Types of Goods and services:
According to Marshall, all the things that satisfy human wants are called goods. E.g; books, chairs, shoes, food, clothes and so on satisfy human wants. So, they are called goods. In economics, all the tangible things like books, copies, chairs, etc as well as intangible things like love, affection, friendship, etc are included in economics.
There are basically 5 types of goods which can be discussed as follows:
a) Normal goods:
All the goods whose demand increase with the increase in income of the consumer are called normal goods. For example; food, clothes, shoes, etc are normal goods as people buy more of these goods when their income increases.
b) Giffen goods:
The term ‘Giffen goods’ is associated with the name of Robert Giffen. Giffen goods are those goods which are substituted for other more important goods. E.g; If a person is consuming rice and meat and suddenly the price of rice rises. The current income of the person will not be sufficient for consuming both the goods, so he sacrifices the amount of meat for consuming the rice which is the necessary goods. So, meat is Giffen goods for him.
c) Inferior goods:
If the demand decreases with the increase in income, such goods are called inferior goods. E.g, A person is using moped when his income is Rs. 2 lakhs per year. When his income rises to Rs 4 lakhs per year, then he will buy a new model motorbike instead of buying two mopeds. So, the moped is an inferior good for him.
d) Substitute goods:
Is the fall in the price of one good lead to the fall in the demand for another good, dude goods are called substitutes but they must be related to each other. E.g; When the price of tea falls, then the demand for coffee will fall down because more people consuming coffee will also shift towards consuming tea as its price is low.
e) Compliment goods:
If the fall in the price of one good leads to the increase in the demand for the other good, those goods are called compliments but those goods must be consumed together. E.g; shoe and shoelace, petrol and car are consumed together. When the price of petrol falls, then it leads to an increase in demand for the car. So, they are compliment goods.
f) Private and public goods:
Goods that are owned by an individual are called private goods. For example, land, building, car, bicycle, laptop, mobiles, etc are private goods. On the other hand, goods that are owned by society as a whole are known as public goods. For example; college, hospital, park, conference Hall, stadium, etc owned by society are known as public goods.