Purchase of a car always means the purchase of a final good. Do you agree?

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Solution

No. It depends on the end-use of the car. If it is purchased by a household, it is a final good. It is a consumer durable.

If it is purchased by taxi-operators, then it is a final good. It is to be finally used by the producer as a fixed asset.

However, if the car is purchased by a retail dealer from the factory for the purpose of resale, it is to be treated as an intermediate good.

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Should purchase of wheat in the wholesale market be treated as the purchase of a final good?

Classify the folllowing goods into intermediate goods and final goods:

(i) Milk purchased by a household

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(iiii) Purchase of an air conditioner for use in a shop

(iv) Cloth used for making a sofa-set by the carpenter

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