Question

B. Questions of 6 marks each
1. Distinguish between intermediate and final goods and explain the importance of this distinction in the
study of national income.​

Answer 1

Explanation:

Final goods :-

Final goods refer to those goods which used either for consumption or for investment.

They are ready for use in the sense that no value has to be added.

Final goods have inherent demand or direct demand

For example, milk purchased by household for consumption.

intermediate goods :-

Intermediate goods refer to those goods which are used either for resale or for further production in the same year.

They are not ready for use in the sense some value has to be added to the intermediate good

Intermediate goods do not have natural demand and the demand is derived based on user preference

They are still within the production boundary

For example, coal used in factory for further production.