Fundamental Concepts and Terminologies — Economics STD 11 Commerce — Question

• Commodities that have physical existence i.e. are tangible are called goods.
• In economics, goods satisfy the needs of consumption i.e. the needs of consumers.

Example: Food items, metal, fuel, furniture, vehicles, etc. are goods.

Services:

• Commodities which are intangible or do not have a physical existence are called services.
• In economics, services are meant to satisfy the needs of human life.

Example: Cooking, transportation, telecom, courier, etc. are services.

• Economics studies activities related to production, consumption and distribution of goods or services.
• Although the nature of goods and services is different both are important in economics.
• Units of goods or stock of goods can be measured but, services generally cannot be measured in cardinal (i.e. quantitative/numerical) terms.
• Time spent to provide a service can be measured to make service quantifiable.

Example:

• When you recharge your mobile phone by paying money you are buying a service. You get a fixed quantity of minutes/hours i.e. time in exchange of price.
• The impact of a service in satisfying human wants varies and hence is abstract.

Example:

• The need for knowledge of a student is satisfied by the service of education.
• However, it is quite difficult or say abstract to identify the exact contribution of the service of education in creating knowledge in student.
• On the other hand, a book is a good and one may be able to tell the amount of information obtained from the book.