Classity each of the following items as a final good or an intermediate good, and classifly the expenditure on each final good.

Item 1. A DVD bought by a household.
item 2. New computers bought by PepsiCo
Item 3. New aircraft bought by Southwest Airlines
item 4. Fertilizer bought by a Florida tomato grower.

Item 1 is ________ and Item 2 _________.

Respuesta :

Answer:

Item 1. A DVD bought by a household. - This is a final good, to be used for entertainment purposes, and a consumption expenditure.

item 2. New computers bought by PepsiCo - This is a final good, meant to be used for administrative purposes by PepsiCo. It is an investment expenditure because the new computers are an asset.

Item 3. New aircraft bought by Southwest Airlines - This is a final good, to be used as an asset by the airline in order to transport passengers from one place to another. This is an investment expenditure because the aircraft will be used to produce economic benefits for the company.

item 4. Fertilizer bought by a Florida tomato grower - This is an intermediate good, because it is bought in order to be used in the production process of another good, an agricultural product. This is an investment expenditure, because it is essentially intermediate inventory, a type of asset, and assets are investments.