What are goods and services?

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Have you ever learned about needs and wants? A need is something essential that we must have to survive. A want is something that isn’t essential to survival, but which we would like to have if we can.

We acquire the things we need (and when possible, the things we want) through the exchange of goods and services. Goods are items. Anything from a pencil to a computer to a box of spaghetti is a good. Services are things that people do. Driving a bus, mowing a lawn, being a doctor, working as a police officer – all of these jobs are types of services.

We trade goods and services to get the things we need and want. For example, a builder can construct a barn for a farmer, and in exchange receive the farmer’s vegetables to eat; in this example a service (building a barn) is being traded for a good (vegetables). Often, money is used to help in the exchange. Say the farmer needs a barn but the builder doesn’t need any vegetables. Instead of the farmer directly trading his goods for the builder’s service, the farmer can trade some money instead. Since money is something everyone deems valuable and worthy of accepting for a trade, the builder can take the money and use it to trade for whatever else he does need.

The exchange of goods and services is basis for all economics!

by   (whyzz writer)
  • Exploration

    Think about what life would be like if people didn’t exchange goods and services. If we never traded with each other, every person (or group) would have to be able to produce and make all of the things they need without help from anyone else. How might this be challenging?

    What are some goods and services you’ve traded for needs or wants? For example, maybe you did chores for your older brother and in exchange, he bought you a popsicle. Or maybe you’ve traded crayons with a friend when you both had colors that the other one wanted. In each case, think about the good or the service that was traded, and how it helped the other person!

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