Consumption goods, capital goods, final goods, intermediate goods

Correct answer: D. One that is bought for final use

Explanation: A final good is purchased for final consumption or final investment and is not intended for further processing or resale in the same production chain. Its classification depends on the purpose of use, not its price, appearance, brand, or physical form. Thus, option D is correct.

Correct answer: A. A good used durably in production

Explanation: A capital good is a durable producer asset used repeatedly to provide productive services or to produce other goods and services. Examples include machines, factory equipment, and office equipment. It is not defined by resale or household eating. Therefore, option A is correct.

Correct answer: B. Because it explains final value and avoidance of double counting

Explanation: National income measures the value of final goods and services. If the value of intermediate goods is added separately as well as through the final product, the same production value is counted more than once. Correct classification therefore prevents double counting and makes national income measurement accurate. Option B is correct.

Correct answer: A. Because the purpose of use decides the category

Explanation: Economic classification depends on the use made of a good. Sugar purchased by a family for eating is a final consumption good, whereas sugar purchased by a sweet shop becomes an intermediate input because it is used to produce sweets. The physical product is the same, but its economic category changes with purpose. Hence, option A is correct.

Correct answer: C. An office buys it for accounting work

Explanation: A computer purchased by an office for accounting is a durable producer asset because it supports the regular provision of office or business services over several periods. The student’s or family’s computer is generally a consumption good, while a computer bought for resale is trading stock. Therefore, option C is correct.

Correct answer: C. By the final or further use of the good

Explanation: The essential basis is economic use. A final good is purchased for final consumption or investment, while an intermediate good is purchased for further processing, production, or resale. Price, colour, and weight do not determine the classification. Since option C identifies the relevant basis, it is correct.

Correct answer: B. Double counting may occur

Explanation: The value of an intermediate good is often already included in the price of the final good made from it. Adding both values separately counts the same economic activity more than once and overstates national income. This error is called double counting. Therefore, option B is correct.

Correct answer: B. Final capital good

Explanation: A factory machine is purchased for final investment in productive capacity. It is not consumed by households and is not an input that is transformed into another product during one production cycle. Although it is used in production, it is a final capital good because it provides services repeatedly over time. Option B is correct.

Correct answer: C. Milk

Explanation: Milk illustrates that classification depends on the buyer’s purpose. Milk bought by a household for drinking is a final consumption good, while milk bought by a dairy or sweet maker as an input is an intermediate good. Thus, the same physical commodity can have different economic classifications. Option C is correct.

Correct answer: C. Intermediate good

Explanation: A mobile phone purchased by a shop for resale is not bought for the shop’s own consumption or productive use. It remains in the trading chain until it is sold to the final user. For national income classification, goods purchased for resale are treated as intermediate goods or trading stock. Hence, option C is correct.

Correct answer: A. Consumption good

Explanation: A mobile phone bought by a household for communication, education, entertainment, or personal use provides satisfaction directly to the final consumer. It is therefore a final consumption good. It is not an intermediate input, raw material, or resale stock because the household does not buy it for further production or sale. Option A is correct.

Correct answer: A. The tailor’s machine can be capital and the family’s machine can be a consumption good

Explanation: The same physical machine may receive different classifications because economic use matters. A tailor uses the machine repeatedly to provide tailoring services, so it is a capital good. A family generally buys its machine for personal household use, so it is a consumption good. Thus, option A is correct.

Correct answer: B. One used for further production or resale

Explanation: An intermediate good is purchased for use in producing another good or service, or for resale to another buyer in the production and distribution chain. It is not counted separately as final output when its value is already embodied in the final product. Its defining feature is further use, so option B is correct.

Correct answer: A. Both can be purchased for final use

Explanation: Final goods are divided according to their final purpose. Consumption goods are purchased for satisfying consumers’ wants, while capital goods are purchased as final investment to add to productive capacity. Neither is intended for further processing in the same accounting chain. Therefore both can be final goods, making option A correct.

Correct answer: B. Intermediate good

Explanation: The mill purchases wheat as an input for producing flour. Because the wheat is transformed and its value becomes part of the flour’s value, it is an intermediate good for the mill. The flour may later become a final good depending on its buyer and use. Therefore, option B is correct.

Correct answer: B. Intermediate good

Explanation: The furniture maker purchases wood as a raw material to produce tables, chairs, or other furniture. Since the wood undergoes further processing and its value becomes part of the finished furniture, it is an intermediate good for the producer. It is not a final consumption or capital good at this stage. Option B is correct.

Correct answer: A. Capital good

Explanation: An office table is a durable asset used repeatedly to support administrative or service-producing activities. It does not become a physical input in another product and is not bought for household consumption or resale. Because it contributes to business operations over several periods, it is classified as a capital good. Option A is correct.

Correct answer: B. Consumption good

Explanation: A table bought for a home is used directly by household members to obtain services such as eating, studying, or placing objects. It is not purchased for further production or resale. Thus it is a final consumption good, even though it is durable and may provide services for many years. Option B is correct.

Correct answer: A. Capital good

Explanation: A shop counter is a durable business asset. The shopkeeper uses it repeatedly to display goods, serve customers, and conduct sales operations; it is not itself bought as merchandise for resale or as household consumption. Since it supports business activity over time, it is classified as a capital good. Option A is correct.

Correct answer: B. Intermediate good

Explanation: The wording says the table is kept for selling, so the shopkeeper is holding it as merchandise or resale stock rather than using it as shop equipment. Goods held for resale remain in the production and distribution chain and are treated as intermediate goods until final purchase. Therefore, option B is correct.

Correct answer: A. A capital good is repeatedly used in production, while an intermediate good may be used up in the process

Explanation: A capital good is a durable means of production that provides services repeatedly, such as a machine or office building. An intermediate good is an input used in producing another good or service and may be transformed or consumed during that process. Durability is therefore the key distinction in this question, making option A correct.

Correct answer: B. Oven capital good and flour intermediate good

Explanation: A bakery oven is a durable asset that is used repeatedly to produce bread and other baked products, so it is a capital good. Flour is consumed or transformed as an input while making those products, so it is an intermediate good. Their different roles explain option B.

Correct answer: A. Duration of use

Explanation: Durable consumption goods provide services over a relatively long period, such as refrigerators, furniture, and televisions. Non-durable consumption goods are used up quickly or have a short life, such as food and some daily necessities. The relevant basis is therefore the expected duration of use, making option A correct.

Correct answer: A. Durable consumption good

Explanation: A refrigerator bought for household use directly provides storage and cooling services to the family over many years. It is not purchased for further production, processing, or resale. Because it is used by the final consumer and has a long useful life, it is both a final consumption good and a durable good. Option A is correct.

Correct answer: A. Capital good

Explanation: When a refrigerator is purchased by a factory for use in its office, production unit, or service activity, it provides repeated services over a long period. Therefore, it is a capital good rather than an intermediate input that is consumed during production. The classification depends on its intended use.