Tag: basic concepts of national income

b) Producer sector: It includes all producing units in the economy. For the production of goods and services, the firms purchase factors of production.

Stock variable is defined as a variable which is measured at a particular point of time. Stock is not time dimensional. It influences the flow. Example: wealth, capital, etc.

Final goods include those goods which are either consumed by the households or purchased by the producers for investment purposes. 

If the end-use of the good is for further production or resale, then the good Is an intermediate good. However, if the end-use of the good is consumption or investment, then the good is a final good. 

It depends on the end use of butter. If butter is purchased by a household, then it Is a final good.
However, if it is purchased by a bakery shop for making cakes, then it is an intermediate good. 

Milk and Bread are examples of Non-durable good. Non-durable gods are those goods which are used-up in a single act of consumption. Bread and milk are used-up in a single act of consumption. The same milk or bread cannot be used again.

Household is the consumption sector. Household sector receive goods and services from the producer sector for consumption purpose and thus the household sector can be termed as the consumption sector. Households are also the owners of the factors of production.

Capital is not a flow. Capital falls under the stock concept since it relates to a point of time. Capital is not time dimensional. Capital is not related to a period of time like flow.

Wealth is a stock. Wealth falls under the stock concept since it relates to a point of time. Wealth is not time dimensional. Wealth is not related to a period of time like flow.

Refrigerator purchased by a confectionery shop is an example of intermediate good since refrigerator is not yet ready for use by the final users. Value is yet to be added. Refrigerator is used as a raw material by a confectionery shop.