On a section about short run vs long run elasticities, I read that some goods are 'durable' because 'the total stocks of each good owned by consumers is large relative to annual production'. I'm confused because I thought stocks was something about owning shares to a company?

(Apologies in advance for the stupid question.)

  • 2
    $\begingroup$ This isn't really an economics question but better suited for an English language forum. You can google stock vs inventory to get your answer. $\endgroup$
    – Alex
    Commented Oct 9, 2022 at 5:28
  • $\begingroup$ Stocks here doesn’t mean company stocks, its just the amount of goods in a way. $\endgroup$
    – BB King
    Commented Oct 9, 2022 at 23:26

1 Answer 1


"Stock" is how much stuff exists, contrasted to "flow", which is how quickly it changes (gets produced or used up or moved around, depending on context).

Dairy farmers produce milk (using cows), and sell it to processing plants, which sell it to distributors, which sell it to supermarkets, which sell it to people, who drink it. Milk expires quickly, so the entire process takes maybe three weeks at most. The USA consumes about 20 billion litres of milk per year. That's the flow. Because it gets produced and consumed so quickly (let's say 2 weeks) the amount that exists right now is 1/26 of that number. So probably about 0.2 billion litres are sitting in fridges right now at home, 0.2 billion litres on supermarket shelves right now, 0.1 billion litres in delivery trucks and warehouses, and 0.3 billion litres in processing plants and farms. That's the stock. As you can see the stock of milk is quite small compared to the flow.

Now do houses. The average lifespan of a house is about 40 years. The USA has about 140 million houses (that's the stock) which means about 3.5 million houses are getting built every year to maintain that (that's the flow). As you can see the stock of houses is quite big compared to the flow. Houses are durable goods. Milk is perishable.

(Numbers in this answer are rough estimates to show the point and shouldn't be treated as data)


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