LESSON FOUR

RESOURCES

These are goods/ inputs out of which man produces goods and services to satisfy his wants.

OR

Resources are tangible and intangible things including human labour that man makes use of to satisfy his unlimited wants.

Examples of human resources include labour and entrepreneur.

Resources are also known as factors of production, factor inputs or means of production.

Resources can either be renewable or non-renewable.

Renewable resources are those resources which can be regenerated e.g. forests.         

Non-renewable resources are those resources which cannot be regenerated e.g. minerals.

GOODS/ COMMODITIES

These are tangible items which satisfy human wants directly like clothes.

TYPES OF GOODS

a) Producer/ capital/ goods/ goods of second order.

These are goods used by producers to transform raw-materials into finished goods. These goods are used in the production of other goods. They satisfy human wants indirectly for example factory machines, buildings, raw materials, ovens, blender.

b) Consumer/ final goods/ goods of first order.

These are goods which are meant for final use by the final consumer and are capable of providing direct satisfaction to man’s wants E.g. salt, soap, foodstuffs, books, clothes, cars, computer.

c) Intermediate goods.

These are goods which are produced but have not reached their final stage of production. That is they still need more processing in order to obtain a final good e.g. sugar canes are intermediate goods in the making of sugar, sugar in the making of sweets, wheat flour in the making of bread.

d) Durable goods.

These are goods which are capable of giving a long term service e.g. buildings, furniture, machines, television set, computers.

e) Perishable goods.

These are goods whose capacity to satisfy human wants ends after a short period of time i.e. they go bad after a short period of time e.g. vegetables, bread, meat, chapatti, milk.

f) Private goods.

Are those enjoyed solely/ exclusively by an individual such that one’s consumption excludes others. A non-owner must always seek permission from the owner before using the good E.g. personal cars, clothes, houses, laptops, textbooks, radio.

Characteristics of private goods

• They are excludable i.e. owners prevent those who have not paid for it from using the good/ no free – riders.
• There is rivalry in their consumption i.e. consumption by one necessarily prevents that of another.
• They involve direct payment to be consumed.
• They are scarce which causes competition for them

g) Public goods.

Are those which when provided, usually by the state, for a particular individual or group of individuals  become available for others to use at zero or no extra costs and consumption by one person does not reduce the amount available for other users.

Examples of public goods include public roads, national defence, law and order, street lights, public clocks, public schools, public hospitals.

Characteristics of public goods

• Non-exhaustibility. Consumption by one person does not reduce the amount available for other users.
• Non-excludability. It is difficult to stop a person from consuming public goods or from getting the benefits of public goods.
• Non-divisibility (Indivisible). They are equally available to all individuals in the society.
• Usually provided by the state.
• They are indirectly paid for i.e. through taxes.
• No competition for them (There is non-rivalry in their consumption).

h) Free/ natural/ original goods.

Are those which exist in natural abundance and are enough for everyone to consume as much as they want at zero cost. E.g. rain water, sunshine, moonlight, soil, air, etc.

Characteristics of free goods

• They are provided by nature
• They are in abundant supply.
• They are consumed at zero cost.
• They provide utility.

i) Economic goods.

Are goods that are relatively scarce and for one to consume them, a cost has to be incurred.

OR

Are goods that arise out of scarcity and choice.

Any commodity which is paid for is an economic good e.g. clothes, vehicles, pens.

Characteristics of economic goods

• They are relatively scarce.
• They provide satisfaction/ utility
• They command a price/ be marketable/ have a monetary value.
• They have opportunity cost.
• Their ownership is transferable

j) Merit goods.

Are those whose consumption is deemed intrinsically desirable and are meant to improve the quality of life of the people and their consumption should be encouraged. Examples of merit goods are safe water, health care and education.

k) Demerit goods.

These are goods considered to be socially undesirable and reduce the quality of life of individuals and the society at large e.g. cigarettes, alcohol, pornographic materials.

l) Normal goods.

These are goods whose demand increases as the consumer’s income increases. E.g. first hand cars, first hand shoes, first hand suits.

m) Inferior goods.

Are those whose demand reduces as the income of the consumer increases e.g. cassava and beans, second hand clothes, second hand computers, second hand shoes.

OR

Are goods with negative income elasticity of demand.

n) Giffen goods.

Are those whose demand increases with the price and take a big percentage of the budget/ income of the low income earner e.g. the basic foodstuffs.

OR

Are goods with positive price elasticity of demand consumed by low income earners.

OR

Are goods with positive elasticity of demand and negative income elasticity of demand consumed by low income earners.

Examples of Giffen goods are basic foodstuffs like bananas, maize flour, bread, bread, cassava, potatoes etc.

NB

All giffen goods are inferior but not all inferior goods are giffen.

o) Superior goods/ articles of ostentation/ luxuries/ status symbols.

These are goods that are desirable only when they are expensive and people buy them show their class or to impress/ attract the attention of others for example golden earrings, sports cars, perfumes, golden watches, expensive phones, etc. The demand for superior goods increases as the price increases.

p) Necessities/ essential goods.

These are goods that that a consumer cannot do without for example food, shelter, water, clothing, soap, fuel. The demand for necessities first increases when there is an increase in the consumers’ income up to a certain point beyond which further increase in income does not affect the quantity demanded. (Quantity demanded remains constant).

q) Complementary goods.

These are goods where the quantity demanded of one commodity varies inversely as the price of the other commodity. (As the price of one commodity goes up, the demand for the other falls).

OR

Complementary goods are goods that are consumed together.

Examples include cars and fuel, guns and bullets, tooth brush and tooth paste, etc.

r) Substitute goods.

These are goods where the quantity demanded of one commodity varies directly as the price of the other commodity. (As the price of one goes up, the demand for the other also rises).

OR

Substitute goods are goods which can be used for the same purpose.

OR

Substitute goods are goods which can be used interchangeably.

Examples include Colgate and fresh-up, tea and coffee, Omo and Nomi, etc.

SERVICES

These are intangible items that are helpful in making our lives comfortable and useful e.g. medical services, teaching services hair dressing services, banking services.

OR

These are intangible items used to facilitate the production of goods and services.

They can be classified as;

i) Personal services.

These are provided by individuals directly e.g. pastors, doctors, services of a teacher, etc.

ii) Commercial services

These are services provided by institutions and are related to aids to trade e.g. insurance companies, communication networks, banking services, transport services, etc.