Commodity facts for kids
A commodity is a basic product that can be bought and sold. Think of it like a simple ingredient or raw material. In business, it's something traded mainly based on its price, not special features. In another way of thinking, especially in Karl Marx's ideas, a commodity is anything made by people and offered for sale or exchange in a market.
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What is a Commodity in Business?
In the business world, a commodity is a product, good, or service that is traded mostly because of its price. People usually don't care much about who made it, as long as it meets a certain standard.
For example, electricity is a commodity. Most people just want power for their homes; they don't usually worry about which power plant it came from. Other examples include wheat, basic chemicals like sulfuric acid, metals, and even orange juice.
Originally, commodities were valuable things that were all pretty much the same quality. They were made in large amounts by many different producers. This means that wheat from one farm is seen as having the same value as wheat from another farm, as long as it meets the same quality rules.
Examples of Commodities
Wheat is a good example of a "soft commodity" (meaning it's grown, not mined). Wheat from many different farms gets mixed together. It's generally sold at the same price, no matter which farm it came from. There are usually clear rules about its quality. For instance, there might be one standard for genetically modified wheat and another for regular wheat.
Markets where commodities are traded can be very efficient. This means they quickly react to changes in how much of something is available (supply) and how much people want it (demand). This helps set the price quickly.
Commodities and Karl Marx's Ideas
In the ideas of Karl Marx, a famous thinker, a commodity is simply any good or service that is made to be sold in a market. Some things, like human work or labor power, artworks, or natural resources, are sometimes treated as if they were commodities, even if they weren't made just for selling.
Marx studied commodities to understand how goods get their economic value. He believed that the value of something comes from the amount of human work put into making it. This idea is called the labor theory of value.
Understanding a Commodity: The Chair Example
To understand a commodity better, let's think about a chair:
- A chair is a commodity if it's made by people to be traded and has a useful purpose for society.
- A fallen log in a forest that someone sits on is not a commodity. It wasn't made by human work for trade.
- A chair made by someone as a gift is also not a commodity.
- If a chair is only useful as firewood, it's not a commodity as a chair (unless someone buys it specifically to chop it up for wood).
- A chair that nobody could sit on has no use, so it can't be a commodity, unless it has value as a decoration (like a doll's house chair).
Images for kids
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A robot, representing technology and production.
Related pages
See also
In Spanish: Materia prima (economía) para niños
