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Search Results - Good (economics and accounting)

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In macroeconomics and accounting, a good is contrasted with a service. In this sense, a good is defined as a physical (tangible) product, capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer, say an apple, as opposed to an (intangible) service, say a haircut. A more general term that preserves the distinction between goods and services is 'commodities,' like a flashlight. In microeconomics, a 'good' is often used in this more inclusive sense of the word.

A good is any object that increases the utility of the consumer/ product directely or indirectely. Goods are usually modeled as having diminishing marginal utility. The first individual purchase has high utility; the second has less. Thus, in these and other goods, the marginal utility of additional units approaches zero, as the quantity consumed increases. Assuming that one cannot re-sell it, there is a point at which a consumer would decline to purchase an additional product, even at a price very near zero. This margin of utility is the consumer's satiation point.

In some cases, such as that of a car, the lower limit of utility as quantity increases is zero. In other goods, the utility of a good can cross zero, changing from positive to negative through time. This means that what initially is a good can become bad if too much of it is consumed. For example, shots of vodka can have positive utility, but beyond some point, additional units make the consumer less happy.

Some things are useful, but not scarce enough to have monetary value, such as the Earth's atmosphere, these are referred to as 'free goods'.

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