Meaning of good
Good is any item that adds some kind of value to the lives of people in any form. Good can be any tangible item that satisfies the want of the consumers. In factor of production, a good is the output of an economic system.
Features of goods
- Tangibility : Goods are tangible in nature i.e. they have shape and are visible unlike any services which are intangible.
- Perishability : Another feature is the perishable nature of goods. Perishability means goods have some life or durability. Goods have some shelf life after the production.
- Separability : The production and consumption of goods are two separate events. Goods produced can be stored for later consumption, unlike service where production and consumption are simultaneous.
- Standardization : Goods have different grades and qualities. Qualities and grades of the goods can be controlled and can have standardized production. In service, service quality varies every time they are served.
Classification of goods
Normal Goods
Normal goods are those goods whose demand changes along with the change in income of the consumers. When income increases demand for the goods also increases and vice versa. On the other hand, normal goods response to negative price effects i.e. rise in price leads to fall in demand and vice versa.
Example: Television, general good items.
Giffen Goods
Giffen goods are special types of goods whose demand increases with the rise of price and decreases with the fall of the price. There is a positive relationship between price and quantity of demand. A giffen good shows an upward-sloping demand curve and it generally violates the fundamental law of demand.
Example: Rice, Salt etc. are giffen goods
Inferior Goods
Inferior goods are those goods whose demands decrease with the increase in income of the consumer and demand increases with the decrease in income of the consumer. There is an inverse relationship between income of the customer and demand for inferior goods.
Example: Street Foods, canned items, grocery items etc.
Substitute Goods
Substitute goods are those goods whose alternatives are available. Such goods satisfy the need similar to that of its close substitution. Such goods can be used for same purpose by the same consumer. They have the inverse relation with price of one product and demand for its substitute. For instance, X and Y are substitute goods. When price increases, demand for X decreases and consumers will shift to product Y for similar utility and demand for Y increases.
Example: Pepsi and Coca Cola, Tea and Coffee
Complementary Goods
Complementary goods are those goods which jointly offer to satisfy a particular want of the consumer. Such goods are purchased and used together. There is an inverse relationship between rise in the price of one product and demand for another product. For instance: X and Y are complementary goods. When the price of X increases, demand for X decreases leading to decrease in demand for Y as well.
Example: Pen and Paper, Milk and Cereals, DVD and DVD player etc.
Private Goods
Private goods are goods with private ownership which means such goods are exclusive (Excludable) to its owner. Such goods require permission from the owner for consumption by other individuals. The law of demand and supply prevails for such goods.
Example: Land, Building, vehicles, mobile phone, clothes, cosmetics etc.
Public Goods
Public goods are common goods to all the people and belong to all the members of the community or society. Such goods are non-exclusive (non-excludability) as anyone can consume such public goods without permission and without reducing the availability to the other.
Example: Roads, Hospitals, Parks, bridges etc.
Economic Goods
Economic goods are scarce goods and we have to make payment for the use and consumption. All the man-made goods where supply is scarce and limited and have some market value are economic goods.
Example : TV, computer, tooth paste, rice etc.
Free Goods
Free goods are those goods which are readily available in abundant quantities and supply of goods is more than demand. Such goods do not require any payment and are freely available.
Example : Air, Atmosphere, sunlight etc.
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