Which of the following goods is an intermediate good?

• A. A haircut received at a salon
• B. A new car bought by a household
• C. Steel used in the production of automobiles
• D. A loaf of bread purchased by a consumer

Answer: (C)

Verified step by step guidance

1. Understand the definition of an intermediate good: it is a product used as an input in the production of other goods or services, rather than being consumed directly by the end user.
2. Analyze each option to determine whether it is used directly by the final consumer or as an input in producing another good.
3. A haircut received at a salon is a final service consumed directly by the individual, so it is not an intermediate good.
4. A new car bought by a household is a final good because it is purchased for personal use, not for further production.
5. Steel used in the production of automobiles is an intermediate good because it is a raw material used by manufacturers to produce the final product (cars).
6. A loaf of bread purchased by a consumer is a final good since it is consumed directly and not used to produce another good.