Many terms are used in
ordinary speech are also used in economics but they are used in a different
sense. Therefore it is essential to explain those terms not only for clear
thinking but also for correct understanding of the language used in books on
Economics. Following some terms which are frequently uses in economics have
been explained in what sense they are used in Economics.
Goods:
Anything that can satisfy a
human want is called a ''good" in economics. Goods may be commodity or
services; they satisfy human wants which are the starting point of all economic
activity.
Kinds of Goods:
The classification of goods
cans be done in different ways as discussed below.
1) Economic goods and Free
Goods:
Free goods are those goods
that exist in such plenty that can be used as much as we like. They are gift of
nature and used without payment e.g. Air, sunshine etc. with out payment e.g.
Air, sunshine etc
The economic goods, on the
other hand, are scarce and can be had only on payment. They are limited and
generally man made and hence those can be available only on payment. In Economics,
we are concerned with economic goods. Economic goods mean wealth. Thus there
would have been no science of economics if all goods had been free goods. The
distinction between free goods and economic roods, of course is not permanent,
for instance air is free goods but when we receive it under fan it is economic
goods.
2) Consumption Goods and
Capital Goods:
Consumption goods are those
which yield, satisfaction directly. They are used by consumer directly to
satisfy the wants e.g. food, clothing, etc. (First order goods).
Capital goods are these
goods which help us to produce other goods e.g. machinery, tools etc. They are
also termed as second order goods. Similarly some goods especially raw
materials are called as intermediate goods. For instance machinery fixed in
factory is capital gods but the cotton used as raw material is intermediate
goods. Thus, the consumption goods are also referred as consumer’s good while
capital goods and intermediate goods are termed as producers goods.
3) Material Goods and Non -
material Goods:
Material good are concrete
in nature e.g. building, furniture, books etc.
While different services a
human being is using called non material services. E.g. services of teachers,
Doctor, advocate etc.
4) Transferable and Non
Transferable Goods:
Most of the material goods
can be transferable. Here transferable means change in ownership e.g. land,
vehicle etc.
On the contrary
non-transferable goods referred to personal qualities like skill, intelligence
etc. which never be transferred.
5) Personal and Impersonal
Goods:
Personal goods refer to
personal qualities of a person and they are non material and exist inside him
e.g. skill, intelligence etc. They are also called as internal goods.
The impersonal goods are
generally material goods and not personal goods. For example land furniture,
vehicle etc. They are external and lie outside and hence they are also called
external goods.
In short, personal goods
indicate “what he is” and impersonal goods” What he has”
6) Private Goods and Public
Goods:
Private goods refer to
individual property e.g. Building land, vehicle etc. which are possessed by an
individual.
The public goods like
railway, roads, dams etc. are owned by society. They are common to all and
owned by society collectively.
7) Necessaries, Comforts and
Luxuries:
Goods can be classified as
Necessaries – like food,
cloth, shelter, etc.
Comfort- table, electricity
and
Luxuries – Air Condition,
vehicle, T.V., Gold & Silver, Jewellery etc.
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