why does operating surplus not arise …
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Meghna Thapar 5 years ago
Operating surplus does not arise in the subsistence sector and in the general government sector because of the following reasons: (i) in the subsistence sector, production is meant only for subsistence of the producing families. Production is not meant for sale in the market. Accordingly, there is no operating surplus.
Reason that goverment's operating surplus is zero or nil is that the main motive of government is maximisation of social welfare rather than profit. The subsistence sector relies on natural resources to provide basic needs. Even the term subsistence means supporting oneself at minimal level.
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