Difference between Consumption and Capital Goods

A good is called final good when it does not have to pass through any stages of production or transformations and is ready for consumption is called final good.

Though both consumption and capital goods are final goods there are some differences between the two –

1. Consumption goods are those goods which are used by consumer for personal use and they are ready for use as they are. While capital goods are those goods for the production of other goods, in other words they are final goods yet they are not final goods to be ultimately consumed. In other words consumption goods can be used few times while capital goods can be used several times.

2. Examples of consumption goods are food, clothing while examples of capital goods are machines, tools, equipments.

However there are certain goods like television, automobiles, computers etc… which though are for final consumption but they can be used for several times or are durable like capital goods that is why such type of goods are called consumer durables. It may be noted that same good can be capital or consumption goods for different persons, so for example a shirt will be capital good for a fashion designer.