Commodity

A commodity is an economic good produced through human activity and intended for exchange in the market. It may be traded for other goods (barter) or for money, which serves as a universal medium of exchange. Commodities are central to economic activity and can be either tangible items for direct consumption or intangible assets that support production.

Tangible and Intangible Goods

Commodities encompass both physical goods - commonly referred to as economic goods in the strict sense - and intangible offerings, known as services.

• Tangible goods: physical objects such as a car, a chair, or a computer.
• Intangible services: activities that don’t result in a physical product but fulfill a need, such as legal advice, a medical consultation, or a private tutoring session.

Example: A sandwich sold at a bakery is a tangible commodity. A haircut provided by a hairdresser is an intangible commodity (a service), but both are exchanged for money.

Consumer Goods vs. Capital Goods

Commodities can be classified based on their purpose as either consumer goods or capital goods (means of production).

• Consumer goods: purchased to satisfy the immediate needs of the end user.
• Capital goods: used as inputs in the production process to create other goods and services.

Example: Bread bought for personal consumption is a consumer good. The flour used by a baker to make that bread is a capital good.

Durable and Non-Durable Goods

Commodities are also categorized by their longevity into durable and non-durable goods.

• Durable goods: retain their utility over time and can be used repeatedly without losing functionality.
• Non-durable goods: are consumed quickly and have a short lifespan.

Example: A washing machine is a durable good because it can be used over many years. A bag of sugar is a non-durable good because it is consumed during use.

Origin and Etymology

The English word "commodity" comes from the Latin commoditas, meaning "suitability" or "advantage," derived from commodus ("convenient," "useful"). It originally referred to something useful or beneficial and gradually took on its modern economic meaning of a tradable good.

By contrast, the Italian word "merce" comes from the Latin verb merere, meaning "to earn" or "to deserve." Several economic terms are rooted in that origin:

• Market: the physical or digital space where goods and services are exchanged - from a farmer's stall to a global e-commerce site.
• Merchant: anyone engaged in trade, whether a traditional shopkeeper or an online seller.

Merceology is the scientific discipline that analyzes the physical, chemical, and functional properties of commodities. It plays a crucial role in product classification, quality assurance, and traceability throughout the supply chain.

For example, a commodity analyst may examine the chemical composition of a fertilizer to ensure it complies with agricultural quality standards.