Final goods are referred to as those goods that 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.
In simple words, final goods are commodities that are manufactured by a company for a subsequent consumption by the consumer. These goods satisfy the needs or wants of a consumer.
Final goods consist of the following:
- Goods that are purchased by the households are meant for the final consumption. For example, television, milk, ready to eat foods, medicines, and more.
- It also consists of the goods that are purchased by the firms for investment purposes or for capital formation.
Classification of Final Goods
Final goods can be classified into the following two broad parameters:
- Buying habits
Let us know more in detail about these parameters.
The following categories of final goods can be classified based on the buying habits of a consumer.
1. Convenience goods
Convenience goods are those goods that are available and regularly consumed. Examples of such goods are the goods that are regularly used such as milk, bread, pulses, and more.
2. Specialty goods
Specialty goods are consumed by the upper class of the society, as these are mostly goods that provide luxury and are expensive. These goods are not a necessity; rather, the purchase is made based on the user’s desires. Examples of such goods are antique cars, jewellery, and more.
3. Shopping goods
These types of goods require more planning on the consumer’s part for purchase, are durable and, more expensive than the convenience goods. Examples of such goods are refrigerators, televisions, laptops, and more.
4. Unsought goods
These types of goods are available in the market but are not purchased often by the consumers. Examples of such goods are fire extinguishers, snow jackets, and more.
Based on the durability of goods, there are three types of goods.
- Non-durable goods
- Durable goods
Services are intangible in nature, but they provide satisfaction to the consumers. They are variable and inseparable. Examples of service include salon services, automobile repair services, and more.
Non-durable goods are goods that have a finite lifespan and are to be consumed as soon as possible. For example, milk, beverages, and more.
Durable goods are those goods that have a higher lifespan than non-durable goods. For example, cars, equipment, and more.
Final Goods and Calculation of GDP
When calculating the GDP, only the newly produced goods and services are considered as final goods. It is done to avoid the repeated counting of goods that are used previously.
This concludes the concept of final goods. For more such interesting concepts on economics for class 12, stay tuned to BYJU’S.