Distinguish between Final goods and Intermediate goods

Question 2. Distinguish between Final goods and Intermediate goods?
Class  Class 12
Subject Economics (Macroeconomics)
Category Class 12 Economics Solutions Sandeep garg

Q.2 Distinguish between Final goods and Intermediate goods. Give examples.
“OR”
Explain the basis of classifying goods into intermediate and final goods. Give suitable examples.

Solution :- Final good and intermediate good can only be differentiated on the basis of the end use of the good. The goods which are used up in the same year are also classified as intermediate goods.




BASIS FINAL GOOD INTERMEDIATE GOOD
Nature They are included in both national and domestic income. They are neither included in national nor in domestic income.
Demand They have “Direct Demand”. They have “Derived Demand”.
Value addition They are ready for use so NO VALUE to be added. They are not ready for use so VALUE is to be added.
Production boundary They have crossed the production boundary. They have not crossed the production boundary.

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