Question

Discuss the meaning of consumption goods and capital goods.

Answer 1

Consumption goods are those goods which are directly used for satisfaction of human wants. These are not used in the production of other goods.Consumption goods are meant for final consumption as final goods. Example: Ice cream and milk used by households.

Capital goods are those goods which are used in the process of production for several years and are of higher value. These goods are fixed assets of the producers. Use of these goods leads to depreciation. Example: Plant and machinery.