The economic wealth or well-being of a nation thus does not certainly rely upon the meagre ownership or possession of resources; the point is how these resources are utilized in causing a flow of manufacturing and how, as a result, income and wealth are caused from that procedure.
What are Final Goods?
In our modern economic position this flow of manufacturing emerges out of manufacturing of goods – commodities and services by millions of firms small and large. These firms range from giant enterprises employing a large number of people to single entrepreneur firms. Each manufacturer of goods plans to sell their output. From the smallest articles like buttons or pins to the biggest ones like helicopters, automobiles, machinery or any saleable service like that of the lawyer, the doctor or the financial counsellor – the commodities and services manufactured are to be sold to the customers. The customer may, in turn,
- Be an individual or a firm and the commodities or service bought by that organization might be for end use or for the use in further manufacturing
- When it is utilized in further manufacturing it often loses its features as that specific commodity and is modified through a productive procedure into another commodity
- Hence, a farmer manufacturing wool sells it to a spinning mill where the raw wool encounters modification to yarn; the yarn is, later, being sold to a textile mill where, through the productive procedure, it is modified into cloth; the cloth is, in turn, modified through another productive procedure into an article of clothing which is then ready to be sold to the customers for the end use.
- Such an article that is meant for end use and will not pass through any more phases of manufacturing or modifications is termed as a final good
What are Consumer Goods?
Out of the final goods, we can differentiate between consumption goods and capital goods. Goods such as food and clothing, services like recreation that are utilised when bought by their ultimate customers are called consumption goods or consumer goods. (This also incorporates services which are utilised but for benefit we may term them as consumer goods)
The above mentioned is the concept that is explained in detail about the Basic Concepts of Macroeconomics. To know more, stay tuned to BYJU’S.