Question

Which among the following are final goods and which are intermediate goods? Give reasons.
(a) Milk purchased by a tea stall
(b) Bus purchased by a school
(c) Juice purchased by a student from the school canteen.

Answer 1

(a) Milk purchased by a tea stall is intermediate good as it is used as input in the production process

(b) Bus purchased by a school is a final good as it is investment expenditure and is a capital good.

(c) Juice purchased by a student from school canteen is final good as it ends up in final consumption and this is an perfect example of a final good.