Everything about Goods totally explained
A
good or
commodity in
economics is any object or service that increases
utility, directly or indirectly, not to be confused with good in a moral or ethical sense (see
Utilitarianism and
consequentialist ethical theory). A good that can't be used by
consumers directly, such as an "office building" or "capital equipment", can also be referred to as a good as an indirect source of utility through resale value or as a source of income. A 'good' in economic usage has taken a divergence from root meanings associated with social moralities and legalities, but still retains the positive outlook of the word. For example, if an object or service is sold for a positive price, then it's a "good" since the purchaser considers the utility of the object or service more valuable than the money. '.
In
macroeconomics and
accounting, a good is contrasted with a
service. A good here's defined as a physical (tangible)
product capable of being delivered to a purchaser and involves the transfer of
ownership from
seller to
customer, say an apple, as opposed to an (intangible) service, say a haircut. A more general term that preserves the distinction between goods and services is 'commodities'. In
microeconomics a 'good' is often used in this more inclusive sense of the word.
Utility characteristics of goods
A
good is an object whose consumption increases the
utility of the consumer, for which the quantity demanded exceeds the quantity supplied at zero price.
Goods are usually modeled as having
decreasing marginal utility. The first
car an individual purchases is very valuable; the fourth is much less useful. Thus, in these and similar goods, the marginal utility of additional units approaches zero as the quantity consumed increases. Assuming that one can't re-sell it, there's a point at which a consumer would decline to purchase an additional car, even at a price very near zero. This margin of utility is the consumer's satiation point.
In some cases, such as the above example of a car, the lower limit of utility as quantity increases is zero. In other goods, the utility of a good can cross zero, changing from positive to negative through time. This means that what initially is a good can become a bad if too much of it's consumed. For example, shots of
vodka can have positive utility, but beyond some point, additional units make the consumer less happy, that is, they wouldn't be chosen or too many trips to the all-you-can-eat-pasta bar which could create all kinds of gastrointestinal disturbances.
In economics a
bad is the opposite of a good. Ultimately, whether an object is a good or a bad depends on each individual consumer, and therefore, it's important to realize that not all goods are good all the time, and not all goods are goods to all people.
Types of goods
Goods can be defined in a variety of ways, depending on a number a characteristics, these are listed in the table below;
Further Information
Get more info on 'Goods'.
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