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Sources of Energy

Coal purchase...

Question

Coal purchased by a factory is a final good or an intermediate good?

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Solution

Dear Student,

If a good is purchased with the purpose to use it for production of final product then it is an intermediate good .

Since coal is majorly used to generate electricity and thus is used for production of final good , therefore it is a an intermediate good.

Else, if Coal is purchased an directly sold in the market it is a Finished Good;

Regards,

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Q. Classify the following as final goods or intermediate goods.
(i) Machine purchased by a firm.
(ii) Soft drinks purchased by the school canteen.
(iii) Clothes purchased by an individual.
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