Q.Define services and goods.

Services are separately identifiable, essentially intangible economic activities that satisfy wants and require an interaction between the provider and the consumer for the benefit to be realised — they are not necessarily linked to the sale of a product. Goods are physical products that can be delivered to a buyer and whose purchase transfers ownership from the seller to the customer.

Understanding the difference through everyday pairs

We feel the effect of business activity every day without noticing that some purchases give us a good and others a service. Compare:

• Buying a tub of ice cream from a store (good) vs. eating ice cream served in a restaurant (service).
• Buying a movie ticket (good) vs. actually watching the film in the cinema hall (service).
• Buying a bus (good) vs. hiring or leasing a bus from a transporter (service).

In each pair one side is purchasing an item and the other is experiencing an activity — that is the core of the distinction.

What a service is

• To an ordinary person, services are essentially intangible — buying one leaves you owning nothing physical. You can take a doctor's advice, but you cannot "buy" the doctor.
• More precisely, services are separately identifiable, essentially intangible activities that satisfy wants and require an interaction between the service provider and the consumer for the benefit to be realised.
• They are not necessarily linked to the sale of a product or of another service.

What a good is

• A good is a physical product that can be delivered to a buyer.
• Its purchase transfers ownership from the seller to the customer.
• The term "goods" is also used generally for commodities or items of every kind (except services) that are involved in trade or commerce.

The two decisive differences

• Non-transferability of ownership — buying a service does not transfer ownership of anything physical, whereas buying a good does.
• Presence of both provider and consumer — a service is realised only through their interaction; goods can be produced today and consumed much later. In short, goods are produced while services are performed.