Chapter 8, Problem 1QA

Summary Introduction

To define: About Goods and the difference between Tangible and Intangible products

Answer to Problem 1QA

Goods: Any kind of physical form of material that satisfies human needs and demands which provides utility to them. For example: A soap, a hairdryer etc.

Tangible Products: Goods are tangible in nature because they can be touched, seen while consuming. For example: A vehicle, a smart phone etc.

Intangible Products: Services are mainly intangible because they can’t be touched, they can only be felt. For example: An insurance police, a computer software etc.

Explanation of Solution

Goods can be of many types.

Free goods: Goods which are in abundance and can be used by anybody are called free goods. For example: Air, sunlight etc.

Consumer goods: A final product which is produced to be consumed by a consumer to satisfy his needs and wants. For example: Biscuits, shampoo etc.

Intermediate goods: Parts and components which are used in making the final good are called intermediate goods. For example: Nuts, bolts, pipes etc.

Differences between Tangible and Intangible products are as

Tangible Products	Intangible Products
⋅They have a physical form and can be touched. ⋅The producer has more control over quality. ⋅Inventory can be stored for some future sales. ⋅For example: Furniture, vehicles, computers etc.	⋅They do not have a physical form and can’t be touched. ⋅The producer has less control over quality. ⋅No inventory to store and experience cannot be stored. ⋅For example: Patents, Brand value, Insurance policies etc.