trade disputes

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trade disputes

  1. 1. INTRODUCTIONEconomics is a study of how people interact by selling and buying goods from one another. Itis important to clarify a few types of goods and services since there is so much disciplinefocuses on the exchange of goods. Besides, goods and services signify an important term inbasic economic. Otherwise, we often called goods and services products with the idea thatthey are available for consumption due to some process.THE DEFINITION OF GOODS AND SERVICESIn economics, a good is a tangible product that is desirable or useful to a customer. Differentgoods respond to the laws of economics in dissimilar ways. Although all goods are subject tothe law of supply and demand, the exact ways in which the law of demand and supplyapplies to them are quite different. While service is a type of economic activity that isintangible, is not stored and does not result in ownership. Services are one of the two keycomponents of economics, while the other one is goods. A service is a set of benefitsdelivered from a service provider, which are generated by the functions of technical systemsand by distinct activities of individual. There are several types of goods and services. I. Normal Normal good can be income elastic or income inelastic. It follows the principles of supply and demand. If people’s income increase, their demand for this goods are also increases. For examples, the things like clothing, fruits and vegetables, computer equipment, and other things that experience increased demand as people increase their income. II. Free Goods Free goods are goods with no opportunity cost. Besides, free goods are created by Gods and needed by consumers and consumers also can use it without has to pay for it. For example is breathing air, sunshine and rainwater. III. Public Public goods are goods with characteristics of non-rivalry and non-excludability. Other than that, public good is a goods and services that produced by the government to take care the welfare of the society. For examples are national defense, police station, neighborhood park that is open to all and road.IV. Necessity Necessity goods are the goods and services that consumer needed in order to survive in their live. People can’t live without necessity goods because it is very important. The examples of necessity goods are foods, water, house and clothes.
  2. 2. V. Private goods Private goods are good and services which do have rivalry and excludability. It is the opposite of public goods. Private goods are goods with a price and if consumer wants to use it they have to pay for it. Examples of private goods are clothes, television, food, radio and electrics. VI. Merit Goods Merit goods are goods and services which people can take benefits from it. It is also often have positive externalities. For example is education and treatment at hospital. Even though merits goods have many advantages, but people may have a bad perception about merit goods.VII. Demerit Goods Demerit goods are goods and services where people may underestimate costs of consuming it. It is also often have negative externalities. For examples are cigarette and drugs. Consumers always use it even though they know that the demerit goods can harm their health.VIII. Veblen or Snob Good Veblen or snob goods are goods where an increase in price encourages people to buy more of it. This is because, they think the more expensive goods are better in quality. Veblen goods are high-status goods such as automobiles, perfumes, expensive wines and watches. If the price of these goods is decrease, the quantity demanded will also decrease because their status denoting utility becomes compromised. IX. Giffen Good Giffen goods are goods that will experience an increase in quantity demanded in response to increases in price. This is because, the income effect of increase in price causes you to buy extra of this cheap good because you can’t afford more expensive goods. For example, if the price of wheat increases, a poor peasant may not be able to afford meat anymore, so they have to buy more wheat. X. Inferior Good Inferior goods are goods that are low-quality but high-quantity. For example, the inferior good is Tesco value bread. When your income increases, you buy less Tesco value bread and buy more high quality bread like organic bread. Other examples of inferior goods are secondhand car and motorcycle and dinner at stall.
  3. 3. XI. Luxury Luxury goods are goods and services that follow the same principle as normal goods, but demand for them increases at higher percentage than it does for normal goods. Besides, luxury good is also normal goods, but a normal good isn’t necessarily a luxury good. For examples, high Definition TV’s, boutique food, artwork and high- end clothing would be luxury. When income rises, people waste a higher percent of their income on the luxury good.XII. Substitute Substitute goods are elastic good that is a relatively great change in quantity due to a relatively small change in price. Hence, it is likely part of a family of substitute goods. For example, as pen prices increase, customer might buy more pencils instead. The other examples of substitute goods are Pepsi and coca- cola. For example, if consumer does not like a Pepsi, they can choose coca cola.XIII. Complimentary Complimentary goods are generally more inelastic than goods in a family of substitutes. It is goods that are used together like TV and DVD player. For example, if the price of TV results in a decrease in the quantity of TV demanded, it is likely that the quantity of DVD player demanded will also fall, even though there is no change in DVD players prices. This is because TV and DVD player are complimentary goods.CONCLUSIONThe conclusion is there are many types of goods and services. The examples like freegoods, public goods, private goods, necessity goods, complementary goods, substitutegoods, luxury goods, inferior goods, merit goods and demerit goods. These types of goodsand services have their own advantages and disadvantages. We, as a consumer must use itvery well.
  4. 4. REFERENCESPettinger, T (2011). Different types of Goods: Inferior, normal, luxury. RetrievedSeptember 29, 2012 fromhttp://www.economicshelp.org/blog/790/economics/different-types-of-goods-inferior-normal-luxury/Pettinger, T (2010). Private, Public and Free goods Defined. RetrievedSeptember 29, 2012 fromhttp://www.economicshelp.org/blog/2104/economics/private-public-and-free-goods-defined/Theng, K.L. (2011).Ekonomi Asas. Selangor: Sasbadi Sdn. BhdNecessity goods. (n.d). Retrieved September 28, 2012 fromhttp://en.wikipedia.org/wiki/Necessity_goodPettinger, T (2010). Private, Public and Free goods Defined. RetrievedSeptember 29, 2012 fromhttp://www.economicshelp.org/blog/2104/economics/private-public-and-free-goods-defined/

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