Discuss the meaning of Consumption goods and Capital goods

Q.5 Discuss the meaning of consumption goods and capital goods.

Solution:-

CONSUMPTION GOODS:-

Consumption Goods refers to those goods and services which are used by the consumer for consumption purpose. They satisfy the needs of the consumers directly. For example: – notebooks, pens, pencils etc….

Consumption goods can further be sub classified as:

1. DURABLE GOODS: These refer to those goods which can be used again and again for more than a year. For example: Dining table, Refrigerator, etc….
2. SEMI- DURABLE GOODS: These refer to those goods which can be used within a year. For example: Clothes, Shoes, etc….
3. NON- DURABLE GOODS: These refer to those goods which are used at the time of consuming it. For example: Milk, Bread, etc….
4. SERVICES: These refer to the intangible (unseen) goods which directly satisfy consumer’s demand at the time of using it. For example: Banking, Teaching, etc….

CAPITAL GOODS:-

Capital Goods refer to those final goods which are used in producing more goods and services. For example: Machines, Equipments, etc….

Capital goods are used in future for further production and have a long life expectancy.

They have “Derived Demand” as their demand depends upon the demand of consumer final goods.

They do not lose their identity in the production process. They need repair and replacement over a certain period of time.

Related Questions – Sandeep Garg Macroeconomics Class 12 Solutions Basic Concepts of Macroeconomics

• Distinguish between Factor income and Transfer income.
• Distinguish between Final goods and Intermediate goods.
• Machine purchased is always a final good.” Do you agree?
• Which of the following expenditure are Intermediate or Final goods?
• Discuss the meaning of Consumption goods and Capital goods.
• Distinguish between Consumer goods and Capital goods.