Which of the following is an example of an intermediate good?

What is an Intermediate Good?

An intermediate good refers to partly finished products that are then offered as an input ton the manufacturing of other products that end up being final items. Intermediate items are an integral part of the production process, and also as such, they are likewise known as producer products. When provided in the manufacturing procedure, the intermediate great will certainly be transformed into an additional product either an additional intermediate excellent or a final excellent offered to the end userTypes of CustomersCustomers play a far-reaching duty in any business. By better expertise the various forms of customers, businesses have the right to be much better equipped to develop.

You watching: Which of the following is an example of an intermediate good?



An intermediate good describes a partly finished excellent that is then provided in the production of various other items to come to be final goods. In order to distinguish whether intermediate goods are offered as second intermediate products or as consumer items, one would have to think about who the buyer is.Intermediate products deserve to be informally categorized into three major categories: in the initially, they are created and automatically supplied by the manufacturer to produce last goods; in the second, they are created and also offered in its partially completed develop to various other suppliers to develop final goods; and also in the third, they are offered to one more agency to develop another intermediate great.

Intermediate Goods Sold as Consumer Goods

There is a distinct category wbelow intermediate items deserve to be marketed to the end individuals in their raw form. Examples of such kinds of intermediate goods (marketed as consumer goods) would be salt or sugar, which are frequently bought by consumers in the marketarea.

However before, tbelow are other intermediate products that consistent consumers (members of the general public) will certainly commonly not buy in their original create, such as metal or glass. In order to differentiate whether intermediate items are marketed as secondary intermediate goods or as consumer products, one would need to take into consideration who the buyer is.

Categories of Intermediate Goods

Intermediate goods have the right to be informally categorized into three primary categories. In the first category, they are created and automatically supplied by the manufacturer to produce final goods; in the second, they are produced and also sold in its partly completed form to various other companies to develop final goods; and also in the 3rd, they are marketed to another company to produce an additional intermediate excellent.


Practical Examples

Here are some examples of the 3 categories pointed out formerly, and as you can imagine, intermediate goods are regularly offered throughout different sectors.

An instance of a good that is created and then supplied by the manufacturer as inputs right into final goods may include car engines. Some automobile manufacturers will make their own practice automobile engines and then use the engines as inputs right into their automobiles that are marketed, as soon as completed, to consumers.

See more: Pros And Cons Of Mandatory Community Service For High School Students

Tright here are many type of examples of goods which are produced and then marketed in their partially completed create to various other service providers, consisting of steel, which is supplied in the completion of buildings, bridges, cars, and trains; wood which is offered in building residences, to make furniture and also hardlumber flooring; precious steels such as gold and also silver used in the production of jewelry, and also glass offered in creating windows, accessories, wine bottles, and photo frames.

Finally, intermediate goods have the right to additionally be offered to make additional intermediate products. For example, a farmer grows flax plants which are then offered to the miller (as an intermediate good), who breaks dvery own the flax plant to separate out the flaxseed (typically used in many types of healthy food). The flaxseed is then bought (as an additional intermediate good) by a company that manufactures granola bars and then sells the final product of banana chocolate chip flaxseed granola bars to customers at the superindustry.

Intermediate Goods and also GDP

The function of intermediate products in calculating a country’s Gross Domestic Product (GDP)Gross Domestic Product (GDP)Gross residential product (GDP) is a typical measure of a country’s financial health and wellness and also an indicator of its typical of living. Also, GDP deserve to be used to compare the efficiency levels between different nations.is a very important principle. As a reminder, GDP describes the meacertain of production for a nation that amounts to all the products and also services produced by that nation or region and also is a foundational idea in macrobusiness economics and in the socio-economic and political spheres.

It is important to note that intermediate goods are not contained in GDP calculations, and also the factor is that doing so would certainly be “double-counting” given that the final items will certainly additionally be had in GDP calculations. Therefore, miscalculations of GDP as a result of consisting of intermediate items would certainly lead to gross overestimate of GDP.

In an easy instance to highlight the idea, imagine that a blueberry farm in Oregon grows blueberries and also sells them to neighborhood grocery stores, members of the public who visit the farm in the summertime, and a jam manufacturer.

When the farm’s develop is calculated as part of U.S. GDP, the blueberries that it marketed to the public will certainly be contained in the GDP calculation, while the blueberries offered to the grocery stores and also the jam factory will certainly not be. This is because the grocery stores and jam manufacturers will certainly be marketing the product to the end customers which will certainly be contained in the GDP calculation, otherwise tbelow would certainly be a case of double-counting.

Services as an Intermediate Good

It must additionally be listed that solutions can additionally be taken into consideration intermediate items. For instance, in a photography organization, the company gave developing photographs is considered the intermediate excellent, while the photographs themselves are thought about the last good.

See more: How Can The Human Mind Occur In The Physical Universe ? Ebook By John R

Other service-oriented businesses have the right to also be classified as intermediate products such as cleaning, landscaping, public transportation, banking, and insurance services.

Discover More

CFI is the main provider of the worldwide Commercial Banking & Crmodify Analyst (CBCA)™CBCA® CertificationThe Commercial Banking & Crmodify Analyst (CBCA)™ accreditation is an international conventional for credit experts that covers finance, accounting, crmodify evaluation, cash circulation evaluation, covenant modeling, loan repayments, and more. certification routine, designed to assist anyone come to be a world-class financial analyst. To keep proceeding your career, the additional CFI resources below will certainly be useful: