Features of free economic goods
- They are not scarce i.e. they are abundant.
- They are not produced by human effort, hence are provided freely by nature.
- They are not transferable in terms of its ownership.
- They lack exchange value.
- They possess utility
These are the goods produced by human efforts and posses the following qualities;
Quality of Economic Goods
- They have utility, i.e. ability to satisfy wants/needs.
- They have exchange value, i.e. they can be bought or sold.
(iii)They are transferable in terms of ownership from one person to another person.
Thus Economics is concerned with economic goods and not free goods because production in Economics is for exchange for which the economic goods possess value.
- Consumer Goods– These are goods produced for final consumption or use such as food, radio, clothes, furniture etc.
- Producer Goods-These are goods which are produced to assist in the production of other goods. They are also known as capital goods. Producer goods include; machinery, raw material, workshop, building etc.
Perishable Goods : These are goods which can easily be destroyed or spoil like food stuffs e.g., milk, meal, fruits, vegetable etc.
Durable Goods: These are goods which can last or stay for a long period of time without being destroyed or damaged such as buildings, machines, furniture etc.
Private goods: Are goods owned by individuals for example private car, clothes, houses etc.
Public goods: Are goods owned and enjoyed by all individuals in the country. For example; roads, defense etc.
Feature of Public Goods:-Non divisibility i.e., provided in totality to the public.
Non rivalry i.e., there is no competition of consumption. One person can consume extra units without reducing consumption of others.
Intermediate goods:– Are goods in progress e.g. raw material.
Final goods:- Are goods ready for consumption.
Normal Goods:- Are the goods for which their demand increases when the real income of the consumers increases while their demand decreases when income of consumers decreases.
Inferior Goods:- Are goods which the demand of the goods by the consumers decreases when real income increases.
Is a creation of goods and services for personal consumption or use.
Economists define production as a process of creating goods and services for exchange i.e for sale in order to satisfy people’s needs.
Is a creation of utility. Utility means the level of satisfaction a consumer derives from consuming a certain unit of goods and services.
Prof. Marshall defined all activities concerning with the earning and spending income (wealth) such as-; the activities of farmers, labor, shopkeeper, teachers, doctors and advocates. Thus all activities which are done with view to earn income are called Economic activities.
NON ECONOMIC ACTIVITIES:
Refers to all activities which do not have the earning of wealth as their nature. E.g. .playing football for health reasons, singing by mothers, teachings by a teacher to his own children, etc.
Means limited in supply or less than that what is required or needed.
CAUSES OF SCARCITY.
- Limited stock of resources.
Resources are limited in number therefore it is not possible to produce enough goods and services to satisfy all wants.
- Unlimited wants.
Wants are unlimited in number therefore resources available cannot produce enough goods and services to satisfy all wants.
- Alternative uses of the available resources.
E.g, same land can be used to grow beans, rice or other uses such as land for construction of buildings.
Resources are normally scarce and therefore you have to choose from the few alternatives to satisfy the needs.
Producers – chooses what goods to produce.
Consumers – Decides which wants/needs they require.
SCALE OF PREFERENCE:
Is a list of all wants in an order to their importance such that that the most important wants are kept first on the list followed by the less important wants.
- The true cost of producing an additional of goods or services in their value of goods or services that must be given up to obtain. E.g. A student may have two alternatives of her/his evening time to do homework and the alternative is to play football.
- If he/she chooses to play football, the opportunity cost of playing football is the homework.