A Industry Demand and Firm Company Deman
A Industry Demand and Firm Company Deman
A Industry Demand and Firm Company Deman
Because of the stickiness of resources in the short run, in the short run there can be imbalances in supply
and demand. Areas in which there is increased demand may encounter shortages until resources can be
shifted to it and likewise areas of decreasing demand can see excess supply. The long run is assumed to
have no imbalances of this sort.
Durable Goods
Goods that go on yielding services to the consumers over a number of periods in future. Further,
because of their durability they can be stored for longer periods of time.
Durable goods tend to have a long useful life. For statistical purposes, a durable good is expected
to last at least three years, according to the Economics and Statistics Administration
Consumer durable goods include items like furniture, jewelry and cars. Large appliances such as
stoves and washing machines are durable goods.
Durable goods can be used many number of times
Durable goods can be resold after some years
The significance of changes in durable goods production and sales is more complex.
Durable goods are usually more expensive than non-durable goods that have to be
purchased over and over again.
Non-Durable Goods
Goods are those which wear out easily and therefore they can be used for short period
of time only.
Nondurable products can used for only limited number of times in some cases only
once.
The market for some non-durable goods, such as food, tends to be stable
Answer 6-Since factor incomes arise from production of goods arid services, and since
incomes are expended on goods and services produced, three alternative methods of
measuring national income are possible.
a) Output Method: This method is also called as production Method. It consists of following
three stages.
1) Estimation of the gross value of domestic output in the various sectors of production.
2) Determination of cost of materials used, services rendered to these sectors by other sectors
of production and also annual depreciation value, of the plants and equipments used in these
Sectors.
3) Deduction of costs and depreciation values from the gross value production which gives
(derives) net value of domestic output.
b) Income Method: Under output method, the net output estimates are obtained. This estimate
is regarded as the equivalent of the value of sales of the output. This is the income to producer
while receipts of the factor suppliers. This income comprisesi) Wages earned by the workers, salaries of staff, social Security, bonus etc.
ii) Earning of self employed persons, dividends of shareholders
iii) Rent of land, factories and business premises.
iv) Interest on capital and earnings of public enterprises the sum of all above gives us National
Income.
c) Expenditure Method: Under this method, estimation of the disposal of income on the
purchase of final goods end services has been done. It includes following.
a) Personal consumption expenditure of households.
b) Gross private domestic investment, i.e. business spending on capital goods.
c) The net foreign investment, i.e. net Spending by foreign nationals.
d) Govt. purchases of goods and services.
Method used in India: The National Income Committee used a combination of Income method
and the Product (output) method for estimating nationa1 income. In the agriculture and industry
sectors the output method (product method) is used. Here net value of product arc computed
and incorporated in national income. But in the fields of commerce, transport, banking the
income method is used. The National income involves the value of products and income earned
by the people engaged in service sector.
Answer 5:-