Definition of Goods & Services for Economics

Food falls under the category of goods.

Goods and services represent an important term in basic economics. Goods are tangible things that can be consumed, such as clothes and food. Services are actions people perform, such as haircuts or cleaning services.

Types of Goods

Consumer goods are items people purchase to satisfy their needs and wants, such as food, shelter, and clothing. Producer goods refer to resources producers need to create goods, like cotton and steel.

Types of Services

Some types of services include educational services, communication services, transportation services and health services.

Scarcity

Scarcity is a fundamental concept of economics. According to the principle of scarcity, time, resources and money always are limited, in contrast to our unlimited desires.

Significance

Economics examines the production and distribution of goods and services as exchanged through trade. Scarcity forces people to make choices about how they value certain goods and services.

Supply and Demand

Since goods and services are scarce, their price is determined by supply and demand. Supply refers to the total amount of the goods or services that are produced, and demand refers to the total amount that consumers wish to consume.

References

• MCWDN: Goods and Services
• Econ Guru: Scarce Resources & Unlimited Wants
• Net MBA: Supply and Demand