In economics, the term ‘services’ refers to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → the intangible satisfaction of wants and needs, such as the tasks that doctors and teachers perform for us
A service meets a want or need without being a physical object. The work a doctor or a teacher does for us is a service.
Option (1) physical, tangible objects, such as food items and clothes, that are used to satisfy wants and needs — Incorrect. Physical, tangible objects such as food and clothes are goods.
Option (2) the intangible satisfaction of wants and needs, such as the tasks that doctors and teachers perform for us — Correct. A service gives intangible satisfaction, like the work of doctors and teachers.
Option (3) the money that people earn by working for someone else and use to buy goods — Incorrect. Money earned by working is income, a sum of money. A service is the satisfaction itself.
Option (4) goods and services that a household produces for its own use instead of exchanging them — Incorrect. What a household makes for its own use can be goods or services. The option is about who uses the output.
NCERT (2026-27): “1.1 A Simple Economy Think of any society. People in the society need many goods and services in their everyday life including food, clothing, shelter, transport facilities like roads and railways, postal services and various other services like that of teachers and doctors. In fact, the list of goods and services that any individual needs is so large that no individual in society, to begin with, has all the things she needs. …” “By goods we means physical, tangible objects used to satisfy people’s wants and needs. The term ‘goods’ should be contrasted with the term ‘services’, which captures the intangible satisfaction of wants and needs. As compared to food items and clothes, which are examples of goods, we can think of the tasks that doctors and teachers perform for us as examples of services.” |