Goods and services

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Goods are things that can typically be touched (although not necessarily), such as pens, physical books, salt, apples, and hats. However, goods may also be intangible. Services are activities that are provided by other people, such as architects, suppliers, contractors, technologists, teachers, doctors, lawn care workers, dentists, barbers, waiters, online servers, a digital book, a digital video game, or a digital movie. When taken as a whole, the creation, distribution, and consumption of products and services are the fundamental components that support all economic activity and commercial exchange. Although businesses also consume goods and services in the process of producing other goods and services, according to economic theory, the consumption of goods and services is presumed to provide utility (satisfaction) to the consumer or end-user. This is the case even though businesses also consume goods and services.

The categorization of services as separate from consumables is an artificial simplification; they are not separate categories. The majority of people who study business think of it as a continuum, with the provision of services at one end and the sale of physical commodities at the other. The majority of things may be placed somewhere in this middle ground. For instance, a restaurant offers a tangible item to its customers in the form of cooked meals, but it also offers services such as ambiance, the setting and cleaning of the table, and other such activities. Some utilities, like those that supply electricity and communications services, are only in the business of providing services, while other utilities, like those that transport water, are in the business of delivering tangible products. In the European Union, the provision of electricity is considered a good rather than a service for the purposes of public sector contracting, but in the United States, the provision of electricity is considered a service for the purposes of federal procurement legislation.

In the framework of the liberalisation of international commerce, distinctions are drawn between different types of products and services. For instance, the General Agreement on Tariffs and Commerce (GATT) of the World Trade Organization covers international trade in products, while the General Agreement on Trade in Services (GATS) covers the services sector. Both agreements are within the purview of the World Trade Organization.