Commodity
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A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. It is a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk. In other words, copper is copper. The price of copper is universal, and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many levels of quality. And, the better a stereo is [perceived to be], the more it will cost. One of the characteristics of a commodity good is that its price is determined as a function of its market as a...
A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. It is a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk. In other words, copper is copper. The price of copper is universal, and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many levels of quality. And, the better a stereo is [perceived to be], the more it will cost. One of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminum, copper, rice, wheat, gold, silver and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.
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