Information about Goods

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 cannot 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 does not imply moral acceptance or even legality.

If an object or service is sold for a positive price, then it is a good since the purchaser considers the utility of the object or service more valuable than the money.Some things are useful but not scarce such as air and are referred to as free goods.

In macroeconomics and accounting, a good is contrasted with a service. A good here is defined as a physical (tangible) product capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer, as opposed to an (intangible) service. 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 a commodity.

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 cannot re-sell it, there is a point at which a consumer would decline to purchase an additional car, even at a price very near zero. This 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 is consumed. For example, shots of vodka can have positive utility, but beyond some point, additional units make the consumer less happy, that is, they would not be chosen.

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 is 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;

Types of goods public good - private good - common good - common-pool resource - club good - anti-rival goods rivalrous good and non-excludable good complement good vs. substitute good free good vs. scarce good, positional good (non-)durable good - intermediate good (producer good) - final good - consumer good - capital good inferior good - normal good - ordinary good - Giffen good - luxury good - Veblen good - superior good search good - (post-)experience good - merit good - credence good - demerit good

See also

• List of economics topics
• Economic Problem
• Freight
• Cargo
• Shopping

References

• Bannock, Graham et al. (1997). Dictionary of Economics, Penguin Books.
• Milgate, Murray (1987), "goods and commodities," The , v. 2, pp. 546-48. Includes historical and contemporary uses of the terms in economics.