What is the way economics distinguishes between items that people buy to use/keep, and people just buy to sell at a higher price to other sellers? I see both referred to as “commodities”, and both have “intrinsic value” (People will pay for them), but they seem clearly different to me.

Question

What is the way economics distinguishes between items that people buy to use/keep, and people just buy to sell at a higher price to other sellers? I see both referred to as “commodities”, and both have “intrinsic value” (People will pay for them), but they seem clearly different to me.

In: 39

Answer 1

The distinction isn’t the item, it’s the action.

Purchasing an item with the intent to use the item is consumption, or expenditure. If it’s something you’ll use and reuse for a while it’s a durable good. If it will be used up, or wear out quickly it’s a consumable good. If you’ll use the durable good to aid your business it’s a capital expense.

Purchasing an item with the intent to resell is called trading,, or brokering, or speculation; depending on the details.