1. INTRODUCTION
Economics is a study of how people interact by selling and buying goods from one another. It
is important to clarify a few types of goods and services since there is so much discipline
focuses on the exchange of goods. Besides, goods and services signify an important term in
basic economic. Otherwise, we often called goods and services products with the idea that
they are available for consumption due to some process.
THE DEFINITION OF GOODS AND SERVICES
In economics, a good is a tangible product that is desirable or useful to a customer. Different
goods respond to the laws of economics in dissimilar ways. Although all goods are subject to
the law of supply and demand, the exact ways in which the law of demand and supply
applies to them are quite different. While service is a type of economic activity that is
intangible, is not stored and does not result in ownership. Services are one of the two key
components of economics, while the other one is goods. A service is a set of benefits
delivered from a service provider, which are generated by the functions of technical systems
and 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. 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. 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.
CONCLUSION
The conclusion is there are many types of goods and services. The examples like free
goods, public goods, private goods, necessity goods, complementary goods, substitute
goods, luxury goods, inferior goods, merit goods and demerit goods. These types of goods
and services have their own advantages and disadvantages. We, as a consumer must use it
very well.

4. REFERENCES
Pettinger, T (2011). Different types of Goods: Inferior, normal, luxury. Retrieved
September 29, 2012 from
http://www.economicshelp.org/blog/790/economics/different-types-of-goods-
inferior-normal-luxury/
Pettinger, T (2010). Private, Public and Free goods Defined. Retrieved
September 29, 2012 from
http://www.economicshelp.org/blog/2104/economics/private-public-and-free-
goods-defined/
Theng, K.L. (2011).Ekonomi Asas. Selangor: Sasbadi Sdn. Bhd
Necessity goods. (n.d). Retrieved September 28, 2012 from
http://en.wikipedia.org/wiki/Necessity_good
Pettinger, T (2010). Private, Public and Free goods Defined. Retrieved
September 29, 2012 from
http://www.economicshelp.org/blog/2104/economics/private-public-and-free-
goods-defined/