Economics is a field that is concerned with buying, selling and money. Goods and services are an important concept in economics. You and your parents purchase goods and services on a regular basis. People sell various kinds of goods and services. You and your parents pay money to buy them.
When you go to the toystore to get a toy, you are buying a good. Whenever you go to the hair salon to get your haircut, you are purchasing a service. Your toy is a tangible good but the haircult you received is intangible. So, what exactly are the differences between goods and services?
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Goods are things we can touch like toys, furniture, books, coal, clothes, food and electronics. So, the things you eat and wear are goods.
Goods are often called physical goods because you can actually touch them. Grocery stores, electronics stores, hardware stores and clothing stores all specialize in selling physical goods.
When you go to a toystore, you trade money for your toy. Trading is the buying and selling of goods and services.
People also buy and sell services. Services are things that are done for you. When you get a haircut, you are buying a service. When your parents pay someone to wash the car, they are buying a service.
There are lots of service providers like doctors, dentists, lawyers, accountants, babysitters, and house painters. Services are also called intangible goods.
Tangible and Intangible
Goods are called tangible because you can touch them. You can give a good to someone else. A book is tangible because you can hold it or give it to a friend.
Services are called intangible. You can’t touch them. You can’t give them to someone else. A haircut is intangible because you can’t hold it. You can’t give your haircut to a friend. If you buy songs, movies or books for download from the Internet, they are also considered to be intangible because you can't actually touch or hold them. They aren't physical objects.
Consumer and Capital Goods
Consumer goods are the "final" goods purchased by customers. When you buy a toy, that's a good in it's final or end form.
Capital goods are things used to produce goods and services. Your toy had to be made in a factory. The factory purchased the capital goods needed to make your toy. Plastic is often used to make toys. Factories have to buy the plastic they use to make toys.
Jaina on May 05, 2020:
thanks that helped me alot
Cole on April 23, 2020:
So this ite is very helpful for me thanks 5stars
layla on May 06, 2019:
WILLIAM on May 06, 2019:
JoanCA (author) on February 11, 2013:
Thanks rfmoran. These are useful basics for kids to learn.
Russ Moran - The Write Stuff from Long Island, New York on February 11, 2013:
too bad you can't travel back in time to give this hub to all members of congress as well as the administration. I'm sharing this with my grandkids.