Goods and services
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Goods are items that are tangible, such as pens, salt, shoes, hats and tables, while services are activities provided by other people, such as doctors, lawn care workers, dentists, barbers, waiters, or online servers. Taken together, they constitute the substance of economic activity and trade aimed at meeting consumer need. According to economic theory, consumption of goods and services is assumed to provide utility (satisfaction) to the consumer or end-user, although businesses also consume goods and services in the course of producing other goods and services.
Physiocratic economists categorized production into productive labour and unproductive labour. Adam Smith expanded this thought by arguing that any economic activities directly related on material products (goods) were productive, and those activities which involved non-material production (services) were unproductive. This emphasis on material production was adapted by David Ricardo, Thomas Robert Malthus and John Stuart Mill, and influenced later Marxian economics. Other, mainly Italian, 18th century economists maintained that all desired goods and services were productive.
The service-goods continuumEdit
The division of consumables into services is a simplification: these are not discrete categories. Most business theorists see a continuum with pure service at one endpoint and pure commodity goods at the other. Most products fall between these two extremes. For example, a restaurant provides a physical good (prepared food), but also provides services in the form of ambience, the setting and clearing of the table, etc. Although some utilities, such as electricity and communications service providers, exclusively provide services, other utilities deliver physical goods, such as water utilities. For public sector contracting purposes, electricity supply is defined among goods rather than services in the European Union, whereas under United States federal procurement regulations it is treated as a service.
Goods are normally structural and can be transferred in an instant while services are delivered over a period of time. Goods can be returned while a service once delivered cannot. Goods are not always tangible and may be virtual e.g. a book may be paper or electronic.
In a narrower sense, service refers to quality of customer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently in retailing.
Goods and services in international lawEdit
Distinctions are made between goods and services in the context of international trade liberalization. For example, the World Trade Organization's General Agreement on Tariffs and Trade (GATT) covers international trade in goods and the General Agreement on Trade in Services (GATS) covers the services sector.
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- UK Legislation. "The Public Contracts Regulations 2006". Regulation 2(1) s.v. "goods". Retrieved 25 June 2015
- Federal Acquisition Regulation, Subpart 41.2 — Acquiring Utility Services, accessed 12 May 2018
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- Smith, Adam. The Wealth of Nations at Project Gutenberg