Goods

Goods are tangible or intangible resources that fulfill a human need, thereby contributing to overall well-being. A good’s ability to meet a need may be either actual or perceived. Goods are defined as anything that provides utility to people, either directly (direct goods) or indirectly (indirect goods). They can take the form of material goods (e.g., food, clothing, water, housing, etc.) or immaterial goods (such as services). Economic goods represent a specific category of goods characterized by utility, scarcity, and a market price.

Distinguishing Economic Goods from Free Goods

Economic goods differ from so-called free goods, which also provide utility (e.g., air) but are freely available to everyone and cannot be traded in economic markets. From a legal standpoint, goods are limited to items that can be subject to property rights.

• Economic Goods. A good is classified as an economic good when it is accessible (available) and exists in limited supply (scarcity). Because of its scarcity, an economic good can be exchanged between individuals. For example, bread and wine are economic goods. These goods are defined by their value and are integral to economic transactions. To satisfy a specific economic need, an individual purchases the economic good from the market, pays the seller the corresponding price, and then uses or consumes the good.
• Free Goods (Natural Goods). A good is considered a free or natural good when it is universally accessible and abundantly available. Free goods can be enjoyed by everyone without the need for exchange. For instance, air is a free good.