Difference between Intermediate goods and Capital Goods (3m) - Economics - Introduction

Question

Difference between Intermediate goods and
Capital Goods? (3m)

Richa Gupta · Accepted Answer

Basis of Difference

Capital Goods

Intermediate Goods

Meaning

Capital goods refer to those final goods
that are purchased by the producers (firms) for using them in the
process of production They do not require further
processing

Intermediate goods refer to those goods
that are used as raw-materials or inputs by the producers in the
production process They require further
transformation

Examples

For example, machinery
purchased by the producer for using it in production
process

For example, cotton purchased by a textile
industry for making cloth is an intermediate
good

Inclusion in National
Income

The money values of these goods are
included in the estimation of national
income

The money values of these goods are not
included in the estimation of national
income

Basis of Difference	Capital Goods	Intermediate Goods
Meaning	Capital goods refer to those final goods that are purchased by the producers (firms) for using them in the process of production. They do not require further processing.	Intermediate goods refer to those goods that are used as raw-materials or inputs by the producers in the production process. They require further transformation.
Examples	For example, machinery purchased by the producer for using it in production process.	For example, cotton purchased by a textile industry for making cloth is an intermediate good.
Inclusion in National Income	The money values of these goods are included in the estimation of national income.	The money values of these goods are not included in the estimation of national income.

Difference between Intermediate goods and Capital Goods? (3m)