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What are and what types of capital goods?

In the economic scenario, the term of goods is widely used, one of these types of goods is capital goods, but do you know what they are? Find out in this article what capital goods are and what their types are.

What this article covers:

What are capital goods?

Capital goods are the products of the intermediate industry, that is, they are the products that are used in the production of other goods or used in services in order to supply and satisfy the needs of consumers or even companies.

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An example are companies that manufacture machinery, aircraft or vehicles, these companies produce capital goods, as their products are intended to meet the needs of third parties, such as other companies or even to provide services.

Some examples of capital goods that are easily found in everyday life are: engines, transport vehicles such as trucks, electricity generators, tools, among other items.

What types of capital goods?

Capital goods can be divided into two different types, the first type is raw material, which is used for the production and manufacture of other products, such as furniture, which is the way in which the company that purchases the material -prima gets its profit.

The second type of capital goods are intermediate goods, which are goods that, instead of being transformed, help in production. An example of an intermediate good is vehicles, for example, a consulting lawyer uses his car to reach his clients around the city, the car is not the product sold by the lawyer, however it helps the product, which would be the consultancy , reach out to the lawyer’s clients.

What are the companies that trade capital goods?

Companies that sell capital goods are also divided into different types of companies, namely base industries, industries that have a connection with raw materials, some examples of base industries are timber, metallurgical, mining, among others.

What are the companies that trade in capital goods

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The second type of company is the intermediary industries, industries responsible for the production of intermediate goods, such as technology industries, automobile assemblers, machine producers, among other types of industries.

What is the relationship between the capital good and B2B?

first explaining what is B2B, B2B is a business model where a company offers its products and services directly to another company. The relationship between capital goods and B2B is that all companies and companies have capital goods, however, only a part of these companies produce this good.

How does capital goods work?

As explained earlier, capital goods are equipment, facilities or services used to produce other goods or services.

The capital asset does not need to be directly linked to the final product in which it was used, as in the example of the consulting lawyer and the car mentioned above. People, organizations, industries and even government institutions make use of capital goods to produce other goods or even goods and services.

This is the main information about what capital goods are, how they work, the existing types of this category of goods and the types of companies that produce them in addition to the relationship between goods and B2B.

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