Service (Economics)

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Definition of Service:

 A service is an intangible act that a consumer or business is willing to purchase.

Detailed Explanation:

A service is intangible and is gone after it is consumed. A barber cutting hair, an accountant preparing tax returns, a doctor providing medical help, a social worker caring for disadvantaged youth, and a taxi driver offering transportation are examples of individuals providing services. You cannot touch, see, or keep a service. Since services are intangible, they cannot be transferred and must be consumed and delivered simultaneously. 

Public services are provided for the well-being of the general public and paid for with tax revenues. The public consensus is these services should be available to all regardless of income, or because externalities make it highly unlikely a service would be provided in the private sector. Public school teachers, military personnel, police, firefighters, emergency medical personnel, and librarians are a few examples of public employees who provide a public service. 

Presently, approximately ten percent of household expenditures in the United States are for durable goods, 30 percent for nondurable goods, and a whopping 60 percent for services. 

Dig Deeper With These Free Lessons:

Capital and Consumer Goods – How They Influence Productivity
Production Possibility Frontier 
Gross Domestic Product – Measuring an Economy's Performance
Demand – The Consumer's Perspective

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