Which of the following best defines the term commodity?

• A. A product that is unique and cannot be substituted by any other product.
• B. A good or service that is interchangeable with other goods or services of the same type and is often traded in bulk.
• C. A resource that is only used in the production of luxury goods.
• D. A service provided by the government to the public free of charge.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of a commodity in microeconomics. A commodity is typically defined as a good or service that is interchangeable with other goods or services of the same type.
2. Step 2: Recognize that commodities are standardized products, meaning that one unit of the commodity is essentially the same as another unit, regardless of who produces it.
3. Step 3: Note that commodities are often traded in bulk on markets, such as agricultural products (wheat, corn), natural resources (oil, gold), or basic manufactured goods.
4. Step 4: Contrast this with unique products, which are differentiated and cannot be substituted easily, and with services or resources that do not fit the interchangeable or bulk-traded criteria.
5. Step 5: Conclude that the best definition of a commodity is a good or service that is interchangeable with other goods or services of the same type and is often traded in bulk.