General Economics:- III, 2014
Therefore, the objectives of investment criteria are
summarized below:
(i) Equal distribution of income and wealth.
(ii) Balanced and
rapid growth of the economy.
(iii) To raise the
gross and national product and per capita income.
(iv) Proper
allocation of existing resources.
(v) Efforts to
correct the balance of payment.
(vi) All-round
development of the country.
(vii) To keep watch the interest of the
future generation.
Non-use value of Environment:- Non-use
value is the value that people assign
to economic goods (including public goods) even if they never have and never will use it. It is distinguished
from use value,
which people derive from direct use of the good. The concept is most commonly
applied to the value of natural and built resources.
Meaning
of Industrial Concentration:
Industrial
concentration means sellers concentration. In other words, in a market some big
firms have dominance over production and sales. The limit of this industrial
concentration depends upon two main factors, firstly number of active firms in
the given market, secondly, quantity of demand fulfilled by a firm out of the
total market demand. If in a market number of firms is limited, the size of
firms will be relatively big and a big firm will have the control over a large
portion of total supply.
This
situation is known as high quantity of seller (or industrial) concentration.
High class industrial concentration depends upon the market power of every
firm. Market power means the capacity of a firm or seller to influence the
price of a product or commodity. In the perfect competitive market situation
this market power is zero, which means the industrial concentration is zero.
But more we move towards the monopoly market more the industrial concentration.
Bounded rationality is the idea that in decision-making, rationality of individuals
is limited by the information they have, the cognitive
limitations of their minds, and the finite amount of time they have to make a
decision.
Public expenditure in
India http://www.yourarticlelibrary.com/economics/indian-economy/an-analysis-of-the-growth-of-public-expenditure-in-india/40219
Pollution Permits
·
Pollution permits involve giving
firms a legal right to pollute a certain amount e.g. 100 units of Carbon
Dioxide per year.
·
If the firm produces less
pollution it can sell its pollution permits to other firms.
·
However, if it produces more
pollution it has to buy permits from other firms or the government.
·
This crease a market for
pollution permits with the price set by demand and supply.
·
The aim of pollution permits is
to provide market incentives for firms to reduce pollution and reduce the
external costs associated with it. For example, it is argued carbon dioxide
emissions contribute towards global warming.
·
Pollution permits can also be a
way for the government to raise revenue, by selling firms these permits to
allow pollution.
Problems of Pollution Permits
·
It is difficult to know how many permits to give out. The
government may be too generous or too tight.
·
It can be difficult to measure pollution levels. There is
potential for hiding pollution levels or shifting production to other
countries, with looser environmental standards. In a globalised world,
multinationals increasingly shift production around.
·
There are administration costs of implementing the scheme
and measuring pollution levels.
·
For global pollution permits, countries who pollute more
than their quotas can simply buy permits from other countries. Therefore rich
developed countries can simply buy permits from less developed countries.
This does not significantly reduce pollution but shifts it from the richer
countries to poorer countries.
·
The biggest carbon trading scheme is the EU Emissions
Trading Scheme (ETS), however political interference has created a glut of
permits and it has done little to reduce carbon dioxide and reverse global
warming.
·
Environmentalists have argued a higher price of carbon is
insufficient to reduce carbon dioxide to levels necessary to stop global
warming. Demand for carbon permits is often price inelastic and too slow to
act.
·
Some carbon trading schemes have a component called
‘carbon offsetting. This means if pay to plant trees, this can count against
carbon emissions. However, critics argue carbon offsetting effectively enables
firms to keep polluting with no guarantee planting trees will on their own
solve the pollution problem.
Examples – Sulphur Trading scheme
In
1990, the US pursued a form of sulphur trading scheme which gradually reduced
the number of permits to pollute sulphur. (a cause of acid rain).
·
It was relatively straight-forward as sulphur emissions
came predominantly from coal-burning power stations. This made it easy to
monitor
·
There was no scope for ‘sulphur offsetting’
·
The scheme was successful in reducing sulphur dioxide by
40%.
·
Though critics note sulphur dioxide also fell in other
countries who pursued more standard regulatory legislation to limit the amount
of pollution – rather than carbon trading.
Capital-output
ratio:- A frequently used tool that
explain the relationship between the level of investment made in the economy
and the consequent increase in GDP is capital output ratio. The concept of
capital output ratio expresses the relationship between the value of capital
invested and the value of output.
Capital output ratio is the amount
of capital needed to produce one unit of output. For example, suppose that
investment in an economy, investment is 32% (of GDP), and the economic growth corresponding
to this level of investment is 8%.
Here, a Rs 32 investment produces an
output of Rs 8. Capital output ratio is 32/8 or 4. In other words, to produce
one unit of output, 4 unit of capital is needed. But don’t forget that the Rs
32 invested in the form of machineries will remain there for around ten or
twelve years. Such a machinery will be giving Rs 1 output in every year.
What is the relevance of capital
output ratio in economic planning?
Capital output ratio has very good
use in economic planning. Suppose the government targets an economic growth of
9% for next year. planners know that the capital output ratio in India is 4.
Here, to realize 9% growth, investment should be increased to 36% (9 x4).
Capital output ratio thus explain
the relationship between level of investment and the corresponding economic
growth. There is a simple equation in economics that shows the relationship
between investment, capital output ratio and economic growth.
G = S/V
Here, G is economic growth, S is
saving as a percentage of GDP and V is capital output ratio.
What is Incremental Capital Output
Ratio (ICOR)?
Another variant of capital output
ratio is Incremental Capital Output Ratio (ICOR). The ICOR indicate additional
unit of capital or investment needed to produce an additional unit of output.
The utility of ICOR is that with more and more investment, the capital output
ratio itself may change and hence the usual capital output ratio will not be
useful.
Lower capital output ratio shows
productivity of capital and technological progress
A lower capital output ratio shows
that only low level of investment is needed to produce a given growth rate in
the economy. This is considered as a desirable situation. Lower capital output
ratio shows that capital is very productive or efficient.
How efficiency of capital can be
achieved?
It is possible mainly through
technological progress. When there is superior technology, capital will be
efficient to produce more output and capital output ratio will be lower.
Decentralised planning in india after 72nd and
73rd amendment http://www.yourarticlelibrary.com/india-2/the-panchayati-raj-and-decentralised-planning-in-india/42424
Indian Economy:- 2013
Transfer
And Non-Transfer Expenditure :-Transfer expenditure refers to those kind of expenditures against there is
no corresponding transfer of real resources i.e., goods or services. Such
expenditure includes public expenditure on :- National Old pension Scheme,
Interest payments, subsidies, unemployment allowances, welfare benefits to
weaker sections etc. By incurring such expenditure, the government does notget
anything in return, but it adds to the welfare of the people, especially to
weaker sections of society. Such expenditure
results in redistribution of money incomes within the society.The non -
transfer expenditure relates to that expenditure which results in creation of
income or output The non - transfer expenditure includes development as well as
non - development expenditure that results in creation of output directly or
indirectly. Economic infrastructure (Power, Transport, Irrigation etc.), Social
infrastructure (Education, Health and Family welfare), Internal law and order
and defense, public administration etc. By incurring such expenditure,
government creates a healthy environment for economic activities.
Debt
for nature swaps are designed to relieve developing countries of two
devastating problems: spiraling debt burdens and environmental
degradation .In a debt for nature swap, developing country debt held
by a private bank is sold at a substantial discount on the secondary debt
market to an environmental nongovernmental organization (NGO).
The NGO cancels the debt if the debtor country agrees to implement a particular
environmental protection or conservation project. The
arrangement benefits all parties involved in the transaction. The debtor
country decreases a debt burden that may cripple its ability to make internal
investments and generate economic growth. Debt for nature swaps may also be
seen as a good alternative to defaulting on loans, which hurts the country's
chances of receiving necessary loans in the future. In addition, the country
enjoys the benefits of curbing environmental degradation. The creditor (bank)
decreases its holdings of potentially bad debt, which may have to be written
off at a loss. The NGO experiences global environmental improvement.
The pollution
haven hypothesis posits that, when large industrialized nations seek
to set up factories or offices abroad, they will often look for the cheapest
option in terms of resources and labor that offers the land and material access
they require.[1] However, this often
comes at the cost of environmentally unsound practices. Developing
nations with cheap
resources and labor tend to have less stringent environmental regulations, and conversely, nations with stricter
environmental regulations become more expensive for companies as a result of
the costs associated with meeting these standards. Thus, companies that choose
to physically invest in foreign countries tend to (re)locate to the countries
with the lowest environmental
standardsor
weakest enforcement.
The contingent choice method
is similar to contingent valuation, in that it can be used to
estimate economic values for virtually any ecosystem or environmental service,
and can be used to estimate non-use as well as use values. Like
contingent valuation, it is a hypothetical method – it asks people to make choices
based on a hypothetical scenario. However, it differs from contingent
valuation because it does not directly ask people to state their values in
dollars. Instead, values are inferred from the hypothetical choices or
tradeoffs that people make.
The contingent choice method asks the respondent to state
a preference between one group of environmental services or characteristics, at
a given price or cost to the individual, and another group of environmental
characteristics at a different price or cost. Because it focuses on
tradeoffs among scenarios with different characteristics, contingent choice is
especially suited to policy decisions where a set of possible actions might
result in different impacts on natural resources or environmental services. For
example, improved water quality in a lake will improve the quality of several
services provided by the lake, such as drinking water supply, fishing,
swimming, and biodiversity. In addition, while contingent choice can be
used to estimate dollar values, the results may also be used to simply rank
options, without focusing on dollar values.
What is the Concentration Ratio
The
concentration ratio, in economics, is a ratio that indicates the size of firms
in relation to their industry as a whole. Low concentration ratio in an
industry would indicate greater competition among the firms in that industry,
compared to one with a ratio nearing 100%, which would be evident in an
industry characterized by a true monopoly.
Democratic
Planning and Totalitarian Planning:
In
totalitarian or authoritarian planning there is central control and direction
of all economic activity in accordance with a single plan. There is planning by
direction where consumption, production, exchange, and distribution are all
controlled by the state. In totalitarian planning, the planning authority is
the supreme body. It decides about the targets, schemes, allocations, methods
and procedures of implementation of the plan. There is absolutely no opposition
to the plan. People have to accept and rigidly implement the plan.
In
democratic planning, the philosophy of democratic government is accepted as the
ideological basis. People are associated at every step in the formulation and
implementation of the plan. Cooperation of different agencies, and voluntary
groups, and associations plays a major role in the execution of the plan.
Democratic planning respects the institution of private property. Price
mechanism is allowed to play its due role. The government only seeks to
influence economic and investment decisions in the private sector through
fiscal and monetary measures. The private sector operates side by side with the
public sector. Democratic planning aims at the removal of inequalities of
income and wealth through peaceful means by taxation and government spending on
social welfare and social security schemes. Individual freedom prevails and
people enjoy social, economic and political freedoms.
Different types of Planning:- http://trcollege.edu.in/study-material/24-economics/43-meaning-and-types-of-planning
Canons of public expenditure and others http://www.accountingnotes.net/financial-management/public-expenditure/8-main-canons-of-public-expenditure/10017
Different types of taxation:- http://www.economicsdiscussion.net/taxes/principles-of-taxation-economics/26212
Property rights in India:- http://www.lawyersclubindia.com/articles/Right-to-Property-under-the-Indian-Constitution-3515.asp
- Weak sustainability:
Manufactured capital of equal value can take the place of natural capital
Weak sustainability means we
can replace or duplicate natural materials and services with manufactured goods
and services
Strong
sustainability:
The existing stock of natural capital must be maintained and enhanced because the functions it performs cannot be duplicated by manufactured capital
The existing stock of natural capital must be maintained and enhanced because the functions it performs cannot be duplicated by manufactured capital
Strong sustainability means that natural
materials and services cannot be duplicated.
There are two different
levels of sustainability: weak and strong. Weak sustainability is the idea that
natural capital can be used up as long as it is converted into manufactured
capital of equal value.
The problem with weak sustainability is that, while we can assign a monetary value to manufactured goods and capital, it can be very difficult to assign a monetary value to natural materials and services. How much is a forest full of trees worth? A value can be calculated if you assume that all the trees are cut down and turned into furniture or paper. However, the forest provides a home for wildlife that provides food for hunters. It also provides a place for hikers to enjoy the natural environment.
Weak sustainability does not take into account the fact that some natural material and services can not be replaced by manufactured goods and services. (Other questions to ask participants are: What is the dollar value of the ozone layer? A wetland? An ocean fishery? An aquifer? A river full of salmon?)
Strong sustainability is the idea that there are certain functions that the environment performs that cannot be duplicated by humans. The ozone layer is one example of an ecosystem service that is difficult for humans to duplicate.
The problem with weak sustainability is that, while we can assign a monetary value to manufactured goods and capital, it can be very difficult to assign a monetary value to natural materials and services. How much is a forest full of trees worth? A value can be calculated if you assume that all the trees are cut down and turned into furniture or paper. However, the forest provides a home for wildlife that provides food for hunters. It also provides a place for hikers to enjoy the natural environment.
Weak sustainability does not take into account the fact that some natural material and services can not be replaced by manufactured goods and services. (Other questions to ask participants are: What is the dollar value of the ozone layer? A wetland? An ocean fishery? An aquifer? A river full of salmon?)
Strong sustainability is the idea that there are certain functions that the environment performs that cannot be duplicated by humans. The ozone layer is one example of an ecosystem service that is difficult for humans to duplicate.
How Monopoly market operates?
Countervailing Power:-
Balancing of the market
power of one group by that of another group. For example, market power of
manufacturers may be balanced by the market power of retailers, and vice versa.
Concept of countervailing power was proposed by the US economist John Kenneth
Galbraith (1908-) in his 1952 book 'American Capitalism.'
Countervailing power was a term coined by Galbraith (1952) to describe the ability of large buyers in concentrated downstream markets to extract price concessions from suppliers.
Countervailing power was a term coined by Galbraith (1952) to describe the ability of large buyers in concentrated downstream markets to extract price concessions from suppliers.
Cournot’s model and stackelberg equilibrium:- http://www.economicsdiscussion.net/price/cournot-model-and-stackelberg-model-with-diagram/24183
Hi. I’m Vivek Sharma. I do write Blog on different issues and topics related to Economy, Exams and Political issues. Inspired to make things looks better.
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