An intermediate good is an object ( good ) that is used to make a final product that will later be marketed (sold). Eg wood, flour.
A good is said to be intermediate when it requires a certain degree of modification, or when it is used within the production chain of another good.
It is also common to use the word intermediate goods as a synonym for intermediate inputs . There are two types of intermediate good :
- When the good is intermediate because it undergoes some modification for its consumption . For example, wood that is cut, polished, and subjected to certain chemicals for preservation and processing of wooden furniture .
- When the good is in the intermediate stage for the production of other products (final goods). For example, the flour, oil, water, salt and sugar that are used to make the dough to prepare pizzas that will later be marketed. In this case it is an intermediate good because it is used in the production of other goods to reach the final goods.
Goods and services
Although it is true that goods in general can be tangible (objects) as intangibles (which cannot be measured or touched), it is important to make a clarification: An intermediate good is always an object . In economics, it is often stated that goods are divided into products and services.
See also: Examples of tangible and intangible assets
For example, a car is not only bought for the car itself (product) but it is also bought by the brand, the after-sales service, the attention received, the payment plans, insurance included, patent and some extra benefits that the purchase may have. The latter is called service since it is not tangible but it accompanies said product or final good .
In the case of intermediate goods , they can never be a service . In other words, an intermediate good is and will always be a product since it is part of the production chain.
It is important to make a distinction between a final consumer good and an intermediate consumer good since both terms are easy to confuse.
For example, eggs that are consumed at home for the preparation of a meal are not intermediate goods. They are final consumer goods . However, the flour that is used for preparing meals that will later be put on sale in a business, is an intermediate consumption .
See also: What are capital assets?
Examples of intermediate goods
- Steel . For the elaboration of beams and elements of construction of buildings.
- Water. As long as it is used in the process of making another greater good for sale or exchange.
- Cotton. For making fabrics.
- Clay. For the manufacture of bricks.
- Silica sand . For the manufacture of glass.
- Sugar and milk . For the production of dulce de leche with which they will later be made from cakes or sweet pastries. In certain Central American countries this sweet is known as caramel candy.
- Sugar . Since with sugar you can make multiple sweet dishes, sweet and sour foods and desserts if you mix it with water.
- Bicycle . If a bicycle is used to transport an employee, for example a postman. In other words, if rolling is used as a working tool, then it is an intermediate good.
- Sugarcane . For the manufacture of sugar.
- Coal . For making pencils, refractory crucibles and lubricating products.
- Cardboard . When this cardboard serves as an input in the company or as packaging for the final product.
- Cement . For the manufacture of houses.
- Copper. To produce integrated circuits that will later be part of different objects such as cell phones.
- Leather. For the manufacture of clothing or footwear.
- Fruits. If they are used for, for example, the production of jams or jellies.
- Sunflower. Sunflower oil and seeds are extracted from the plant. This oil, in turn, is used to make other products.
- Grain. For making baked goods for sale.
- Flour. When it serves as part of any of the ingredients for the manufacture of a food that will be commercialized later.
- Eggs. They are also generally used for the preparation of various dishes.
- Pencils and papers that are used in an office
- Latex : For the manufacture of rubber.
- Milk. If it is used to make yogurt, cheeses, smoothies, etc.
- Wood . It is an intermediate good because it is used for the manufacture of furniture or real estate.
- Sewing machine . Provided it is used to make clothing for sale.
- Paper. When these are used as a wrapper for a final product.
- Petroleum. For the preparation of gasoline (naphtha).
- Plastic. For making containers with drinks or food.
- Wheels or parts of a vehicle . When what is marketed is the car.
- Drills, industry tools. As long as they are used to make furniture or things for sale.
- Wheat for the manufacture of flour.