The economic wealth or well-being of a nation does not rely upon the meagre ownership or possession of resources. The point is how these resources are utilised in causing a flow of manufacturing and as a result, how income and wealth are influenced from that procedure.
What are Final Goods?
In our modern economic position, the flow of manufacturing emerges out of the manufacturing of goods like commodities and services by millions of small and large firms. These firms range from giant enterprises (that employ a large number of people) to single entrepreneur firms.
Each manufacturer of goods plans to sell their output. It can range from small articles like buttons or pins to the bigger ones like helicopters, automobiles, machinery, or any other services like those of a lawyer, a doctor, or a financial counsellor. Such commodities and services are manufactured for the customers.
- A customer can be an individual or a firm. The commodities or service bought by that organisation might either be for the end-user or for the use in further manufacturing.
- When it is utilised in further manufacturing, it often loses its features as that specific commodity and modifies through a productive procedure into another commodity.
- Hence, a farmer manufacturing wool sells it to a spinning mill where the raw wool modifies to form yarn. Later, the yarn is sold to a textile mill, where it modifies into cloth through a productive process. The cloth further modifies into an article of clothing, which is then ready to be sold to the end-user.
- The article meant for the end-user does not pass through any more phases of manufacturing or modifications. Thus, it 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, and services like recreation that are utilised when bought by their ultimate customers are known as consumption goods or consumer goods.
This concept is about the Basic Concepts of Macroeconomics. To know more about such concepts, stay tuned to BYJU’S.