"Machine purchased will never be a final good"
Which of the following option is true in regards to the above statement?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: The statement is false
Here's why:
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Final Goods: These are goods that are ready for consumption or investment and are not used in the production of other goods. They are included in the final calculation of GDP.
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Machines: Machines purchased for production are considered capital goods. While they are not consumed directly, they are used in the production of other goods and services. Capital goods like machines are considered final goods when they are purchased for investment purposes by businesses.
A machine can be a final good if it is purchased for its own use and not for further production. Here are some examples:
a. A machine bought by a household: If a household buys a washing machine for personal use, it is considered a final good.
b. A machine bought by a small business: If a small business buys a computer for office use, it is considered a final good.