some goods approximate the concept closely enough

For example, if one individual visits a doctor there is one less doctor's visit for everyone else,
and it is possible to exclude others from visiting the doctor. This makes doctor visits a rivaled
and excludable private good. Conversely, breathing air does not significantly reduce the amount
of air available to others, and people cannot be effectively excluded from using the air. This
makes air a public good, albeit one that is economically trivial, since air is a free good. A less
straight-forward example is the exchange of MP3 music files on the internet: the use of these
files by any one person does not restrict the use by anyone else and there is little effective control
over the exchange of these music files and photo files.

Types of goods

                                Excludable                 Non-excludable

                                                   Common goods
                                                   (Common-pool
                             Private goods
                                                     resources)
       Rivalrous          food, clothing, cars,
                                                 fish stocks, timber,
                          personal electronics
                                                coal, national health
                                                        service

                              Club goods                   Public goods
                            cinemas, private                free-to-air
    Non-rivalrous
                             parks, satellite             television, air,
                               television                national defense

:Complementary goods:

      Peanut butter and jelly
      Printers and ink cartridges
      DVD players and DVDs
      Computer hardware and computer software

  Substitute good Classic examples of substitute goods include margarine and butter, or
petroleum and natural gas (used for heating or electricity). The fact that one good is substitutable
for another has immediate economic consequences: insofar as one good can be substituted for
another, the demand for the two kinds of good will be bound together by the fact that customers
can trade off one good for the other if it becomes advantageous to do so
free good vs. positional good

 A durable good or a hard good is a good that does not quickly wear out, or more specifically,
one that yields utility over time rather than being completely consumed in one use. Items like
bricks or jewelery could be considered perfectly durable goods, because they should theoretically
never wear out. Highly durable goods such as refrigerators, cars, or mobile phones usually
continue to be useful for three or more years of use[1], so durable goods are typically
characterized by long periods between successive purchases.

Examples of consumer durable goods include cars, household goods (home appliances,
                                                                                                 3

Consumer electronics, furniture, etc.), sports equipment, and toys.

Nondurable goods or soft goods (consumables) are the opposite of durable goods. They may be
defined either as goods that are immediately consumed in one use or ones that have a lifespan of
less than 3 years.

Examples of nondurable goods include fast-moving consumer goods such as cosmetics and
cleaning products, food, fuel, office supplies, packaging and containers, paper and paper
products, personal products, rubber, plastics, textiles, clothing and footwear.

While durable goods can usually be rented as well as bought, nondurable goods can generally
not be rented. While buying Durable goods comes under the category of Investment demand of
Goods, buying Non-Durables comes under the category of Consumption demand of Goods

Intermediate goods or producer goods are goods used as inputs in the production of other
goods, such as partly finished goods. Also, they are goods used in production of final goods.[1] A
firm may make then use intermediate goods, or make then sell, or buy then use them. In the
production process, intermediate goods either become part of the final product, or are changed
beyond recognition in the process.

The use of the term "intermediate goods" can be slightly misleading, since in advanced
economies about half of the value of intermediate inputs consist of services.

Examples

      Sugar - sugar is used as a final good (when it is sold as sugar in the supermarket) or as an
       input (when it is used to make candy)
      Steel - a raw material used in the production of many other goods, such as bicycles.
      Car engines - Some firms make and use their own, others buy them from other producers
       as an intermediate good, then use them in their own car.
      paint, plywood, pipe & tube, ancillary parts, etc.
      An interesting example is the use of chlorine in the production of polyurethane. Rock salt
       is electrolyzed to produce chlorine, which is reacted with carbon monoxide to give
       phosgene. Phosgene, a chlorine compound, and a diamine are then reacted to produce a
       diisocyanate and hydrochloric acid that is neutralized in situ. The diisocyanate reacts with
       a diol to produce polyurethane, which contains no chlorine. Chlorine is used because
       chlorine is electronegative enough to produce an isocyanate, but does not become a part
       of the product; it lowers the atom economy.



2.Commodity. Characteristics of commodity.
        In classical political economy and especially Karl Marx's critique of political economy, a
commodity is any good or service produced by human labour and offered as a product for
general sale on the market. Some other priced goods are also treated as commodities, e.g. human
labor-power, works of art and natural resources, even although they may not be produced
specifically for the market, or be non-reproducible goods.

Marx's analysis of the commodity is intended to help solve the problem of what establishes the
economic value of goods, using the labor theory of value. This problem was extensively debated
by Adam Smith, David Ricardo and Karl Rodbertus-Jagetzow among others. Value and price are
                                                                                                      4
not equivalent terms in economics, and theorising the specific relationship of value to market
price has been a challenge for both liberal and Marxist economists.

Characteristics of commodity

"Man really attains the state of complete humanity when he produces, without being forced by
physical need to sell himself as a commodity."— Che Guevara [1]

     In Marx's theory, a commodity is something that is bought and sold. It has value, which
represents a quantity of human labor. Because it has value, implies that people try to economise
its use. A commodity also has a u
								
To top