Goods

|alt=Cardboard boxes stacked in a warehouse In certain economic contexts, goods are anything that is good, usually in the sense that it provides welfare or utility to someone. Goods can be contrasted with bads, i.e. things that provide negative value for users, like chores or waste products. A bad lowers a consumer's overall welfare. Economics focuses on the study of economic goods, i.e. goods that are scarce; in other words, producing the good requires expending effort or resources. Economic goods contrast with free goods such as air, for which there is an unlimited supply. Goods are the result of the secondary sector of the economy which involves the transformation of raw materials or intermediate goods into goods.

|alt=Cardboard boxes stacked in a warehouse In certain economic contexts, goods are anything that is good, usually in the sense that it provides welfare or utility to someone. Goods can be contrasted with bads, i.e. things that provide negative value for users, like chores or waste products. A bad lowers a consumer's overall welfare. Economics focuses on the study of economic goods, i.e. goods that are scarce; in other words, producing the good requires expending effort or resources. Economic goods contrast with free goods such as air, for which there is an unlimited supply. Goods are the result of the secondary sector of the economy which involves the transformation of raw materials or intermediate goods into goods.

Types

, including normal goods (which has subcategories of necessities and luxury goods) and inferior goods. Goods' diversity allows for their classification into different categories based on distinctive characteristics, such as tangibility and (ordinal) relative elasticity. A tangible good like an apple differs from an intangible good like information due to the impossibility of a person to physically hold the latter, whereas the former occupies physical space. Intangible goods differ from services in that final (intangible) goods are transferable and can be traded, whereas a service cannot. Price elasticity also differentiates types of goods. An elastic good is one for which there is a relatively large change in quantity due to a relatively small change in price, and therefore is likely to be part of a family of substitute goods; for example, as pen prices rise, consumers might buy more pencils instead. An inelastic good is one for which there are few or no substitutes, such as tickets to major sporting events, original works by famous artists, and prescription medicine such as insulin. Complementary goods are generally more inelastic than goods in a family of substitutes. For example, if a rise in the price of beef results in a decrease in the quantity of beef demanded, it is likely that the quantity of hamburger buns demanded will also drop, despite no change in buns' prices. This is because hamburger buns and beef (in Western culture) are complementary goods. Goods considered complements or substitutes are relative associations and should not be understood in a vacuum. The degree to which a good is a substitute or a complement depends on its relationship to other goods, rather than an intrinsic characteristic, and can be measured as cross elasticity of demand by employing statistical techniques such as covariance and correlation.

Notes

External links

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