Tea leaves bought by a family to make tea at home are a final good, even though they are transformed into drinkable tea. This is because:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → no producer transforms them any further
A final good is one that will not be transformed any further by a producer. The family changes the tea leaves into tea, but the family is the final buyer, not a producer.
Option (1) they are durable and last over many periods — Incorrect. Tea leaves are used up quickly; being durable is not what makes a good final.
Option (2) they are imported goods — Incorrect. Where a good comes from does not decide whether it is final or intermediate.
Option (3) no producer transforms them any further — Correct. Only the ultimate buyer changes them, so they are out of the active economic flow.
Option (4) they are used up in the production process of a firm — Incorrect. Goods used up by a firm in production are intermediate goods; the family is not a firm.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … 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. …” |