Cotton is used in making clothes. In this example, cotton is which type of good?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Intermediate.
In this example, cotton is considered a raw material or an intermediate good. It is a natural resource used in the production of final goods, such as clothes. Cotton undergoes various processes like spinning and weaving before it becomes wearable fabric. Therefore, it is not a consumer good itself but a producer good that forms an essential input in the textile industry. As such, cotton is a commodity used to manufacture finished products for consumer use.