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Types of Goods in Microeconomics

Microeconomics

Microeconomics is the study of the decisions that individuals and firms make regarding the allocation of resources and the prices at which they trade goods and services. In other words, microeconomics attempts to understand human choices, decisions, and resource allocation




Microeconomics does not attempt to answer or explain the forces that must occur in the market and instead tries to explain what happens when there are changes in certain conditions. Much of the microeconomic information comes from the financial statements of each company, and microeconomics includes many basic principles including


  • Demand, supply and equilibrium

Prices are determined by the law of supply and demand in a competitive market. In addition, suppliers offer the same price that consumers demand and this creates economic equilibrium .


  • production theory

This principle is the study of how goods and services are created or manufactured


  • production costs

According to this theory the price of all goods or services is determined by the cost of the resources used during production.


  • Labor Economics

This principle looks at workers and employers and attempts to understand levels of wages, employment, and income. The rules in microeconomics consist of a set of compatible laws and theories rather than beginning with empirical study.


total economy

Macroeconomics studies the behavior of a country and how its policies affect the economy as a whole. In addition, it analyzes all industries and entire economies rather than specific individuals or companies, which is why it is a top-down approach. Macroeconomics also attempts to answer many questions such as “what should Is that the rate of inflation?” or “What spurs economic growth?”


Macroeconomics also studies phenomena at the level of the economy such as gross domestic product (GDP) and how it is affected by changes in unemployment, national income, growth rates and price levels . Gross unemployment rate (GDP)


Macroeconomics focuses on the sum of standard economic correlations and for this reason governments and their agencies depend on macroeconomics for the formulation or success of economic and financial policy. Macroeconomics is plenty for some specific investments.


Rather, it is often credited to John Maynard Keynes as the founder of macroeconomics who began using monetary aggregates to study broad phenomena and some economists argue their theories while many disagree about how to explain his work.


The difference between microeconomics and macroeconomics

The difference between macroeconomics and microeconomics Individual investors may be better off focusing on microeconomics rather than macroeconomics. Fundamental and established investors may disagree with technical investors about the appropriate role of economic analysis, but microeconomics is more likely to affect individual investment .


Warren Buffett stated that the macroeconomic outlook did not influence his investment decisions , and when asked how he and his partner Charlie Munger choose investments, Buffett said, “Charlie and I do not care about the macro outlook. Or in a company as Buffett also referred to macroeconomic rules as funny papers


Another hugely successful investor, John Templeton, shares the same sentiment for macroeconomics, Templeton told Forbes in 1978, “I never ask whether the market will go up or down because I don't know and that doesn't matter even though I look in country after country for Stock asking: Where is this the cheapest compared to what I think it's worth? “


Types of Goods in Microeconomics

  • tangible and intangible goods

Goods may be tangible and immaterial, and physical goods are those that can be seen, touched, and moved from one place to another, for example.

  • the cars
  • the shoes
  • Clothing
  • machines
  • buildings
  • Wheat


On the other hand, intangible goods are considered intangible because they do not have any shape or weight and cannot be seen, touched or moved, so services of all kinds are intangible goods such as services

  1. Doctors Services
  2. Engineers Services
  3. Representative services
  4. Lawyers Services
  5. Teacher Services


The common characteristics of both tangible and intangible goods are that they are valuable and satisfy human needs .


intermediate goods

Intermediate goods are called goods sold from one company to another for resale or for further production of these intermediate goods. They are producers' single-use goods that are converted to manufacture final goods. Intermediate goods are also called as inputs, for example cotton is sold from the fields to the spinning mill where it is converted In turn, the yarn leaves the spinning factory by selling to the textile factory, where it disappears in a new product, which is the cloth again, and the cloth is sold by the factory to the merchant to be sold as final goods.


finished goods

On the other hand, final goods are called goods sold not for resale or for further production but for personal consumption or for the investment of final goods. Commercial and industrial enterprise is an intermediate good because it is used by them for further production.


On the other hand, water sold to individual families is considered final goods because it is used for personal consumption. Likewise, postal services that are sold to commercial homes are intermediate goods and those provided to families are final goods, and therefore the services of government institutions and non-profit organizations should be classified as intermediate or final goods according to By definition, what these firms and organizations buy from firms are intermediate goods because they are used in the services they provide to final consumers.


Where when the government buys cement, steel and other raw materials for building roads and bridges, consumers use road and bridge services which are final goods and the distinction between intermediate and final goods is of great importance in calculating national income and this is particularly the case while calculating national income through product method or value-added method .

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