Q3. Which of the following goods are... [FREE SOLUTION]

Chapter 7: Q3. (page 151)

Which of the following goods are usually intermediate goods and which are usually final goods: running shoes, cotton fibers, watches, textbooks, coal, sunscreen lotion, lumber?

Short Answer

Expert verified

Good	Category
Running shoes	Final good
Cotton Fibres	Intermediate good
Watches	Final good
Textbooks	Final good
Coal	Intermediate good
Sunscreen lotion	Final good
Lumber	Intermediate good

Step by step solution

Difference between final and intermediate goods

Final goods are goods that are meant for use by the end customer.These are used for direct consumption with no possibility of resale. The users are the households. For example, a bag of chips bought by a consumer is a final good.

Intermediate goods are goods that are used as inputs in producing other final goods. The users are the businesses or the producers. For example, the flour used to make bread in a bakery shop is an intermediate good

Explanation for the answer

Labeling the goods as final or intermediate goods:

Running shoes are used by the end customer for final consumption, and therefore, is a final good.
Cotton fibers are used as an input in the cloth material industry, and therefore, are an intermediate good.
Watches are used by the end customer for final consumption, and therefore, a final good.
Textbooks are used by students, teachers, and other academicians for final consumption in the form of reading and information gathering, and therefore, a final good.
Coal is used as an input in electricity generation and railways, and therefore, it is an intermediate good.
Sunscreen lotion is applied on the skin by consumers for UV protection, and this is its final consumption; therefore, it is treated as a final good.
Lumber is used in the real estate industry as an input for making houses and furniture, and therefore, it is treated as an intermediate good.