Goods and services are one of the most basic ideas in economics. Economics is the study of how resources are used to provide goods and services, and how they are made, distributed, consumed and exchanged. Tweens and teens will be able to apply their understanding of goods and services to more advanced economics concepts such as scarcity and supply and demand. Younger children, however, benefit from simply understanding that we use money to buy both goods and services, and it is helpful for children to be aware of the difference between the two.
|Goods = Objects|
|Services = Actions|
Goods are things that are made or grown and something that you can use or consume. A good way to explain the concept to children is to tell them that goods are things that they can touch. Have your child look around a room at home and see how many goods they can name. The list might include things like:
Goods are things that people buy to use one time (such as a piece of candy) or over and over (for example, a toy). Some goods are manufactured (or made) – for instance, clothes, cars and computers. Other goods are grown, including fruits and vegetables. Explain that many goods are made from natural resources. For instance, trees are used to make pencils, paper, furniture and playgrounds; cotton is used to make clothing and copper is used to make wire and coins (like pennies).
A service, on the other hand, is work that someone does for someone else. Where a good is an object, a service is an action. Your child may have heard the term "community helper" at school. Community helpers are people who work to help the community and many provide services, including those performed by:
- Bus drivers
- Fire fighters
- Maintenance workers
- Police officers
- Postal workers
- School teachers
Some services, including some of the ones listed above, are paid for by taxes or money that has been paid to the government. Other services are paid for by each person using the service. Examples include:
- Car mechanics
- Hair stylists
Goods from Services
Some people and companies provide services that result in goods. For example, a chef provides the service of cooking food that people buy and eat (goods), and farmers provide the service of planting and harvesting the food that people purchase and consume. Goods and services can be confusing to young children, especially when the line between them is blurred, as is the case between the chef and the food. To check for understanding, you can name a few goods and services (for example, a book) and ask your child:·
- Is this a good or a service? (a good)
- Who could use it? (anyone)
- Why would they want to use it? (to learn, for enjoyment, etc.)
InsightsPrice level is the average of all current prices for goods and services in an economy.
InvestingWhat you're getting isn't easy to determine. Find out how to get your money's worth.
InsightsProducts that are purchased for consumption by the average consumer. Clothing, food, automobiles and jewelry are all examples of consumer goods
Managing WealthIt can be hard to talk about money with your children, especially when times are tough, here are some tips to make it easy.
InvestingCapital goods are assets with a useful life of more than one year that are used for the production of income.
Managing WealthPreparing your kids for financial success is important. Here is a quick guide to setting them up to be smart about money.
Personal FinanceIn this tutorial we introduce key financial concepts that are appropriate for young children, including tips for getting kids to think about and understand the topics.