What type of goods are intended to enhance future production capabilities?

Prepare for the SACE Stage 2 Economics exam with a comprehensive quiz. Study through flashcards and multiple-choice questions, each featuring hints and explanations for thorough understanding. Get ready for your exam!

The correct choice is capital goods, which are designed to be used in the production of other goods or services and play a crucial role in enhancing future production capabilities. These goods include machinery, tools, and buildings that businesses utilize to manufacture products, improve infrastructure, or provide services. By investing in capital goods, firms can increase their productive capacity, resulting in higher output and efficiency over time.

In contrast, consumer goods are products meant for direct consumption by the end users, like food and clothing, and do not contribute to production capabilities. Luxury goods, while they may have significant demand, are also considered consumer items that cater to higher income groups and do not enhance production efficiency. Intermediate goods are products used to produce final goods but are not considered capital goods because they are not used for long-term production but rather consumed or transformed in the production process.

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