Types of Goods

A product goes through several stages of the production process. When a product becomes part of another production process, its characteristics change and another product is formed. The different types of goods are final goods and intermediate goods.

Final Goods

Goods and services that are used for final use are called final goods. Final goods are goods that do not enter the production process again. Once the final good is sold, it cannot become part of another production process. Thus, they go out of the active economic flow. It is not the nature of the product, but the nature of the economic process through which it passes that makes a product a final good. Final products do not undergo further transformation in the economic process. Final goods can be divided into two categories: consumer goods and capital goods.

Consumer Goods

Consumer goods are products that are purchased and used by the final consumer. Items that are used directly for consumption are known as consumer products. Consumer products are also called consumer goods.

Example - Goods and services such as food, clothing, entertainment, etc. are purchased and used by the final consumer.

Capital Goods

Once the producer buys such goods, they can be used continuously in the production process. Capital goods are final goods that are used to produce other goods. They last longer and, although they are not converted into another product, they can help in the production process of another product. Although they are final goods, they are not consumed in a single consumption. Products known as the backbone of the production process are capital goods. Once the producer buys them, they can be used continuously in the production process. Due to natural wear and tear, they need to be repaired or replaced over time.

Example - Buildings, machinery, equipment, etc.

Intermediate Goods

Some of the goods and services formed through the production process may not be final consumer goods or capital goods. Such products are used as raw materials by other producers. These are known as Intermediate Goods. Intermediate Goods are products that are used as raw materials for the production of other goods but are not final products. Intermediate goods are products that are used to produce final goods and are re-used in the production process.

Example - Steel sheets used to make vehicles, copper to make pots

Terms related to Types of Goods

Consumer Durables - Products that last a long time but need to be renewed and replaced like capital goods are called Consumer Durables.

Stock - In economics, some variables are defined on the basis of a certain period of time. Those that can be measured and quantified over a certain period of time are called flows. Flows are those that occur within a certain time frame. Example - Income, production, profit, etc.

Flow - Stocks are those that can be measured and quantified at a certain point in time. Example - A person's bank deposits, wealth, etc. on 01.01.2025.