Q.
Define the following categories of goods with appropriate example:
a) Free Goods (5 marks)
b) Public Goods (5 marks)
c) Producer Goods (5 marks)
d) Consumer Goods (5 marks)
(20 marks, 2018 Q5)
A.
a) Free Goods
A free good is a good that is not scarce, and therefore is available without limit.[1][2] A free good is available in as great a quantity as desired with zero opportunity cost to society.
A good that is made available at zero price is not necessarily a free good. For example, a shop might give away its stock in its promotion, but producing these goods would still have required the use of scarce resources.
Examples of free goods are ideas and works that are reproducible at zero cost, or almost zero cost. For example, if someone invents a new device, many people could copy this invention, with no danger of this "resource" running out. Other examples include computer programs and web pages.
Earlier schools of economic thought proposed a third type of free good: resources that are scarce but so abundant in nature that there is enough for everyone to have as much as they want. Examples in textbooks included seawater and air.
Intellectual property laws such as copyrights and patents have the effect of converting some intangible goods to scarce goods. Even though these works are free goods by definition and can be reproduced at minimal cost, the production of these works does require scarce resources, such as skilled labour. Thus these laws are used to give exclusive rights to the creators, in order to encourage resources to be appropriately allocated to these activities.
Many post scarcity futurists[who?] theorize that advanced nanotechnology with the ability to turn any kind of material automatically into any other combination of equal mass will make all goods essentially free goods, since all raw materials and manufacturing time will become perfectly interchangeable.
Ref:
Wikipedia search "free goods", available at
https://en.wikipedia.org/wiki/Free_good
b) Public goods
In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.[1]
Gravelle and Rees: "The defining characteristic of a public good is that consumption of it by one individual does not actually or potentially reduce the amount available to be consumed by another individual." In a non-economic sense, the term is often used to describe something that is useful for the public generally, such as education and infrastructure, although these are not "public goods" in the economic sense. This is in contrast to a common goodwhich is non-excludable but is rivalrous to a certain degree.
Public goods include knowledge, official statistics, national security, common language(s), flood control systems, lighthouses, street lighting, and Wikipedia itself. Public goods that are available everywhere are sometimes referred to as global public goods.[2] There is an important conceptual difference between the sense of "a" public good, or public "goods" in economics, and the more generalized idea of "the public good" (or common good, or public interest), "a shorthand signal for shared benefit at a societal level".[3][4][5]
Many public goods may at times be subject to excessive use resulting in negative externalities affecting all users; for example air pollution and traffic congestion. Public goods problems are often closely related to the "free-rider"problem, in which people not paying for the good may continue to access it. Thus, the good may be under-produced, overused or degraded.[6] Public goods may also become subject to restrictions on access and may then be considered to be club goods or private goods; exclusion mechanisms include copyright, patents, congestion pricing, and pay television.
Ref:
Wikipedia search "public goods", available at
https://en.wikipedia.org/wiki/Public_good
c) Producer goods
: goods (such as tools and raw materials) used to produce other goods and satisfy human wants only indirectly.
A capital good is a durable good (one that does not quickly wear out) that is used in the production of goods or services. Capital goods are one of the three types of producer goods, the other two being land and labour, which are also known collectively as primary factors of production. This classification originated during the classical economics period and has remained the dominant method for classification.
A society acquires capital goods by saving wealth that can be invested in the means of production. In terms of economics, capital goods are tangible property. People use them to produce other goods or services within a certain period. Machinery, tools, buildings, computers, or other kinds of equipment that are involved in production of other things for sale, are capital goods. The owners of the capital good can be individuals, households, corporations or governments. Any material used to produce capital goods is also considered a capital good.
Many definitions and descriptions of capital goods production have been proposed in the literature. Capital goods are generally considered one-of-a-kind, capital intensive products that consist of many components. They are often used as manufacturing systems or services themselves.
Examples include automated storage and retrieval systems, automatic test equipment, battleships, baggage handling systems, data centers, oil rigs, roller coaster equipment, semiconductor fabrication plants, and wind turbines. Their production is often organized in projects, with several parties cooperating in networks (Hicks et al. 2000; Hicks and McGovern 2009; Hobday 1998). A capital good lifecycle typically consists of tendering, engineering and procurement, manufacturing, commissioning, maintenance and (sometimes) decommissioning [1]. [2]
Ref:
https://www.merriam-webster.com/dictionary/producer%20goods
https://en.wikipedia.org/wiki/Capital_good
d) Consumer Goods
A consumer good or final good is any commodity that is produced or consumed by the consumer to satisfy current wants or needs. Consumer goods are ultimately consumed, rather than used in the production of another good. For example, a microwave oven or a bicycle that is sold to a consumer is a final good or consumer good, but the components that are sold to be used in those goods are intermediate goods. For example, textiles or transistors can be used to make some further goods.
When used in measures of national income and output, the term "final goods" includes only new goods. For instance, the GDP excludes items counted in an earlier year to prevent double counting of production that is based on resales of the same item. In that context, the economic definition of goods includes what are commonly known as services.
Manufactured goods are goods that have been processed in any way. As such, they are the opposite of raw materials, but they include intermediate goods as well as final goods.
Ref:
Wikipedia search "final goods", available at