por The final goods in economics They are consumer products that, once processed, do not require further processing for consumption. Their ultimate goal is to satisfy the needs of the consumer.
Once the industry makes them, they can be used by the consumer without the need for them to be processed or modified. In a nation, the annual production of these products defines the GDP or Gross Domestic Product (an important economic indicator of the country).
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Classification of final goods
Despite the fact that final goods are considered consumer goods, this classification is ambiguous. Economists have classified final goods into two large groups:
– Consumer goods
This is the classic example of final goods, where they are made to satisfy the consumer. Here are included two classes of goods, durable and non-durable.
Non-durable or immediate consumer goods
In this case, the wear and tear is total, the product is immediately used by the consumer once the final product is released on the market. A typical example of this is food or clothing.
durable consumer goods
Here the wear is partial and occurs slowly. The final good can be used multiple times and wear out over time.
Such is the case with cars or furniture. The durability of this product is closely related to its quality and the use it is given.
– Capital goods
Final capital goods, unlike consumer goods, are not intended to satisfy consumer needs. On the contrary, they are used to increase the capital productive factor of the economy.
Capital goods are automatically classified as durable goods, such is the case of construction machinery, tractors, etc.
Economic activities
Three types of economic activities are established in the final goods market. The main ones that frame the final goods are the activities of production and consumption.
In some cases, the final goods may be part of the accumulative activities, but these end up becoming durable consumer goods.
productive economic activities
In productive economic activities, raw materials or intermediate goods undergo transformations that will later become final goods. The main objective is to produce the final good.
This is achieved using labor as a resource, which would be the working hours used to produce the product, and capital, which would be the facilities, machinery, money to buy raw materials and everything necessary for final production.
Economic activities of consumption
In economic activities of consumption, the main objective is the consumption of the product, rather than its production. Final goods play an important role because it is the product that will generate income.
The consumption activity establishes the durability of the product, for which the final goods can suffer total or partial wear.
Intermediate goods
It is important to mention intermediate goods because they tend to be confused with final goods. Intermediate goods are all the raw material resources that were used for the production of the final good.
For example, in making bread (final good), the industry needs to buy flour (intermediate good). This flour in turn derives from the processing of wheat (intermediate good).
For the production of the final good, a chain of intermediate goods is required. However, economically these are different and it is very important to establish the differences to calculate the final cost of the product.
References
Arnold, R.A. (2008). Cengage Learning.
Bellido, WM (2006). Macroeconomy. An Analytical Framework for a Small and Open Economy. PUCP Publishing Fund.
Colarobadores, E. d. (February 23, 2016). Dictionary of Economics: What are final goods? Retrieved on August 18, 2017, from the Economy Dictionary: diccionarioeconomia.blogspot.com
Pinto, A., & Freder, C. Economics course. University Press.
Sanfuentes, A. (1983). Economics Handbook. Andres Bello.