Basic concepts in the field of economics are discussed below:

 Goods

Anything that satisfies a human want is called good. Goods are the tangible and material outcomes of production. Examples: Food grains, pulses, oilseeds, machinery, implements, seeds, fertilizers, cloth, book, pen, etc.

Service

A service is any act or performance that one party can offer to another i.e., essentially intangible, and does not result in the ownership of anything. Services are intangible, non-material, inseparable, variable, and perishable. The services rendered by doctors, teachers, lawyers, engineers, laborers, etc., are examples.

Classification of goods

Goods are categorized based on four criteria viz., supply, transferability, consumption, and durability as given below:

Based on Supply

Based on supply, goods are classified into economic goods and free goods. Economic goods are those goods, which are produced through human efforts and are to be purchased at a given price. Supply is less than demand. They have value in use and value in exchange. Buildings, machinery, furniture, and a host of other goods of our daily use are the economic goods. Free goods are the free gifts of nature. Their supply is more than demand and one can get to the extent they need. No efforts are needed to be put forth by humans to secure free goods. Since these are freely available in nature, no price needs to be paid. They have value in use but no value in exchange. Examples are air, sunshine, rainfall, etc.

Though a clear distinction is made between free goods and economic goods based on their distinct characteristic features, the distinction between the two is lost under certain situations. Water, which is a free good near the canals and rivers for the consumers, becomes an economic good in water scarcity places. Similarly, sand which is a free good in riverbeds becomes an economic good in the places of house construction activities.

Based on Transferability:

As given by Marshall Goods are classified as follows

Based on Consumption

Based on consumption, goods are classified into consumer goods and producer goods. Consumer goods are those from which consumers directly derive satisfaction using the goods. These are otherwise known as goods of the first order in view of their ability to give direct satisfaction. Food, cosmetics, clothes, books, pens, etc., are examples of consumer goods.

Producer goods are those that help to produce other goods. They can be used by consumers or producers or both because it depends upon how the good is used. From the consumers’ point of view, they give satisfaction indirectly. The examples are machines, factory buildings, raw materials, etc. The chance of a producer good to become a consumer good is possible based on its usage. For instance, electricity when used at home, it becomes a consumer good and the same becomes a producer good when used in the industry.

Based on Durability

Based on durability goods are classified into mono period goods and poly period goods. Those goods which are used only once to satisfy a need are called mono period goods. They cease to exist once their use was over. Examples: All food items and productive resources like seeds, fertilizers, etc.

Durable goods are those goods, which are used time and again. They can be made use of several times. Here the relevant examples are machinery, implements, buildings, etc.