Read the following Flow chart carefully and choose the correct option : Goods → Final Goods ; Intermediate Goo

Question 68 of 75

Q.Read the following Flow chart carefully and choose the correct option : Goods → { Final Goods ; Intermediate Goods } Final Goods → { Consumption Goods ; ________ (blank box) } Options : (A) Transfer goods (B) Capital goods (C) Non-durable goods (D) Semi-durable goods

Manipur CohsemCBSE Class XII Board 2026MCQ· 1mImportance★★★★★

91% · 68/75 Questions

🔒 Locked · start free trial →

You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.

Start your 14-day free trial to unlock the full solution →

Concept understanding — Final Goods vs Intermediate Goods (Consumption and Capital Goods)

Where Does Counting Stop? Final vs Intermediate Goods

Suppose we want to measure the total value produced in an economy in a year. A tempting mistake is to add up the value of everything sold — but that would count the same value many times. The wheat sold to the miller, the flour sold to the baker, and the bread sold to you all overlap. To measure output correctly, we must separate goods by where they stand in the production chain.

Final Goods = goods that are purchased for final use — either final consumption by households or final investment by firms — and do not pass through any further stage of production or resale within the accounting year.

Intermediate Goods = goods purchased by one firm from another to be used up as raw materials or resold within the same year; they are still "inside" the production process.

The Crucial Distinguishing Test

The difference is not about the physical nature of the good — the same good can be either, depending on its use:

Flour bought by a bakery to make bread → intermediate (used up in production).
Flour bought by a household to cook at home → final (final consumption).

So a common exam statement like “final goods include only those goods consumed by households” is false — final goods also include capital goods bought by firms for investment.

The Two Types of Final Goods

Final goods split cleanly into two categories:

Consumption Goods — bought by households to satisfy wants directly (durable like a fridge, semi-durable like clothes, non-durable like food, and services like a haircut).
Capital Goods — durable goods of fixed nature bought by producers to produce other goods (machines, tools, plant). These are the correct answer whenever a flow chart splits final goods into “consumption goods” and a blank box.

$\text{Goods} \;\longrightarrow\; \{\text{Final Goods},\; \text{Intermediate Goods}\}$ …

Start your 14-day free trial to unlock the full solution →

The blank box in the classification of final goods must be filled with Capital goods, because final goods are divided into consumption goods (used by households) and capital goods (used by firms for further production).

The flow chart you’ve been given is a standard NCERT-style classification of goods in macroeconomics. Let’s walk through the logic step by step.

Goods are first divided into final goods and intermediate goods. Intermediate goods are those that are used up in the production of other goods (like raw materials). Final goods, on the other hand, are those that are used for final consumption or for investment — they do not undergo further transformation in the production process.

Now, final goods themselves are split into two categories. One is consumption goods — these are goods purchased by households for direct satisfaction of wants (e.g., food, clothing, a mobile phone). The other category is capital goods, which are goods used by firms to produce other goods and services (e.g., machinery, factory buildings, computers used in a business). Capital goods are also called producer goods or investment goods.

\text{Final Goods} = \text{Consumption Goods} + \text{Capital Goods}

Let’s check the options:

(A) Transfer goods — This is not a standard classification in macroeconomics. Transfer goods are not a category of final goods.
(B) Capital goods — This fits perfectly. It is the standard counterpart to consumption goods in the final goods classification. …

Start your 14-day free trial to unlock the full solution →

←Previous questionQ55 — Income generated from Aircrafts of Air India operating between Canada …→Next questionQ57 — Read the following statements carefully : Statement 1 : Brokerage earn…

Q.Read the following Flow chart carefully and choose the correct option : Goods → { Final Goods ; Intermediate Goods } Final Goods → { Consumption Goods ; ________ (blank box) } Options : (A) Transfer goods (B) Capital goods (C) Non-durable goods (D) Semi-durable goods

🎓Unlock everything free for 14 days

Unlock everything free for 14 days