Merits and demerits of market economy and elasticity of demand

He either buys or sells in an attempt to make profit depending on the prevailing prices and anticipated prices. Demand Forecasting Method 7. Empirical studies made in India and USA has shown that high rates of direct taxes have adversely affected savings.

Thus, resource allocation between the two goods remains efficient. Allocation of resources is efficient as by producing X0 of good X and Y0 of good Y, the community is reaching the highest possible indifference curve U2.

Demerit Good A demerit good has two characteristics: On this calculation, the speculator will buy now at current prices Rs. The opponents of bimetallism dispute that flexibility of money led to price stability. The price will be settled at the prevailing rate and the seller is given three months time.

The essence of speculation lies in the forecasting of price movements and buying and selling for profit. This merit was not available to other monetary standards, especially the gold standard, where cyclical movements in one country were automatically passed on to other countries through gold movements.

Speculation | Meaning | Kinds | Genesis | Speculation Proper

It is very convenient to carry large sums of paper money from one place to another. Museums — the educational benefit of museums. Towards demand of consumer goods. This speculation is done by a few rich and powerful operators who organize themselves into monopolistic combination in order to tilt the price in their favour.

The individual moves to equilibrium point B on indifference curve IC1.

The Merits and Demerits of Direct Taxes (explained with diagram)

These opinions and views are analysed and deductions are made therefrom to arrive at the figure of demand forecasts. Simple and mercantile speculation is essential and also beneficial to the market. This means actual delivery of the commodity will not take place immediately.

These have led governments to adopt exchange control measures. Contraception Supporters of family planning may argue contraception is a merit good because contraception can involve personal costs of unwanted pregnancy.

However, there are some demerits of direct taxes which we discuss below: This method has its base for demand forecasting on few economic indicators. Under this method, an effort is made to ascertain separately certain determinants of demand which can be maintained, e.

The paper standard is a highly useful monetary system because it possesses great elasticity. Meaning of Paper Standard: The chief dis-advantages of the of this method are: The main advantages of this method are: This acts as a brake on the economy getting into serious inflationary situation.

The transactions in stock exchanges are highly risky and there are great chances for making huge profits or heavy losses. This is a new experiment. No need of elaborate statistics:4. Buoyancy, that is, to what extent revenue from tax increases with the increase in income; and.

5. Economic stability. Merits of Direct Taxes.

Paper Standard: Meaning, Merits and Demerits

exm_ - Free download as The production of goods and services is based on supply and demand in the general market (market economy), Merits and Demerits of. Q1. Discuss some of the merits and demerits of market economy. Over the last two decades, the planned economies have introduced some elements of th.

Price elasticity of demand has been defined as the More so the economy is a state oriented market economy. What are the merits and demerits of attempting.

Definition of merit and demerit goods. Home > Micro Economic Essays > Market Failure > Merit and Demerit Goods. 1. UK economy in s. Paper Standard: Meaning, Merits and Demerits.

Top 7 Methods of Demand Forecasting | Managerial Economics

or silver coins or bullion of specified weight on demand. monetary system because it possesses great elasticity.

Merits and demerits of market economy and elasticity of demand
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