Anything that satisfies a human want can be considered as 'good' in economics, In economics, the term 'goods' refer to material and non-material things. Just as an apple or a chair is a good, music or the services of actors, musicians and teachers are some of the examples of goods.
Goods can be classified into free goods and economic goods. Goods like air and sunlight which are the gifts of nature are free goods. They are not scarce. So they do not command a price in the market. They are known as free goods. Economic goods command a price in the market. In other words, they have value-in-exchange. For, they are scarce in relation to demand. In this connection, we have to remember that what is a free good in one place can become an economic good in another place. It all depends on the supply of a good and the demand for it. For example, in some villages firewood is a free good. But in a town where we have to pay a price for it, it becomes an economic good. Similarly, water which is a free good becomes an economic good when there is scarcity of water.
Goods may be further classified into (1) consumers goods and
(2) producers goods. Consumers goods satisfy our wants directly. They can be classified into (1) perishable goods (eg. vegetables, fish and music) and (2) durable goods (eg. a house, a car, a radio). Capital goods satisfy our wants indirectly. Machines that are used to make machines are called capital goods. For example, car is a sort of machine. It is a consumers' good. But there must be some other machine to make a car. That machine is known as capital good or producer good. But what is a consumers' good in one place can become a producers' good in another place. For example, when electricity is used for lighting purposes at home, it is a consumers' good. But the same electricity when used in factories for industrial purposes, it becomes a producers' good.
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