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Differentiating between physical objects we can touch and actions performed by others.
Imagine you have $10. You could buy a shiny new action figure to keep in your room, or you could pay for a ticket to see a movie. Why can you hold one in your hand, but the other is just a memory?
In economics, goods are physical objects that people grow or make. We call these tangible because you can actually touch them and pick them up. Think about your backpack. Inside, you might have a notebook, a pencil, and an apple. All of these are goods!
Goods can be small, like a cent paperclip, or huge, like a dollar car. Because goods are physical things, they can be stored on a shelf and used later. When you buy a good, you usually get to keep it and take it home with you.
Let's look at items you find in a grocery store: 1. A carton of milk is a good because you can carry it. 2. A loaf of bread is a good because it was baked and packaged. 3. A bag of frozen peas is a good because it is a physical product you can own.
Quick Check
If you buy a pair of sneakers at the mall, are you buying a good or a service?
Answer
A good, because sneakers are physical objects you can touch and take home.
A service is an action that someone does for someone else. Unlike goods, services are intangible, which means you can't hold them in your hand. When you get a haircut, you aren't buying the scissors; you are paying for the barber's skill and time.
To provide a service, people use resources. These include human resources (the person's work) and capital resources (the tools they use). For example, a doctor uses their medical knowledge and a stethoscope to give you a check-up. You don't take the doctor home, but you feel better because of the work they did!
Think about your ride to school: 1. The service is the act of being driven safely from your house to the school. 2. The human resource is the driver who knows the route. 3. The capital resource is the bus itself, which is a tool used to perform the service.
Quick Check
Is a piano lesson a good or a service?
Answer
It is a service because you are paying for the teacher's time and knowledge of music.
Sometimes, the line between a good and a service gets blurry because many businesses provide both at the same time! Think about a pizza restaurant. When you order a pepperoni pizza, you are buying a good (the actual pizza you eat).
However, you are also paying for a service. The chef had to cook the pizza, and a server might have brought it to your table. If the pizza is delivered to your house, that delivery is a service too. Most businesses use services to help sell their goods!
Imagine you go to a tech store because your phone screen is cracked: 1. You buy a new protective case. This is a good. 2. You pay a technician to fix the broken screen. This is a service. 3. The store provided both a physical product and a skilled action to help you.
Which of these is the best definition of a 'good'?
A window washer cleans the glass on a tall building. What is this an example of?
A restaurant provides only goods and never provides services.
Review Tomorrow
Tomorrow morning, look around your kitchen. Can you find three goods and name one service your family might pay for this week?
Practice Activity
Draw a picture of a bicycle shop. Circle the 'goods' in red (like bikes and helmets) and the 'services' in blue (like a mechanic fixing a flat tire).