Intermediate Goods And Final Products

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Intermediate Goods And Final Products

All those goods which serve any of the following criteria are classified as intermediate goods:

•    Goods meant for further production, e.g., non-factor inputs like raw materials, semi-finished goods, etc. These help in the production of final goods. Demand for such goods is a derived demand.

•    Goods meant for resale in the year of production itself by wholesalers or retailers. These include finished goods also. (However, if at the end of a year these goods remain unsold, these constitute unsold stocks and are treated as final products.).

Final Products are those which serve nay of the following two criteria:

•    Goods meant for personal consumption, e.g., a pair of jeans, shirts, bread, etc Demand for these goods is direct demand.

•    Goods meant for investment. These may be in the form of fixed capital assets or stocks of finished goods meant for sale in the market which remained unsold at the end of a year.

Services provided by the general government, strictly speaking, can be classified both as intermediate goods and final products. Services, like posts and telegraphs when utilized by the producers are intermediate goods but the same services of posts and trlegraphs, when made use of by the consumers are final goods.

Conventionally, in order to avoid any confusion on this count, government services are treated as final products. The value equal to the cost of production of these services is included in national income.

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