The basic difference between Consumer goods and Capital goods is their end-user. As consumer goods lead to direct or final satisfaction by consumers whereas capital goods help in further processing or production of other goods.
To know the difference between these two, we must clear the meaning of these terms:
Meaning of Consumer Goods:-
These are goods that are directly used by consumers for the satisfaction of wants and attain utility. Also, these goods are not used for any further production.
For example, clothes, stationery items, and meals, etc. are consumer goods as these are directly used by consumers for final consumption. Thus, these are also known as consumption goods. In other words, consumer or consumption goods are meant for final consumption by final users i.e. consumers.
Meaning of Capital Goods:-
The goods which are in production for long period and have high value, are known as capital goods. These goods are known as fixed assets for the producers as these are used for further production. In addition to it, capital goods always carry depreciation costs with themselves. Therefore, the goods which are used for a short period of time or carry low value cannot be included in capital goods.
For example, tractors, equipment, plant and machines in a factory, etc.
Chart of Difference between Consumer Goods and Capital Goods:
| Basis of Difference | Consumer Goods | Capital Goods |
| Meaning | These refer to the goods which are used by end consumers for consumption | These refer to the goods which are used in the production of other goods. |
| Users | For these goods, the users are final consumers. | For these, the users are manufacturers or producers. |
|
Marketing Model |
Here, business to consumer (B2C)marketing model is used. | In these, business to business(B2B) marketing model is used. |
|
Also known as |
Consumer goods are also known as Consumption goods. | Capital goods are also known as producer’s fixed assets. |
|
Expenditure |
The expenditure on consumer goods is known as Consumption Expenditure. | The expenditure on capital goods is known as Investment Expenditure. |
|
Leads to |
The high production of these goods leads to raising the living standard of people. | The high production of these goods leads to raising the future growth of the economy. |
|
Objective |
The objective of the production of these goods is to fulfill the consumers’ needs. | The objective of the production of these goods is to produce other goods. |
|
Price Determination |
For these goods, the prices are determined by the suppliers. | For these goods, the prices are determined by the companies. |
| Demand | These goods have a high demand in the market. | These goods have less demand as compared to consumer goods. |
| Interdependency | The production of these goods depends on capital goods. | The production of these goods doesn’t depend on consumer goods. |
| Pricing | These goods are cheaper. | These goods are costly. |
| Storage | The storage of these goods mainly consists of the home. | The storage of these goods mainly consists of warehouses and inventory. |
| Meant for | These goods are meant for final consumption. | These goods are meant for final investment. |
Download the chart:-
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Conclusion:
Thus, both goods are necessary for the economy. As consumer goods fulfill the needs of consumers and add up in their quality of life. In the contrast, capital goods facilitate the production of other goods. Thus, these add up to the growth of the economy.
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