Explain the basis of classifying goods into intermediate and final goods. Give suitable examples.
Explain the basis of classifying goods into intermediate and final goods. Give suitable examples.
Goods which are used by the producers in the process of production as raw material or are purchased for resale are known as intermediate goods. Example: Shirts purchased by a firm for resale are intermediate goods.
Goods which are used by final users are known as final goods. These are not resold and see no value addition. Example: A shirt purchased by a customer at a shop is a final good.
'End-use' of the goods is the basis of classifying goods as final and intermediate goods. Goods are final if they have crossed the boundary line of production and are ready for use by their final users (consumers or producers). Goods are intermediate if they are within the boundary line of production and are not ready for use by their final users. Value is yet to be added to intermediate goods.
Goods which are used by the producers in the process of production as raw material or are purchased for resale are known as intermediate goods. Example: Shirts purchased by a firm for resale are intermediate goods.
Goods which are used by final users are known as final goods. These are not resold and see no value addition. Example: A shirt purchased by a customer at a shop is a final good.
'End-use' of the goods is the basis of classifying goods as final and intermediate goods. Goods are final if they have crossed the boundary line of production and are ready for use by their final users (consumers or producers). Goods are intermediate if they are within the boundary line of production and are not ready for use by their final users. Value is yet to be added to intermediate goods.
