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Commodity
 

 

  1. A particular type of raw material or primary product such as tea, doffee, wool, cotton, rubber, tin, jute and furs.
  2. In price theory commodity is the general name given to goods and services, the basic objects of production and exchange. Thus coal, ice cream and the services of a car mechanic would all be regarded as commodities. There are three essential characteristics which distinguish one commodity from another:
  • The physical attibutes of the commodity which determine its characteristics in production and consumtion. Thus coal clearly differs from ice cream which differs from a mechanic's services in this respect.
  • The place at which a commodity will be made availbale. For example; coal available at the mine where it is extracted from, is a different from coal available from a high-street supplier.

    The purpose of distinguishing these three aspects of a commodity is that even if commodities were identical in two of them, they could not be regarded as perfect subsitutes if they differed in respect of a third.

 

Reference: The Penguin Business Dictionary, 3rd edt.