difference between intermediate good and final goods
Answers
Difference between Intermediate goods and Final Goods
Meaning -
Intermediate goods are those goods which are used in the production process but are provided by other firms.
Final goods are those goods which are ready for consumption and which cannot be resold or remanufactured.
Examples -
Intermediate goods- raw cotton to cotton mill, wheat to flour mill,tailoring services to a readymade clothes making company.
Final goods- Telephone, sweets, guns, building, machinery, aeroplane,etc.
Nature of goods
Intermediate goods
These goods are used in the production process as a raw material or an equipment
Final goods
Such goods are ready for consumption and cannot be manufactured further.
National Income
Intermediate goods
Such goods are not a part of national income. If such goods are added it results into double counting.
Final goods
These goods form a part of national income.
Production Boundary
Intermediate goods
These goods remain within the production boundary .
Final goods
These goods are out of production boundary .
Explanation:
goods which are purchased by the production unit from other production unit and means for resale or for using up completely during the same here are called intermediate goods for raw material
goods which are purchased for consumption and investment Accord final goods
for example
purchase of machinery for installation in factory