We explain what intermediate goods are and their relationship with final goods. Also, examples and other types of goods.
What are intermediate goods?
In economics, intermediate goods or semi-finished goods are those resources and goods that serve as inputs in the production process of other goods. They should not be confused with final goods, which go directly into the hands of the consumer, or with services.
Intermediate goods constitute a very broad category, which includes products and materials that do not serve the consumer to satisfy their needs, but rather allow the producer to obtain other goods whether final (consumption) or capital (production).
For example, a set of wooden planks and metal bars constitute an intermediate good for the production of furniture in a factory. The planks and bars, however, were in turn produced in a sawmill and a steel mill, so they have already gone through their own industrial process; But their usefulness does not lie in being consumed by the public directly, but by furniture manufacturers who will produce a final good such as a wardrobe or a bed.
See also: Goods
Examples of intermediate goods
The following are some examples of intermediate goods:
- The different flours (corn, wheat, chickpeas) that are used in the manufacture of breads and other foodstuffs.
- steel beams and the dried materials (to form cement) that are used in the construction of a building or road work.
- The plastic which is obtained from various chemical synthesis processes, and then molded to form parts or elements necessary to assemble all types of machines.
- Screws and rivets used in the manufacture of an appliance, such as a blender or microwave.
- Cards, microchips and connectors that make up the interior of a computer.
- Solvents and chemical compounds used in the production of detergents and cleaners, such as chlorine, alcohol, baking soda, among others.
Intermediate goods and final goods
The difference between intermediate goods and final goods is that final goods are ready to be consumed that is, they are at the end of their production chain as independent commodities. This means that they are goods ready for use and that are not part of the productive circuit of any other which is why they are also known as consumer goods.
Some examples of final goods are: an energy drink, a dish prepared in a restaurant, a liter of gasoline for the car, a piece of clothing, a home or a cell phone.
Instead, intermediate goods are not purchased by the consuming public since they do not serve to satisfy your specific needs; but they can sometimes be acquired as a store of value, as happens when someone buys gold, silver or other materials used in jewelry.
Other types of goods
In addition to intermediate goods and final goods, other types of goods are differentiated in economics, based on different criteria, such as:
- Capital or investment goods. They are those materials, goods and services that are required to produce a specific good. For example: raw materials, electricity or work machines and tools.
- Consumer goods. They are those final goods that the public acquires to satisfy their needs. For example: food, housing, fuel or basic services of electricity and drinking water.
- Substitute goods. They are those consumer goods whose consumption excludes other similar merchandise, that is, which forces the consumer to choose between one and the other. For example: lactose-free milk and whole milk, sugar and sweeteners, or margarine and butter.
- Complementary goods. They are those consumer goods that, instead of opposing each other, as substitutes do, complement each other, that is, they require the presence of the other to satisfy a need. For example: a car and fuel, coffee and sugar, or popcorn and salt.
- Inferior goods. They are those consumer goods that are considered undesirable, so their consumption decreases when consumers' incomes increase. This means that they are replaced by superior goods as soon as the opportunity presents itself. For example: second-hand clothing, products about to expire, and low-quality brands.
- Superior goods. They are those consumer goods that are considered very desirable, which is why they usually have a high demand and therefore a higher cost. This means that its purchase is associated with greater income or purchasing possibilities: when the amount of money available decreases, so does its consumption margin. For example: designer clothing, jewelry, imported food products and premium meat.
- Durable goods. They are those consumer goods that, once acquired, last over time and satisfy a need permanently. For example: a home, a car or a refrigerator.
- Non-durable goods. They are those consumer goods that are exhausted during use or lose their properties, so they must be continually replaced by new ones. For example: food, medicine, matches and detergent.
- free goods. They are non-economic goods, that is, they are not part of the productive circuit, since they are superabundant or impossible to limit, so that it is not necessary to produce them, nor is it possible to market them. For example: sunlight, breathable air or sea water.
Continue with: Production costs
References
- Moreno, A. (sf). The product or national income: intermediate products and final products. Ministry of Education of San Juan (Argentina). Education
- Government of Mexico. “Intermediate goods”. Glossary. Bancomext
- The Encyclopaedia Britannica. “Produce goods”. Britannica
