- A particular type of raw material or primary product such as tea, doffee, wool, cotton, rubber, tin, jute and furs.
- In price theory commodity is the general name given to goods and services, the basic objects of production and exchange. Thus coal, ice cream and the services of a car mechanic would all be regarded as commodities. There are three essential characteristics which distinguish one commodity from another:
- The physical attibutes of the commodity which determine its characteristics in production and consumtion. Thus coal clearly differs from ice cream which differs from a mechanic's services in this respect.
- The place at which a commodity will be made availbale. For example; coal available at the mine where it is extracted from, is a different from coal available from a high-street supplier.
The purpose of distinguishing these three aspects of a commodity is that even if commodities were identical in two of them, they could not be regarded as perfect subsitutes if they differed in respect of a third.
|Reference: The Penguin Business Dictionary, 3rd edt.