SHIFT IN SUPPLY CURVE

SHIFT IN SUPPLY CURVE:

            When there is a change in quantity supplied of a good resulting from a change in any of its determinants, other than the price of a good. It causes the supply curve shift rightward or leftward. The supply curve can shift due to advance in technology, change in production cost, climatic changes etc.

REAL WAGE:

               The amount of goods and services which a worker actually receives for his labour is called his real wage depends upon the price level, opportunities of extra earning, status in the society, pension benefits etc.

Nominal wage:

            Nominal wage is the total amount of money income earned, by person for this work during a certain period.

RANKS OF ELASTICITY OF DEMAND TO BE NAMED:

           There are five degrees or ranks of elasticity

(i) Elasticity to unity. (Ed = 1)

(ii) Perfectly inelastic demand (Ed = O)

(iii) Perfectly elastic demand (Ed = 00)

(iv) Elasticity greater than unity (Ed >1)

(v) Elasticity less than unity (Ed<1)

OPPORTUNITY COST:

         The opportunity cost of capital is the available rate of return or the amount of income which could have been earned by investing in the next best alternative. For example, a person has Rs. One lakh in cash which he has kept in the locker, suppose the rate of return on the invested capital in the bank is 10% annually. If the money is kept in the locker, it earns no interest. In case it is invested, it yields 10% interest a year. So the opportunity cost of holding Rs. One lakh in locker is 10% interest which is foregone yearly.

QUASI RENT:

              Economic rent which can only be earned by man-made factors in the short run due to inelastic supply is called Quasi rent.

REGRESSIVE TAX:

           In case the rate of tax is lowered as the taxable income of an individual or firm increases the tax is called regressive. The burden of regressive tax falls more on the poor than on the rich people. Indirect taxes tend to be regressive.

PROGRASSIVE TAX:

             When the rate of increases as the taxable income of a person or firm increase, it is called progressive tax, in other words, the higher the income of a person, the higher the proportion of income paid in tax.

PROPORTIONAL TAX:

         When the rate of tax remains same on all the taxable slabs of income, it is called proportional tax. If the proportional rate of tax is 10%, a person with a taxable income of rs. 20,000/= will pay 2,000/= as the tax and another person with taxable income and maximum employment in the country.

GIFFEN PARADOX:

             The Giffen paradox is named after the name of British economist Robert. According to him there are certain cases of inferior goods to which the law of demand does not apply. These goods are named as Giffen goods. According to Giffen, “when the price of an inferior good decreases its demand decreases and when its price increases, its demand also increases. (the demand for inferior quality of rice increases with the rise in its price in low income groups)