The basic difference between Final goods and intermediate 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:
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Meaning of Final 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 Intermediate 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 Final Goods and Intermediate Goods:
|Basis of Difference||Final Goods||Intermediate 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.|
|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.|
|The expenditure on consumer goods is known as Consumption Expenditure.||The expenditure on capital goods is known as Investment Expenditure.|
|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.|
|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.|
|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.|
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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.
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