Differentiate between intermediate products and final products? What is the significance of this distinction?
Answers
Final goods are those goods which are used for final consumption in the consumer market and any kind of business or capital investment.
Intermediate goods are identified as goods which are used in further production of final goods and services or used for resale for commercial purposes.
Explanation:
The distinction between final and intermediate is largely applicable in the calculation of National Income or GDP of any country.According to the value added method of GDP or National Income estimation,the market value of the factors/inputs of production are not included in the calculation of the GDP calculation of final goods and services to avoid double counting.Similarly,based on the expenditure method of National Income/GDP calculation,the value of all the intermediate goods and services are excluded from the estimation of GDP as those are already reflected in the final market value of the final goods and services.Hence,it is extremely essential to differentiate final and intermediate goods while calculating the National or GDP as practically,the final market value of the final goods and services already includes the value or costs of all the intermediate goods and the factors/inputs of production that have been used in their production.Therefore,this distinction is very much relevant from a macroeconomic standpoint.
sorry mate do not know the answer