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What are goods and services and why are they important for economics?
Answer:
Answer by Student
-
Goods
are the
physical objects
that we can see and touch, such as food, clothes, toys, etc.
-
Services
are the
activities that we pay others to do
for us, such as teaching, cleaning, repairing, etc.
-
Both goods and services are important for economics because they are the
outputs or products
that are
produced
to
satisfy human wants and needs.
- For example, we need food to survive and we want clothes to look good. We pay teachers to educate us and we pay cleaners to keep our houses tidy.
Detailed Answer by Teachoo
-
Goods are the
tangible items
that can be produced, bought, sold, and consumed in an economy. They have a
physical existence
and can be measured in terms of
quantity and quality
. Examples of goods are food, clothes, toys, furniture, cars, etc.
-
Services are the
intangible activities
that are performed by one person or organization for another person or organization in exchange for a
payment
. They do not have a
physical existence
and cannot be stored or transferred. Examples of services are teaching, cleaning, repairing, banking, consulting, etc.
-
Both goods and services are important for economics because they represent the
output or production
of an economy. Output is the
total value
of all goods and services produced in a given period of time. Output reflects the level of
economic activity and income
in an economy. Output also determines the level of
demand or consumption
in an economy. Demand is the
willingness and ability
of people to buy goods and services at different prices. Demand reflects the
preferences and needs
of consumers in an economy.
-
For example,
we need food to survive and we want clothes to look good. Food and clothes are
goods
that are produced by farmers and manufacturers using resources such as land, labor, and capital. Food and clothes are also consumed by people who buy them from markets or shops using their income or money. The production and consumption of food and clothes affect the output and demand in the economy.
- We pay teachers to educate us and we pay cleaners to keep our houses tidy. Teaching and cleaning are services that are performed by teachers and cleaners using their skills and time. Teaching and cleaning are also consumed by people who hire them from schools or agencies using their income or money. The performance and consumption of teaching and cleaning affect the output and demand in the economy.
