Goods and services are the backbone of any traditional economy. Understanding how goods and services are categorized can help you understand how the economy works and can apply to your career, whether it’s in the public or private sector.
A good is a tangible object that provides value to consumers. Unlike services, which provide an experience that cannot be transferred from one person to another, goods can be viewed and touched. The types of goods include consumer, producer and capital goods. Consumer goods are physical commodities or products that satisfy human wants and needs, such as food or clothing. Producer goods are raw materials and tools used to make consumer goods, such as automobiles and furniture. Capital goods are goods that are purchased by businesses to produce other goods, such as finished products or services.
Consumer goods can be divided into durable and nondurable goods. Durable goods are consumed over time and include items like bicycles and refrigerators. Nondurable goods are consumed only once and include items like packaged foods and beverages or laundry detergent. Consumer goods can also be grouped into convenience and luxury goods.
Service goods are not tangible and are intangible activities that provide a benefit to society and can be exchanged for money. Examples of services are haircuts, car repairs and mail delivery. A service can be rendered by someone or it can be provided by an automated system. For example, when you receive a meal from a delivery service, the meals themselves are goods, while the work and labor that goes into providing the service is a service.