Goods in Economics: Definitions, Types and Examples
In economics, goods are items that add some kind of benefit to the lives of the people who consume them. Most companies make and sell goods, whether they're physical products or services that consumers can regularly use. Learning about the different types of goods can help you identify how they impact the economy and your own life. In this article, we learn what goods are and identify different types, with examples.
What are goods?
Goods are products and resources that satisfy people's needs and wants. A good can be a physical object, a provided service or some combination of the two. Virtually anything is a good if it offers some kind of benefit to consumers. Since goods are diverse, they're categorized into distinct groups with unique characteristics that determine their value.
Most goods belong in one or more of these seven classifications:
An excludable good is an item or service that's not freely available. This type of good has set limitations for who can benefit from it, such as items that are only accessible to paying customers. Whether the transaction requires a payment plan or a single purchase, a monetary price automatically makes something an excludable good because a consumer must pay before they can enjoy it. Excludable goods aren't definitive, meaning they can change their classification depending on how exclusive it is. Some examples of excludable goods include:
Going to the movies: Only consumers who pay for tickets can see movies at movie theaters.
Eating at a restaurant: Only consumers who can pay for the food can eat it.
Using a music-streaming service: Only consumers who pay the subscription fee can use the service.
A non-excludable good is an item anyone can consume without directly paying for it. Examples include:
Public infrastructure, like roads, bridges, power grids and water drainage systems
Public services, like education and safety
Public art displays, like murals on buildings
Many non-excludable goods are built and maintained through public funds.
Semi-excludable goods are technically excludable goods that many consumers have access to without paying for them. For example, someone could use their friend's TV streaming subscription without paying for it. Items like music, movies, books and magazines could be classified as semi-excludable goods if people can get them without paying. Many economic professionals call this "free-riding."
A rivalrous good is an item that a consumer can't benefit from because someone else is presently benefiting from it. Some examples of rivalrous goods include:
Buying a car: Once someone purchases a car, no one else can own it at the same time.
Eating a sandwich: Once someone eats a sandwich, no one else can eat it.
Reading a book: If someone is reading a book, no one else can read it at the same time.
Related: What Are Inferior Goods?
A non-rivalrous good is an item that multiple consumers can benefit from simultaneously with no negative attributions. Non-rivalrous goods can be excludable or non-excludable. For example, consumers can watch a TV show on cable, which is an excludable good, no matter how many people consumed it beforehand or are simultaneously consuming it. A non-rivalrous, non-excludable example is multiple people driving on the same road at the same time.
Materials goods are items that are tangible, meaning you can touch, hold and see them within a physical space. Consumers can move and transfer these goods from one location to another. Most goods are material. Basic examples of material goods include items like:
Non-material goods are intangible, meaning you can't touch, move or see them within a physical space. Services, like those provided by teachers, doctors and actors, are the most common type of non-material good. Several factors determine how much value people place on a non-material good, such as the quality and timeliness of the service. Most non-rivalrous goods also count as non-material goods.
Types of goods in economics
There are four basic types of goods:
A private good is something that provides a positive value and benefit to the consumer. These goods are also excludable, which means the consumer can prevent other, nonpaying consumers from benefiting from them. Examples of private goods include:
Seats on a plane
Public goods, also referred to as social or collective goods, are non-rivalrous and non-excludable. Anyone can benefit from this good without depreciating its value or preventing someone else from benefiting from it at the same time. Even if you didn't pay for a public good, you can still access it. Public goods include things like:
Public hiking trails
A country's national defense
Club goods, sometimes referred to as artificially scarce goods, are often excludable and non-rivalrous public goods. This means that the item is available for the public to benefit from, and it can keep its value no matter how many people consume it. However, the item is excludable because it allows consumers to bar other people from gaining its benefits if they don't pay for it. These items are artificially scarce because there is a financial gain in making them exclusive rather than the possibility of them running out. Examples of club goods include items like:
Common-pool resource goods
A common-pool resource good is an item that's created as part of a resource system. This item can be natural or man-made. These goods are typically public, but they can become a private or excludable good. These goods differ from public goods because they have high consumption rates, which can impact their value. Some examples of common-pool resource goods include:
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