En economy terms, a good is an element that satisfies the need of a demand and of a population. Therefore, an economic good is a tangible and intangible service that is present in the market and can be acquired by a person but in a limited way. This means that the goods have an expiration date and can be exhausted.
In addition, to understand the concept of economic good we must bear in mind that each and every one of them has a price given, an attributed value that can vary over time. In fact, a single asset can see how its characteristics and benefits vary over time.
Is a good the same as a service?
No. In fact, one of the main differences between good and service is that services have a greater durability over time, therefore, they can be consumed for a long time, without even expiring. What good has in common with service is that in both cases the satisfaction of a need for the consumer is pursued.
How are the goods classified?
Depending on the need they cover or what their objective is, we find several types of goods and each of them is free or limited. This is the classification of the goods and what characteristics it presents:
- Assets that are classified according to their nature and can be at the same time movable or immovable property. On the one hand, movable property is those that can be moved and transferred from one place to another. On the other hand, real estate is those that cannot be moved, are fixed and cannot be moved, in the case of a house.
- The goods that are classified according to their function: they can be consumer, intermediate or capital. Consumer goods are those that will be consumed in a relatively short period of time after acquisition. Intermediate goods will be those that, in order to be consumed, will have to go through a prior transformation period beforehand, in the case of raw materials such as wood. Capital goods will be those that are part of the production process of a good or service, this is the case, for example of the facilities of a company.
- Goods that are classified according to their duration: we establish a difference between durable goods, which are those that remain in our lives for a long period of time. Then, goods that are not durable and their consumption is reduced, because they only have a use. Finally, we find those goods whose durability is perishable, that is, they can be consumed for a short period of time.
- Assets that are classified according to their ownership and are public, when they belong to a public entity and may be used by all citizens, or private, which may only be used by those who are relatively their owners, users or owners.
- The goods that are classified according to their behavior or demand: they are complementary, substitute, normal and inferior goods. Complementary goods refer to those that are acquired jointly. Substitute goods are those that compete with each other, because the consumer has several options to satisfy that need. Normal goods will always be those that go up as the consumer's purchasing and consumption capacities increase. Finally, the inferior goods will be those whose consumption decreases as the consumer's purchasing capabilities increase.