Question

Read the following statements carefully:
Statement 1: Final goods are those goods which normally lose their identity in the production process.
Statement 2: Final goods may get transformed during the consumption process by a consumer.

• A. Statement 1 is true and statement 2 is false.
• B. Statement 1 is false and statement 2 is true.
• C. Both statements 1 and 2 are true.
• D. Both statements 1 and 2 are false.

Hint:

Final goods retain their identity in production and are not transformed until consumed. Intermediate goods, however, lose their identity in production.

Answer 1

The Correct Option is B

Step 1: Clarifying Statement 1.
Final goods are products that have crossed the production boundary and are ready for use by the end consumer. They do not lose their identity in production; it is "intermediate goods" that are transformed or merged into other products during the manufacturing process. Thus, Statement 1 is incorrect.
Step 2: Clarifying Statement 2.
Once a final good reaches a consumer, it is used for satisfaction. During this consumption (like eating food or using fuel), the good is transformed or exhausted. Therefore, Statement 2 is a correct description of the consumption stage.
Step 3: Conclusion.
Since final goods remain intact through production but are used up in consumption, Statement 1 is false and Statement 2 is true.
Final Answer: Statement 1 is false and statement 2 is true.