Difference between Consumer Goods and Capital Goods

Difference between Consumer Goods and Capital Goods-min

The basic difference between Consumer goods and Capital goods is its end usage. 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 which 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 meal 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 the 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 itself. 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 fulfil 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 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:-

If you want to download the chart please download the following image and PDF file:-

Chart of Difference between Consumer Goods and Capital Goods 1 min 226x300 - Difference between Consumer Goods and Capital Goods
Chart of Difference between Consumer Goods and Capital Goods

 

application pdf - Difference between Consumer Goods and Capital Goods
Chart of Difference between Consumer Goods and Capital Goods

 

Conclusion:

Thus, these both goods are necessary for the economy. As consumer goods fulfil the needs of consumers and add up in their quality of life. On contrast, capital goods facilitate the production of other goods. Thus, these add up in the growth of the economy.

Thanks!!!

Please share with your friends  

Comment if you have any question.

References:

Introductory Microeconomics – Class 11 – CBSE (2020-21)

Leave a Reply