Match List-I with List-II.

Choose the correct answer from the options given below :

(A)-(III), (B)-(I), (C)-(II), (D)-(IV)

The correct answer is option (4) : (A)-(III), (B)-(I), (C)-(II), (D)-(IV)

The correct match is based on the categorization of goods in the production and consumption processes :

(A) Raw Material : Raw materials are used in the production process and are considered intermediate goods (III).

(B) Machines used in Production : Machines used in production are considered capital goods (I) as they contribute to the production of other goods.

(C) Bread used by a Consumer : Bread used by a consumer is a final good (II) as it is ready for consumption.

(D) Services used by Consumer : Services used by a consumer are considered consumer goods (IV) as they are directly consumer by the end-user.

Note: An item that is meant for final use and will not pass through any more stages of production or transformations is called a final good. Of the final goods, we can distinguish between consumption goods and capital goods. Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumption goods or consumer goods. (This also includes services which are consumed but for convenience we may refer to them as consumer goods.). Accordingly, both bread as well as services can be both final goods/consumer goods.

Then there are other goods that are of durable character which are used in the production process. These are tools, implements and machines. While they make production of other commodities feasible, they themselves don’t get transformed in the production process. They are also final goods yet they are not final goods to be ultimately consumed. Unlike the final goods that we have considered above, they are the crucial backbone of any production process, in aiding and enabling the production to take place. These goods form a part of capital, one of the crucial factors of production in which a productive enterprise has invested, and they continue to enable the production process to go on for continuous cycles of production. These are capital goods and they gradually undergo wear and tear, and thus are repaired or gradually replaced over time.