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Commodity

Yerba mate (left), coffee bean (middle) and tea (right), all used for caffeinated infusions, are commodity cash crops.

In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.[1][2][3]

The price of a commodity good is typically determined as a function of its market as a whole: well-established physical commodities have actively traded spot and derivative markets. The wide availability of commodities typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price.

Most commodities are raw materials, basic resources, agricultural, or mining products, such as iron ore, sugar, or grains like rice and wheat. Commodities can also be mass-produced unspecialized products such as chemicals and computer memory.

Other definitions of commodity include something useful or valued[4] and an alternative term for an economic good or service available for purchase in the market.[5] In such standard works as Alfred Marshall's Principles of Economics (1920)[6] and Léon Walras's Elements of Pure Economics ([1926] 1954)[7] 'commodity' serves as general term for an economic good or service.

  1. ^ "Learn What Commodities Are in These Examples!".
  2. ^ "Commodity definition". Merriam-Webster Dictionary. Retrieved 30 July 2018.
  3. ^ T., H. (3 January 2017). "What makes something a commodity?". The Economist. Retrieved 22 January 2020.
  4. ^ Merriam-Webster Dictionary, commodity, def. 2a.. Retrieved January 2022.
  5. ^ Mas-Colell, Andreu, Michael D. Whinston, and Jeffery R. Green (1995). Microeconomic Theory, Oxford, p. 17.
  6. ^ Alfred Marshall (1920). Principles of Economics Press cntrl-f to search for commodity vis- à-vis goods and services.
  7. ^ Léon Walras ([1926] 1954). Elements of Pure Economics Press cntrl-f to search for commodity vis- à-vis goods and services.

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