Goods and Services

Most of the activities of our economic system are devoted to the production and consumption of goods and services.

A good is anything that satisfies a human want. The bread that we eat, the shoes that we wear, the house that we live in, are all goods. Individual testes will differ of course.

Two conditions are necessary for the existence of a good: a human want and a means that will satisfy that want.

Goods may be divided into two main classes: free goods and economic goods. Free goods are those plentifully supplied by nature that human effort is required to obtain them. Economic goods are those that are so scarce relative to human wants that human effort is required to obtain them.

It will be obvious to the reader that whether a good falls in the classification of free goods or economic goods will depend upon circumstances.  In certain thinly populated islands untouched by navigation. Coconuts might be considered a free good. But when we consider the effort necessary to gather and transport them, the coconuts in London are an economic good. Probably the only goods that are free good under nearly all circumstance are a fresh air and sunshine.

A service is any nonmaterial goods. The acts of the barber who cuts our hair of the boy who mows our lawn and of the orchestra that plays for our enjoyment are services. For many processes services need to be distinguished form material goods but since services need to be distinguished from simultaneously with their  production and a considerable internal may elapse between production and consumption of material goods it is sometimes convenient to draw distinction between them.

The distinction between consumers goods and producers goods is base not on the character of the goods themselves but on the use to which they are put. Consumers goods and services are those used directly to satisfy human wants of practically speaking, are the goods purchased by the ultimate consumer. Producers goods are those used to produce consumers goods or other producers goods.

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