producer goods

producer goods, in economics, goods manufactured and used in further manufacturing, processing, or resale. Producer goods either become part of the final product or lose their distinct identity in the manufacturing stream. The prices of producer goods are not included in the summation of a country’s gross national product (GNP), because their inclusion would involve double counting of costs and lead to an exaggerated estimate of GNP. Only the price of final consumer goods is included in the GNP. The contribution of producer goods to the GNP may be determined through the value-added method. This method calculates the amount of value added to the final consumer good by each stage of the production process. When the values added at all stages of production have been established, they are summed to estimate the total value of the final product.