Law 19983 on
A) Business:Business is an economic activity of producing and selling goods or services to earn profit.B) Demand:
Demand is the quantity of a good or service that consumers are willing and able to buy at a given price and time.C) Inflation:Inflation is the continuous rise in the general price level of goods and services in an economy.D) National Income:National income is the total money value of all final goods and services produced in a country during a year.E) Law of Demand:Law of demand states that, other things being equal, when price falls demand rises and when price rises demand falls.F) Macro Economics:Macro economics is the branch of economics that studies the economy as a whole (national income, employment, inflation)
.G) Income Elasticity of Demand:It measures the responsiveness of demand to changes in consumer income.H) Supply Function:Supply function shows the relationship between quantity supplied of a product and its determinants (price, cost, technology).I) Production:Production is the process of creating goods and services to satisfy human wants.J) Land & Labour:Land: Natural resources used in production.
Labour: Human effort (physical & mental) used in production.
Demand forecasting is the process of estimating future demand for a product or service based on past data, market trends, and other influencing factors.*It helps businesses make decisions about production, inventory, pricing, and resource planning.Methods of Demand Forecasting (Summary):1. Qualitative Methods (Opinion-Based):
*Survey of Buyers’ Intentions – Ask customers directly.
*Expert Opinion (Delphi Method) – Take views from experts/salesmen.
*Market Research – Collect and analyze customer data.
2. Quantitative Methods (Data-Based):
*Trend Projection – Use past sales data (moving average/least squares).
*Barometric Method – Use economic indicators (GDP, production index).
*Econometric Models – Statistical analysis of demand determinants.
A Joint Stock Company is an artificial person created by law, having a separate legal existence from its owners, with a common seal and perpetual succession, where the capital is divided into shares that are freely transferable.*The owners are called shareholders, and they have limited liability.
Characteristics of Joint Stock Company:
1. Incorporation:*Created by registration under the Companies Act.*Comes into existence legally
2. Separate Legal Entity:*Has its own legal identity, separate from shareholders.*Can own property, enter contracts, sue and be sued.3. Perpetual Succession:*Company’s life is not affected by death, insolvency, or retirement of members.
*Continues until legally dissolved.4. Limited Liability:
Shareholders’ liability is limited to the value of shares they hold.5. Transferability of Shares:Shares can be freely bought and sold (except in private companies where restrictions apply).6. Common Seal:Acts as the company’s official signature (though now optional under Companies Act 2013 in India).7. Separation of Ownership and Management:Owners (shareholders) appoint directors to manage day-to-day affairs.8. Large Capital:Can raise huge capital by issuing shares to the public.
Factors Affecting Elasticity of Demand1. Nature of the Commodity: The demand for necessities like rice and salt is inelastic, while the demand for luxuries such as jewellery and high-end gadgets is elastic.
2. Availability of Substitutes: When many substitutes are available, the demand is more elastic because customers can easily switch; with fewer substitutes, demand is inelastic.3. Proportion of Income Spent: If a commodity takes only a small share of income, such as a matchbox, its demand is inelastic; if it takes a large share, like cars or appliances, demand is elastic.4. Time Period: In the short run, demand is less elastic since habits change slowly, but in the long run, demand becomes more elastic as people adjust consumption.5. Nature of Use: Commodities with multiple uses have more elastic demand since a price change affects total usage, while single-use goods have inelastic demand.6. Habits of Consumers: The demand for habit-forming goods such as cigarettes and alcohol is inelastic because consumers continue buying them despite price changes.7. Price Range of the Commodity: At very high or very low prices, demand tends to be inelastic, while at moderate prices, demand is usually more elastic.
Inflation is the sustained rise in the general price level of goods and services over time. It can be classified by rate, cause, and nature.
1. By Rate:Creeping Inflation: Slow rise in prices, below 3% per year
Walking Inflation: Moderate rise, 3–10% per year, may disturb balance.
Running Inflation: Fast rise, 10–20% per year, reduces purchasing power.
Hyperinflation: Extremely high rise, above 20% or even 50%, uncontrolled.
2. By Cause:
Demand-Pull: Demand exceeds supply, “too much money chasing too few goods.”
Cost-Push: Rising production costs force producers to raise prices.
Built-in: Higher prices lead to higher wages, which again increase prices (wage-price spiral).
3. By Nature:
Open Inflation: Price rise is visible and measurable.
33Suppressed Inflation: Price rise is hidden by government controls, but pressure remains.