Final Goods – Meaning, Example and more [Economics Term] [Commerce Achiever]

A final good is an item produced for direct use by end consumers. Final goods are also referred to as consumer goods.”

• Refers to any commodity that a company produces and a consumer subsequently consumes.
• The consumer consumes it to satisfy his or her current wants or needs.

The consumer may, in turn, be an individual or an enterprise and the good or service purchased by that entity might be for final use or for use in further production. When it is used in further production it often loses its characteristic as that specific good and is transformed through a productive process into another good.

Example-

A farmer producing cotton sells it to a spinning mill where the raw cotton undergoes transformation to yarn; the yarn is, in turn, sold to a textile mill where, through the production process, it is transformed into cloth; the cloth is, in turn, transformed through another productive process into an article of clothing which is then ready to be sold finally to the consumers for final use. Such an item that is meant for final use and will not pass through any more stages of production or transformations is called a final good.

Why do we call this a final good?

Because once it has been sold it passes out of the active economic flow. It will not undergo any further transformation at the hands of any producer