Consumer Goods vs Capital Goods
There are two types of goods namely consumer goods and capital goods. Why this dichotomy, you might wonder? But then, can you compare a machine that produces shampoo sachets with the sachets themselves that are ultimately used by end consumers? Though both are goods, they are entirely different in form and function, aren’t they? This is not the only difference between capital and consumer goods as would be clear to you after reading this article.
As their name implies, consumer goods are goods meant for the end consumers. Whether you buy a cold drink, a pack of cigarettes, or a laptop, they are going to be utilized by you and hence, classify as consumer goods. Bread that you buy from market is a consumer good, but the huge oven that is used by the company manufacturing bread is classified as a capital good. Consumer goods are thus products that are bought from retail stores for personal or household need.
On the other hand, capital goods are goods that are used to make more goods, which are to be used by end consumers. All machinery, equipment, even factories that are used to produce consumer goods come under the category of capital goods. Capital goods are not natural, and are man made. The word capital is enough to convey the impression that these are goods that are expensive, and require a huge investment on the part of the company trying to make consumer goods.
Cars and other automobiles are consumer goods, but dump trucks are not classified under consumer goods. This is because they are mainly used by construction companies to haul other vehicles, and not by end consumers.
What is the difference between Consumer Goods and Capital Goods?
• Capital goods are goods used to make more consumer goods, whereas consumer goods are goods meant for the use of end consumers only.
• One buys consumer goods from retail stores for personal, family, or household use.
• Capital goods are bought by companies desirous of making the consumer goods.
• Machines, tools, equipments are examples of capital goods, whereas bread, butter, cold drinks, TV, laptops etc (in fact everything that is used by people) are examples of consumer goods.
- Difference Between Consumer Price Index (CPI) and Gross Domestic Product (GDP) Deflator
- Difference between Wholesale Price Index (WPI) and Consumer Price Index (CPI)
- Difference Between Consumer and Customer
- Difference Between Goods and Services
- Difference Between Gross Working Capital and Net working Capital