Difference between Final Goods and Intermediate Goods

Final goods are referred to as those goods which do not require further processing. These goods are also known as consumer goods and are produced for the purpose of direct consumption by the end consumer.

Intermediate goods are referred to as those goods that are used by businesses in producing goods or services. These goods are also known as producer goods.

In other words, intermediate goods are used for producing final goods or consumer goods or it can be said that they act as inputs in other goods and constitute the final goods as an ingredient.

Let us now look into the points of difference between the final goods and intermediate goods.

Final Goods

Intermediate Goods

Definition

Final goods are those goods that are manufactured to be consumed directly by the consumer

Intermediate goods are referred to as those goods that are used for producing final goods

Nature

Final goods are finished goods

Intermediate goods are goods that are partly prepared and can be referred to as unfinished goods or partly finished goods

Uses

Final goods are available for consumption or can be used for capital formation

Intermediate goods are available for reselling by the firms for generating profit

Processing needed

Final goods are ready to be consumed and therefore do not require any further processing

Intermediate goods require further processing in order to be consumed

Impact on National Income

Final goods are considered to be a part of national income and have an impact on the national income

Intermediate goods are not included in the national income and therefore have no impact

Demand for goods

Final goods have inherent demand or direct demand

Intermediate goods do not have natural demand and the demand is derived based on user preference

This article was all about the topic of Difference between Final Goods and Intermediate Goods, which is an important topic for Commerce students. For more such interesting articles, stay tuned to BYJU’S.

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