This is where a country’s wealth lies. It lies in the amount of goods and services it produces. The more goods and services a country produces, the more wealth, influence and power it has; especially if there is significant demand for those goods and services domestically and globally. What does your country produce and how much does it produce? What’s the demand for those goods and services your country produces? Based on the answers to those questions, you can get somewhat of an idea of how wealthy and powerful your country is.
And you know what? This concept applies to every level of civilization. It applies to a territory, a state, a city, a town, a village and even a household. The more goods and services any level of civilization produces, the more wealthy, influential and powerful that level of civilization becomes. But what constitutes a good or a service?
In its most broadest sense, a good is a product that can be used to fulfill a want or a need; a good is some kind of item or object that has some useful function.
Goods are everywhere. It seems that everything I come in contact with is some sort of good. The monitor I’m looking at, the keyboard I using, the lamp that lights the room, the cell phone on the counter; these are all goods. But there’s more to it then that. The definition I gave you is the broadest of the broad. Let’s get more specific.
Types of Goods
The term ‘goods’ is definitely a very broad. So allow me to share with you the sub-categories beneath the broad term ‘goods’.
Durable Goods – Just by reading the name of this category, you can tell that these particular goods have sustainability. Durable goods are products that don’t wear out, get consumed or used up quickly. Durable goods are also known as hard goods. The length of time a good has to last in order to be considered a durable good can be a minimum of 2 to 3 years. Here are some examples of durable goods: a car, a computer, a television, furniture, a camera, my replica Kill Bill samurai sword and my new carpet.
Non-Durable Goods – I guess it wouldn’t be much of a surprise to tell you that these particular goods don’t have sustainability, huh? Non-durable goods are products that get worn out, consumed or used up immediately or within a short time. I would say a good that lasts less than 2 years would be considered a non-durable good. Here are examples of non-durable goods: gasoline, foods, clothing, batteries, toiletries, paper towels and a bunch of other random stuff that usually don’t last more than 2 years.
Capital Goods – are goods that are used to make other goods, whether it be durable goods or non-durable goods. Examples of capital goods are machinery, factories, trackers and tools. Here’s an example: Company ABC purchases a tire machine (capital good). After months of testing and adjusting, company ABC is now able to produce two thousand tires (durable goods) every day.
Intermediate Goods – are used to make a final product. Either they become part of a final product or are changed beyond recognition into the final product. Example of intermediate goods: steel, iron and copper.
Those are the four types of goods that are commonly used by statisticians. If there are other types of goods that I’m missing, please let me know by commenting below.
A service is a temporary contract that requires a servicer to perform agreed upon duties for the individual or party being serviced. A service is something that is intangible and cannot be owned like a good. It is one party performing tasks for another party. Examples of services would be a car wash, a tax advisor and an airplane pilot.
In the case of the car wash, the one being serviced is paying a party or an individual to wash a car. The one being serviced isn’t paying for ownership of anything. The serviced is merely paying for the servicer to perform agreed upon tasks. That would also apply to the tax advisor and airplane pilot.
There are some instances where goods and services seem to blend. What I mean by that is sometimes what is being sold to a consumer by a producer seems to meet the criteria for both goods and services to form some sort of service good blend. One example is a custom suit tailor. The tailor performs a service by taking your measurements and performing alterations to the clothing and once the tailor is done, you get your non-durable good, which is your suit. It would be easy to conclude that this is some kind of service good blend of some sort. However, it is not. Please don’t be confused. Rather that think of this example as a service good blend, consider it a good and then a service transaction. A consumer would pay for the suit (good) and then the tailor would offer his service to alter the consumer’s suit. A good has been brought and a service has been rendered.