Question

What ultimately determines if a good is classified as an industrial good or a consumer good?

Answer 1

The component whether it is "ready to use or a raw material" ultimately decides whether it is a consumer good or industrial good.

Explanation:

Let us understand the terms:

Consumer goods:

• Satisfy the need of the consumer
• Ready for consumption
• Also called final good
• Eg. Clothing, drinks and food
• Stocked on store shelves
• There are 3 categories: Durable goods, non-durable goods, or consumer services.

Industrial goods:

• At the most it will be raw materials, plants, machinery, etc
• There are two types: production goods and support goods
• Used for industrial and business use
• Based on the demand and consumer need, industries prepare products with the help of raw materials.