Good (economics and accounting)

Good (economics and accounting)

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Encyclopedia
In economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

, a good is something that is intended to satisfy some wants or needs of a consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...

 and thus has economic utility
Utility
In economics, utility is a measure of customer satisfaction, referring to the total satisfaction received by a consumer from consuming a good or service....

. It is normally used in the plural form—goods—to denote tangible
Tangible property
Tangible property in law is, literally, anything which can be touched, and includes both real property and personal property , and stands in distinction to intangible property....

 commodities such as products and material
Material
Material is anything made of matter, constituted of one or more substances. Wood, cement, hydrogen, air and water are all examples of materials. Sometimes the term "material" is used more narrowly to refer to substances or components with certain physical properties that are used as inputs to...

s.

Although in economic theory all goods are considered tangible, in real world certain classes of goods, such as information
Information
Information in its most restricted technical sense is a message or collection of messages that consists of an ordered sequence of symbols, or it is the meaning that can be interpreted from such a message or collection of messages. Information can be recorded or transmitted. It can be recorded as...

, may only exist in intangible forms. For example, among other goods an apple
Apple
The apple is the pomaceous fruit of the apple tree, species Malus domestica in the rose family . It is one of the most widely cultivated tree fruits, and the most widely known of the many members of genus Malus that are used by humans. Apple grow on small, deciduous trees that blossom in the spring...

is a tangible object, while news
News
News is the communication of selected information on current events which is presented by print, broadcast, Internet, or word of mouth to a third party or mass audience.- Etymology :...

belongs to an intangible class of goods and can be perceived only by means of an instrument such as print
Publishing
Publishing is the process of production and dissemination of literature or information—the activity of making information available to the general public...

, broadcast
Broadcasting
Broadcasting is the distribution of audio and video content to a dispersed audience via any audio visual medium. Receiving parties may include the general public or a relatively large subset of thereof...

, or computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...

.

Goods are contrasted with services, which are intangible commodities.

Utility characteristics of goods


Goods may increase or decrease their utility directly or indirectly and may be described as having marginal utility
Marginal utility
In economics, the marginal utility of a good or service is the utility gained from an increase in the consumption of that good or service...

. Some things are useful, but not scarce enough to have monetary value, such as the Earth's atmosphere
Earth's atmosphere
The atmosphere of Earth is a layer of gases surrounding the planet Earth that is retained by Earth's gravity. The atmosphere protects life on Earth by absorbing ultraviolet solar radiation, warming the surface through heat retention , and reducing temperature extremes between day and night...

, these are referred to as 'free good
Free good
Free goods are what is needed by the society and is available without limits. The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society....

s'.

In economics, a bad
Bad (economics)
In economics, a bad is the opposite of a good. A "bad" is anything with a negative value to the consumer, or a negative price in the marketplace...

 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 of characteristics. For example, goods have price elasticity
Price elasticity of demand
Price elasticity of demand is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price...

. An elastic good is one for which there are substitute good
Substitute good
In economics, one way we classify goods is by examining the relationship of the demand schedules when the price of one good changes. This relationship between demand schedules leads economists to classify goods as either substitutes or complements. Substitute goods are goods which, as a result...

s; for example, as pen prices rise, the cross elasticity of demand
Cross elasticity of demand
In economics, the cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good. It is measured as the percentage change in demand for the first good that occurs in response to a percentage change in...

 would result in consumers buying more pencils instead. An inelastic good is one for which there are few or no substitutes, such as tickets to major sporting events or original works by famous artists.

Trading of goods



Goods are capable of being physically delivered to a consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...

. Goods that are economic intangibles
Intangibles
The term intangibles is most commonly used to describe things that are recognized but not easily quantified; a common example are economic intangibles which describes something not easily quantified within a given theory of economics...

can only be stored, delivered, and consumed by means of media.

Goods, both tangibles and intangibles, may involve the transfer of product ownership
Ownership
Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties. The concept of ownership has...

 to the consumer. Services do not normally involve transfer of ownership of the service itself, but may involve transfer of ownership of goods developed by a service provider in the course of the service. For example, distributing electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

 among consumers is a service provided by an electric utility
Electric utility
An electric utility is a company that engages in the generation, transmission, and distribution of electricity for sale generally in a regulated market. The electrical utility industry is a major provider of energy in most countries. It is indispensable to factories, commercial establishments,...

 company. This service can only be experienced through the consumption of electrical energy, which is available in a variety of voltage
Voltage
Voltage, otherwise known as electrical potential difference or electric tension is the difference in electric potential between two points — or the difference in electric potential energy per unit charge between two points...

s and, in this case, is the economic goods produced by the electric utility company . While the service (namely, distribution of electrical energy) is a process that remains in its entirety in the ownership of the electric service provider, the goods (namely, electric energy) is the object of ownership transfer. The consumer becomes electric energy owner by purchase and may use it for any lawful purposes just like any other goods.

See also

  • Tangible property
    Tangible property
    Tangible property in law is, literally, anything which can be touched, and includes both real property and personal property , and stands in distinction to intangible property....

  • Intangibles
    Intangibles
    The term intangibles is most commonly used to describe things that are recognized but not easily quantified; a common example are economic intangibles which describes something not easily quantified within a given theory of economics...

  • Fast moving consumer goods
    Fast Moving Consumer Goods
    Fast moving consumer goods or Consumer Packaged Goods are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries, and grocery items...

  • Final goods
  • List of economics topics