Question

Orrin mines iron ore, which he sells to Thorin, who turns iron ore into steel. The steel is sold to Gorin, who turns the steel into battle axes. The battle axes are sold by a merchant in the city to adventurers. Which of the following would be considered a final good?

A) Iron ore sold by Orrin.
B) Steel sold by Thorin.
C) Battle axes sold by the merchant.
D) None of the above.

Answer 1

The final good in the given scenario is C) Battle axes sold by the merchant because these are sold to end-users -- adventurers who will utilize them without further modification.

Step-by-step explanation:

The student asks about final goods in the context of the production of battle axes from iron ore. Among the options given, C) Battle axes sold by the merchant would be considered a final good. Final goods refer to products that are sold to the final users, who are not going to resell or transform the product through a further manufacturing process. In this scenario, adventurers will use the battle axes, and these axes will not undergo further transformation. Therefore, they are considered final goods. In contrast, iron ore and steel sold to intermediate parties for further processing are considered intermediate goods, not final goods.