Given below are some statements. Read them carefully and choose the correct statement (s) from the given options.

Statement 1: It is not in the nature of the good but in the economic nature of its use that a good becomes a final good.

Statement 2:  Services are not a part of Consumer Goods.

Only Statement 1 is correct.

The correct answer is Option 1: Only Statement 1 is correct.

Statement 1: It is not in the nature of the good but in the economic nature of its use that a good becomes a final good. This is correct.

A good that is meant for final use and will not pass through any more stages of production or transformations is called a final good. Why do we call this a final good? Because once it has been sold it passes out of the active economic flow. It will not undergo any further transformation at the hands of any producer. It may, however, undergo transformation by the action of the ultimate purchaser. In fact many such final goods are transformed during their consumption. Thus the tea leaves purchased by the consumer are not consumed in that form – they are used to make drinkable tea, which is consumed. Similarly most of the items that enter our kitchen are transformed through the process of cooking. But cooking at home is not an economic activity, even though the product involved undergoes transformation. Home cooked food is not sold to the market. However, if the same cooking or tea brewing was done in a restaurant where the cooked product would be sold to customers, then the same items, such as tea leaves, would cease to be final goods and would be counted as inputs to which economic value addition can take place. Thus it is not in the nature of the good but in the economic nature of its use that a good becomes a final good.

Statement 2:  Services are not a part of Consumer Goods. This is incorrect. Consumer goods also includes services which are consumed.