Types Of Goods

Types Of Goods

In it we know about types of goods

Based on Income
NORMAL

• Demand increases as income increases (positive relationship).
• Income elasticity of demand is positive.
• Examples: TV, Refrigerator, Cars, etc.
• 
  INFERIOR
• Demand decreases as income increases (negative relationship).
• Income elasticity of demand is negative.
• Examples: Cereals, Public transportation, etc.

Types of Goods
Based on Prices

• GIFFEN
  ⚬ Demand increases as price increases.
  ⚬ This is due to the substitution effect.
  ⚬ These are usually basic goods consumed by the low-income group.
• VEBLEN
  ⚬ Demand increases as price increases.
  ⚬ This is due to the prestige effect.
  ⚬ These are usually expensive goods that signify wealth and status.

Types of Goods
Based on Utility to Society

Merit

• Goods that benefit society when consumed.
• The government usually provides or subsidises them to
  encourage consumption.
• Examples: basic needs, health care, education, etc.
• 
  Demerit
• Goods that harm the society when consumed.
• Negative spillover effect or externality.
• Examples: alcohol, tobacco, etc.

Types of Goods
Based on who is the producer

• Public (are non-rival and non-excludable)
  ⚬ Non-rivalry (using this good does not affect its availability for others).
  ⚬ Non-excludable (everyone can use this good without paying for it).
  ⚬ Examples: defence, streetlight, law and order (police).
• Private (are excludable and rival)
  ⚬ Rival (using this good reduces its availability for others).
  ⚬ Excludable (only those who pay for this good can use it).
  ⚬ Examples: clothes, food, cars.

Types of Goods

Excludable Non–Excludable

private goods Rival eg..cars	common goods Rival eg..public library
club goods Non Rival eg..electricity	public goods Non Rival eg…defence

Types of Goods
Based on presence in the economic flow

• Intermediate
  ⚬ Are inputs for producing other goods or services.
  ⚬ Are part of the production process or supply chain.
  ⚬ Examples: steel, aluminium, coal, etc.
• Final
  ⚬ Are ready for consumption or use by the end users.
  ⚬ Do not undergo any further processing or value addition.
  ⚬ Examples: car, cell phone, etc.

Types of Goods
Substitute goods

• Goods that can replace each other to satisfy the same need.
• Can be switched.
• Demand changes with the price of the good or its substitute.
• Examples: tea and coffee; cold drinks, cars, mobiles, etc.
• 
  Complementary goods
• Goods that are used together to satisfy a need.
• Cannot be separated.
• Demand changes with the price of the good or its complement.
• Examples: petrol/diesel and car; ink and printer, etc.