Showing posts with label microeconomics notes. Show all posts

Saturday, September 24, 2022

Government Budget and the Economy Class 12 Notes CBSE Macro Economics Chapter 5

Budget:-

A budget is the annual financial statement that contains an estimate of future revenue and expenditure of the government . It is a details financial statement of a country's revenue and expenditures.

Objectives of Budget:-

The Main Objectives of the Budget are:

1. Resource Reallocation.

2. Redistribution of Income and Wealth

3. Management of Public Enterprises.

4. Economic Stability

5. Economic Development

6. Employment Generation

Components of Budget:-

Two main components of Budget are-

1. Revenue budget

2. Capital budget

1. Revenue budget:

The revenue budget consist of the government revenue receipts and the expenditures that are met with that revenue. Revenue receipts and revenue expenditures of the government are shown in the revenue account.

2. Capital budget:

Capital budget includes capital receipts and capital expenditures. The capital receipts are shown in the capital account .

Revenue Account:-

The revenue account consist of the current receipts and expenditure of the government. Revenue receipts refers to those receipts of the government which neither create a liability nor lead to reduction in assets. Revenue receipts consist of -

Tax Revenue:-

Tax revenue consist of the proceeds of taxes and other duties leived by the government, which includes direct taxes like personal income tax and corporation tax and indirect taxes like excise taxes, customs duties , service tax etc.

Non Tax Revenue:-

Non-tax revenue of the government consist receipts from sources other than tax like interest and dividends on government investment, administrative revenue - eg. license fees, registration fees, fines and penalties etc.

Different types of taxes:-

The various taxes that are imposed by the government are given below:

a. Direct Tax

b. Indirect Tax

c. Proportional Tax

d. Progressive Tax

e. Regressive Tax

Direct Tax :-

Direct taxes refers to those types of taxes that cannot be shifted to anyone else, that is, the impact and incidence of the tax is on the same person who pay the tax. Examples of direct tax - expenditures tax, estate tax, wealth tax, gift tax, property tax etc.

Indirect Tax :-

Indirect taxes is defined as those taxes which are ultimately borne by some other person than the person who first paid the tax. In other words, the impact of indirect is on one person while its incidence is on some one else to whom the burden of tax is shifted. Example of indirect tax - sale tax, excise duty, export duty, import duty, entertainment tax etc.

Monday, September 12, 2022

The Concept of Production Function | Class 11 | Economics Notes

Production :-

In general, the term 'production' refers to the creation of goods and services. Man by his scientific and technological knowledge can change the shapes and patterns of all goods and hence such, can raise the utility of these goods. Thus, production also refers to the creation of utility.

Production Function:-

The term 'production function' refers to the relationship between physical input and physical output of a firm. In other words, production function refers to the functional relationship between physical input and physical output of a firm.

Symbolically, production function is written as -

Q = f(N, L, K, M, .........)

Where,

Q = total output

N = land

L = labour

K = capital

M = raw materials

f = functional relation

Variable Factors :-

Variable factors refers to those factors which change with the change in output. Variable factors are those factors, which can be changed in the short run. They vary directly with the output. For example, Labour, raw material, etc.

Fixed Factor :-

Fixed factor refers to those factor which do not change with the change in output. Fixed factors are those factors which cannot be changed in the short run. They do not vary directly with the output. For example, Capital, land, plant and machinery, etc.

Short Run Period :-

In the short run a firm cannot alter the fixed inputs. Thus, short run period is defined as that period that is not sufficient to bring about changes in the fixed factors of production. In other words, short period refers to the period of time in which a firm cannot change some of its factors like plant, machines, building, etc. due to insufficiency of time but can change any variable factor like labour, raw material, etc. Thus, in short run, there will be some factors of production that are fixed at predetermined levels, e.g., a farmer may have fixed amount of land.

Long Run Period :-

In the long run a firm can change all factors of production. Hence, a long period is a time period during which a firm can change all its factors of production including machines, building, organization, etc. In other words, it is a period of time during which supplies can adjust itself to change in demand

Sunday, August 28, 2022

The Concepts of Revenue| Microeconomics Notes| CBSE| AHSEC| Chapter 7 Notes - Nemazedu

Revenue Definition:-

The term 'revenue' refers to the amount of money earned by a firm/enterprenure by way of selling its products at different prices. The revenue of a firm/enterprenure is its sales, receipts or income.

The concepts of revenue include - Total Revenue, Average Revenue and Marginal Revenue.

Total Revenue:-

The term 'total revenue' refers to the total amount of income earned by a firm/enterprenure through sale of its product. The total revenue of a firm is the sum of all sales, receipts or income of that concerned firm.

Thus,

TR = AR × Q

Where,

TR = Total revenue

AR = Average revenue or price per unit

Q = Output

As for example, if a firm sell 200 pen at Rs. 50 each, the total revenue would be

TR = Rs 50 × 200

TR = Rs 10000.

Average Revenue:-

Average revenue refers to the revenue per unit of output produced by a firm. It is obtained by dividing the total revenue by the total output.

Thus,

Average Revenue(AR)= total revenue/total output

or,

AR = TR/Q

As for evample, for a firm having total revenue of Rs10000 after selling 200 pens,we have

AR = 10000/200

= 50

Hence, the average revenue is Rs50 which is the price of the product.

Marginal Revenue:-

The tern marginal revenue refers to the amount of change in the total receipts due to the sale of an additional units. In other words, marginal revenue is the change in total revenue which results from the sale of one more unit of output.

Thus,

MR = ∆TR/∆Q

or, MR = TRn - TRn-1

Where, MR = marginal revenue

TRn = total revenue from 'n' units.

TRn-1 = total revenue from (n-1) units.

For example, is by selling 201 units of the pen the total revenue increases from Rs10000 to Rs10050, then the marginal revenue from sale of the additional one unit is Rs 50.

Since,

MR = TRn - TRn-1

= Rs 10050 - Rs10000

= Rs 50

Relationship between AR and MR curve:-

The relationship between AR and MR curve is given below -

* when MR is more than AR, AR is increasing,

* when MR is equal to AR, AR is constant,

* when MR is less than AR, AR is decreasing.

The relationship between AR and MR is shown in the figure given above. As in the figure , when marginal revenue (MR) is rising and above average revenue(AR), AR is rising upward. When MR is equal to AR, AR is constant and parallel to the X-axis. When MR is falling or less than AR, AR is falling. Hence, it is MR which determines the shape of the AR curve.