Concept of Needs, Wants, Goods and Services
Senior 1 · Entrepreneurship
Concept of Needs, Wants, Goods and Services
Lesson 2 of 4
25 min
Nyabugogo bus park in Kigali is the busiest transport hub in Rwanda. In one hour you can watch hundreds of things being bought and sold. A traveller buys a bottle of water and a bag of roasted groundnuts. She pays a porter to carry her suitcase, has her shoes polished, tops up her phone with a mobile-money agent, and buys a ticket for a bus to Huye.
Some of what she paid for she can hold in her hand and take home. Some of it was over the moment it was done.
Think about it: Sort her purchases into two groups. What rule did you use?
Definition
Good: a physical product that can be seen, touched, stored and owned.
Example: a bottle of water, groundnuts, a suitcase.
Definition
Service: an activity done for someone that satisfies a need or want but produces nothing physical to keep.
Example: carrying luggage, polishing shoes, a bus journey, a haircut.
| Feature | Goods | Services |
|---|---|---|
| Can you touch it? | Yes (tangible) | No (intangible) |
| Can it be stored? | Yes: a shop keeps stock | No: an empty bus seat today cannot be sold tomorrow |
| Ownership | Passes to the buyer | Nothing is owned; the buyer receives an experience or a result |
| When produced | Before it is sold | At the same time as it is used |
| Quality | The same for each item of a product | Varies with who provides it and when |
| At Nyabugogo | Water, groundnuts, a bus ticket's paper | Porter, shoe polish, the bus journey, mobile money |
Tip
The "take it home" test: if you can take it home and keep it, it is a good. If it is over once it has been done, it is a service.
Definition
Free good: a good so plentiful that it has no price, because no one has to give anything up to get it.
Example: air, sunlight, rain falling on a field.
Definition
Economic good: a good that is scarce, so it has a price and making it uses up resources.
Example: bottled water, beans, bricks.
Definition
Consumer good: a good bought by households for their own use.
Example: soap, a mattress, a school bag.
Definition
Producer good (capital good): a good used to produce other goods or services, not for its own sake.
Example: a tailor's sewing machine; a farmer's hoe; a bus used to carry passengers.
Definition
Durable good: a good that can be used many times over a long period. Non-durable good: one that is used up once or quickly; food that spoils fast is also called perishable.
Example: a bicycle is durable; milk is non-durable and perishable.
Definition
Public good: a good or service provided for everyone, where one person's use does not stop others from using it. A private good is bought and used by one person.
Example: street lighting is a public good; a mandazi is a private good.
The same item can belong to different groups depending on its use. A bus carrying passengers is a producer good; a family car is a consumer durable. Rainwater falling on a farm is a free good; rainwater collected, treated and bottled is an economic good.
| Type | What it is | Examples in Rwanda |
|---|---|---|
| Direct (personal) services | Done directly for a person | Hairdressing, nursing, teaching, shoe polishing, security guarding |
| Commercial services | Help trade and businesses to run | Transport, banking, mobile money, insurance, warehouses, advertising |
| Public services | Provided by government for all | Public schools, health centres, roads, street lighting |
Worked example
What are you paying for in a new dress? (illustrative figures)
A tailor charges Frw 15,000 for a dress: Frw 9,000 for the fabric and Frw 6,000 for her work.
Service share:
Goods share:
40% of the price pays for a service (the tailor's skill and time) and 60% for a good (the fabric).
Worked example
Is a bicycle worth it? (illustrative figures)
Ishimwe can buy a bicycle for Frw 90,000. It should last 3 years and he would ride it to school about 200 days a year. The alternative is a moto fare of Frw 400 a day.
Step 1: number of uses. days.
Step 2: cost per use.
Step 3: compare. Frw 150 a day for the bicycle against Frw 400 a day for the moto service.
Because the bicycle is a durable good, its price is spread over many uses, so it works out cheaper per day.
tutor2u, "Consumer and Capital Goods" (about 2 minutes). Watch for the difference between a good bought for its own sake and a good bought to produce other things, and for the video's own examples of each.
Practice
Sources and credits
Written by Ganzaa: the Nyabugogo case, the tables, the tree diagram, the worked examples, the activity and the practice items. Prices are illustrative (2026).
