Intermediate Products vs Final Products

The concepts of intermediate and final products are very important economic concepts. These are explained below:-(a) Intermediate Products:-The intermediate products are those which are purchased by one production unit from other production units for resale. For example, wheat purchased by a flour mill is intermediate product for the mill. The flour mill will grind the wheat and resale the same in the form of flour.Similarly all other such purchases by the flour mill like electricity, packing materials, lubicants, etc. are intermediate products. Expenditure on all such purchases from other production units is a part of the value of output of flour. The cost incurred on such products is termed as 'intermediate cost'.(b) Final Products:-All goods and services purchased for consumption and investment, and not resale, are final products. It include all purchases by households and the purchases of capital goods like machines, furnitures, fittings, transport vehicles, etc. by the production units. The final goods are purchased for own use for consumption or for investment.Significance of these will be posted later so stay tuned.