On what basis is the difference between a final good and an intermediate good decided in the product method?
Answer and explanation
Correct answer: The use of the good
The classification of a good as final or intermediate depends on its intended use, not on its price, colour, or seller. A good purchased for final consumption, investment, or export is final, whereas a good used as an input in producing another good is intermediate. Therefore, the correct basis is the use of the good, making option D correct.
Frequently asked questions
What is the correct answer to this question?
The use of the good
Why is this the correct answer?
The classification of a good as final or intermediate depends on its intended use, not on its price, colour, or seller. A good purchased for final consumption, investment, or export is final, whereas a good used as an input in producing another good is intermediate. Therefore, the correct basis is the use of the good, making option D correct.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
