Final answer:
A commodity is a basic good used in commerce that is 1) interchangeable with goods of the same type, for example, agricultural products or minerals like gold.
Step-by-step explanation:
The term commodity refers to a basic good used in commerce that is interchangeable with other goods of the same type. Examples include gold, copper, oil, and agricultural products like sugar, cotton, and coffee.
Commodities can serve various roles in the economy, including functioning as commodity money, where the item is used as money but also has intrinsic value in its physical form, such as gold or salt historically.
Commodity-backed currencies are monies, like dollar bills, that have their values guaranteed by a physical commodity, such as gold. On the other hand, a credit card represents a short-term loan from the credit card company to the user, with the funds being transferred immediately to the seller. At the end of the credit card billing period, the user owes the borrowed money to the credit card company.
Commodities are essential in free-market economies; they are private goods, which can be owned and traded due to their exclusivity and finite supply. In contrast, public goods such as air or forests are typically regulated by the government due to their non-excludable and non-finite nature.