Intermediate good

Article summary

is an example of an intermediate good, and is used in the production of the final good, the assembled automobile. Intermediate goods, producer goods, or semi-finished products are goods used as inputs in the production of other goods, including final goods. A firm may make and then use intermediate goods, or make and 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. This means intermediate goods are resold among industries. Intermediate goods are not counted in a country's GDP, as that would mean double counting, because the value of the intermediate good is included in the value of the final good. The value-added method can be used to calculate the amount of intermediate goods incorporated into GDP. This approach counts every phase of processing included in production of final goods. Characterization of intermediate goods as physical goods can be misleading, since, in advanced economies, about half of the value of intermediate inputs consist of services. Intermediate goods generally can be made and used in three different ways. First, a company can make and use its own intermediate goods. Second, a company can manufacture intermediate goods and sell them to others.…

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