Final goods are referred to as those goods which do not require further processing. These goods are also known as consumer goods and are produced for the purpose of direct consumption by the end consumer.
In simple words, final goods are commodities that are manufactured by a company for subsequent consumption by the consumer. These goods satisfy consumer needs or want.
Final goods consist of :
- Goods that are purchased by the households meant for final consumption. For example, television, milk, ready to eat foods, medicines.
- Goods that are purchased by firms for investment purposes or for capital formation
Classification of Final Goods
Final goods can be classified into two broad parameters
A. Buying Habits
Let us know more in detail about these parameters
A. Buying Habits
The following categories of final goods can be classified, based on consumer buying habits
1. Convenience Goods
Convenience goods are those goods which are available and are regularly consumed. Examples of such goods are goods that are regularly used such as milk, bread, pulses etc.
2. Speciality Goods
Speciality goods are consumed by the upper class of society, as these are mostly goods that provide luxury and are expensive. These goods are not a necessity; rather, the purchase is made based on the user desires. The examples of such goods are antique cars, jewellery, etc.
3. Shopping Goods
These types of goods require more planning on the consumer’s part for purchase and are durable and more expensive than the convenience goods. Examples of such goods are refrigerators, televisions, laptops, etc.
4. Unsought Goods
These types of goods are available in the market but are not purchased often by the consumers. The examples of such goods are fire extinguishers, snow jackets, etc.
Based on the durability of goods, there are three types of goods
- Non Durable goods
- Durable goods
Services are intangible in nature, but they provide satisfaction to the consumers. They are variable and inseparable. Examples of service include salon services, automobile repair services, etc.
Non Durable Goods are goods that have a finite life span and are to be consumed as soon as possible. For example, milk, beverages, etc.
Durable goods are those products that have a higher lifespan than non-durable goods, and the examples are cars, equipment, etc.
Final Goods and calculation of GDP
When calculating GDP, only the newly produced goods and services are considered as Final goods as it is done to avoid repeated counting of goods that are used previously.
This concludes the concept of final goods. For more such interesting concepts on Economics for Class 12, stay tuned to CoolGyan’S.