Types of goods
In economics, the concept of goods refers to those physical elements that, in some way, satisfy human needs. There is a wide typology of goods according to their characteristics, and to talk about them we must sort them by categories. Therefore, we have goods according to their degree of scarcity, their function, their degree of transformation, the ease of accessing them or their relationship with income.
We are going to detail all the types of goods that exist according to the different classifications that are usually made in economics, but first we leave you this scheme to have a clear idea of the distinction between all of them. It should be borne in mind that a good must be present only once, but in all classifications. For example, a good can be economic, consumer, final, private and normal.
Goods according to their degree of scarcity
If we take into account their degree of scarcity, we can speak of two types of goods: free goods and economic goods.
- Free goods: They are of unlimited access, hence their name. This means that its access is free and everyone can access it. An example of a free good is oxygen, air.
- Economic goods: These are goods that not everyone can access, given their characteristics. For example, oil.
Goods according to functionality
If we look at the functionality of the goods, we can distinguish between consumer goods, intermediate goods and investment goods:
- Consumer goods: They refer to the goods we use every day. For example, a motorcycle, going to a restaurant, a house ...
- Investment goods: Also known as capital goods, capital goods or production goods. They are those that serve to obtain a later benefit from them. For example, if we buy a computer because it is necessary for our work, or fixed-term funds in the bank, etc.
Sometimes intermediate goods are also included in this classification, which are goods that through transformation become other intermediate goods or consumer goods. For example, some wooden boards, flour, etc. However, we consider it more appropriate to include intermediate goods in the following classification.
Goods according to their degree of transformation
Also, we have mentioned the types of goods according to their degree of transformation. We can distinguish between intermediate goods or final goods:
- Intermediate goods or raw materials: These are goods that are used to produce other types of goods. That is to say, its life is not finished in the productive cycle. For example, flour, since later it will be used to produce bread.
- Final goods: If they are already prepared to be consumed. For example, bread.
Goods according to their ease of access
We can also distinguish goods according to the ease of accessing them. We can differentiate between public, private and privately owned goods:
- Public goods: They are the most accessible because they belong to society, in general. For example, a school.
- Private goods: They are the least accessible because they can only be used by their owners. For example, a house.
- Privately owned assets: These are assets owned by private owners but intended to be used by the general public. Like, for example, a hotel.
Assets according to income
Finally, one of the most important distinctions is assets according to income. That is, the demand for goods according to disposable income. We can differentiate, in this section, between normal goods and inferior goods.
- Normal goods: Their demand increases because people's income increases. It occurs in most of the goods. For example, some shoes. Within normal goods we must distinguish two other types:
- Luxury goods or superiors: Their demand increases faster than the income of consumers. It occurs mainly in leisure services.
- Staple goods: Their demand grows at a slower rate than the income of consumers. For example, bread.
- Inferior goods: They are those whose demand decreases while consumer income increases. This is because, as they have more income, consumers prefer higher quality products. For example, fast food, second-hand cars, etc.