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Sia ? 6 years, 2 months ago
TC and TVC curves are parallel to each other and the vertical distance between them remains the same at all levels of output because the gap between them represents TFC which remains constant at all levels of output.
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Factors affecting price elasticity of demand
- The number of close substitutes – the more close substitutes there are in the market, the more elastic is demand because consumers find it easy to switch. E.g. Air travel and train travel are weak substitutes for inter-continental flights but closer substitutes for journeys of around 200-400km e.g. between major cities in a large country.
- The cost of switching between products – there may be costs involved in switching. In this case, demand tends to be inelastic. For example, mobile phone service providers may insist on a12 month contract which has the effect of locking-in some consumers once a choice has been made
- The degree of necessity or whether the good is a luxury – necessities tend to have an inelastic demand whereas luxuries tend to have a more elastic demand. An example of a necessity is rare-earth metals which are an essential raw material in the manufacture of solar cells, batteries. China produces 97% of total output of rare-earth metals – giving them monopoly power in this market
- The proportion of a consumer's income allocated to spending on the good – products that take up a high % of income will have a more elastic demand
- The time period allowed following a price change – demand is more price elastic, the longer that consumers have to respond to a price change. They have more time to search for cheaper substitutes and switch their spending.
- Whether the good is subject to habitual consumption – consumers become less sensitive to the price of the good of they buy something out of habit (it has become the default choice).
- Peak and off-peak demand - demand is price inelastic at peak times and more elastic at off-peak times – this is particularly the case for transport services.
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RBI controls and regulates all the banks and other financial institutions in India. One of the major aims of financial sector reforms is to transform the role of RBI from regulator to facilitator of financial sector.
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Yogita Ingle 6 years, 2 months ago
The income of a country may be stated in the context of (i) its territory, and (ii) its residents. The concept of domestic product is based on production units located within domestic (economic) territory operated by both residents and non-residents. In comparison the concept of national product is based on residents and includes their contribution to production both within and outside the domestic territory.
(a) Domestic Income. "It is the sum total of factor incomes generated by all the production units located within domestic (economic) territory of a country during an accounting year". The point to be noted is that factor incomes should be generated within the domestic territory of a country irrespective of the fact whether producers are normal residents (citizens) or non-residents (i.e., foreigners). It is a territorial concept since it is defined with reference to domestic (economic) territory. For example, many non-residential companies and foreign banks operate within domestic territory of India. Income generated by them is included in India's domestic income.
(b) National Income. "It is the sum total of factor incomes accruing to the normal residents both from within and outside the country during an accounting year". The point to be noted is that national income includes factor incomes earned by normal residents within and outside the country. It is an economic concept since it is defined with reference to productive efforts of normal residents.
Difference. Simply put, income generated by residents and non-residents within domestic territory of a country is called domestic income and income generated by normal residents within and outside the country is called national income. The difference between the two is net factor income from abroad which is added to domestic income to get national income. Symbolically:
National Income = Domestic Income + Net factor income from abroad
In short, domestic income or product is attributed to all the producers within domestic territory of a country whether they are resident producers or non-resident producers. National income or product is attributed to only normal residents of the country within the country or outside.
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