Features of Co-operative Society - Class 11 | HSC

Following are the characteristics of Co-operative Society

1. Voluntary Association : A cooperative society is a voluntary association of people who have a desire of improving their financial condition through joint action.  It is a voluntary association of persons who have a common interest. The membership of cooperative society is open to all regardless of caste, religion, and gender of person. A person can join and leave the cooperative society at any time. Nobody is forced to become a member or to continue as a member. Everyone having a common interest are free to join a cooperatives society.

2. Religious and Political Neutrality: Anyone can become a member of a cooperative society irrespective of his/her religion, caste, creed or political affiliation.

3. Equal Voting Rights. Co-operative Society works on the principle of One Man One Vote. Every member has only one vote irrespective of the number of shares held by him/her. This prevents rich members (holding more shares) from dictating the terms. The society is run in a democratic manner.

4. Separate Legal Entity : A cooperative society has a separate legal identity of its own. In eyes of law, cooperative society and its members are different from each other. It can own a property and enter into contracts in its own name. It can sue and be sued in its own name. The death, insolvency or lunacy (insanity) of any member does not affect its existence.

5. Service Motive : The main aim of a cooperative society is to provide service to its members and not to maximize profits. However, a cooperative society may earn some profits for the benefit of its members.

6. Registration : Registration of a cooperative society is compulsory. A cooperative society has to be registered under the Co-operative Societies Act. A co-operative society has to be registered with the Registrar of Cooperative Societies.

7. State Control :  All the cooperative societies are closely regulated by the government. This is done to ensure healthy growth of these societies.

8. Distribution of Surplus : As mentioned earlier, a cooperative society may make some profit during the course of its business. A part of this profit is distributed among its members.

9. Limited liability: The liability of the members of a cooperative society is limited only to the extent of their capital contribution in the society.

10. Democratic control: Management and control of a cooperative society lies in the hands of the managing committee which is elected by the members themselves. 

Meaning of Supply, Individual Supply, Market Supply - HSC | Microeconomics

What do you mean by Supply in Economics?

In economics, supply refers to that quantity of a particular commodity that a supplier/seller is willing and able to offer for sale at a particular price and during a particular period of time.

For example, let's say there is a seller for some commodity and he has 50 units of that commodity which he wants to sell in the market. Let's say the market price of that commodity is Rs. 100/- per unit. The seller finds this price as a bit below his expectation and hence he is ready to sell only 10 units at this price in this week. Here you can say that the supply of that product is 10 units at the price of Rs.100/- per unit for next one week. Let's say that the same seller is willing to sell 20 units if he gets the price of Rs.150/- per unit. Here we can say that the supply of the commodity is 20 units at the price of Rs.150/- per unit. We can also say that the supply is 10 units at the price of Rs.100/- per unit and 20 units at the price of Rs.150/- per unit.

As the price goes on increasing, the seller or the supplier would offer more and more units for sale in the market. Hence we can say that as price increases supply also increases and vice versa. We can say that there is a direct relationship between price and quantity supplied. More the price more will be the supply and vice versa. This is called as Law of Supply.




Here it is also important to understand the concepts of Total Output and Stock.

Total Output refers to the total quantity of a particular commodity produced by the producer during a given period of time.

Stock refers to the total quantity of a particular commodity that is available with the seller for sale in the market. It is potential supply. Stock is the maximum quantity that a supplier can offer for sale in the market. In other words, supply cannot exceed stock. At best, supply can be equal to stock (if the seller is ready to offer entire stock for sale in the market). Let's say total unsold units of a particular commodity with seller is 500 units but he is willing to offer only 200 units for sale at the current market price of the commodity. Here you can say that stock available with the seller is 500 units but supply (at current market price) is only 200 units. Stock indicates the seller's ability to offer goods for sale in the market.

What is an Individual Supply Schedule?

It is a table which shows different quantities of a particular commodity that the seller is willing and able to offer for sale in the market at different prices.

For example, the following table shows different quantities of commodity X which a seller is ready to offer for sale at different prices. Such a table is called Individual Supply Schedule.

You can see that the seller is willing to offer only 10 units for sale if the price per unit is Rs.1/-. In other words, the supply is 10 units if the price is Rs.1/- per unit. However, if the price is Rs.5/- per unit, the seller is willing to offer 50 units for sale.




What is a Market Supply Schedule?

It is a table which shows different quantities of a particular commodity which all the sellers are willing and able to offer for sale in the market at different prices.

For example following table shows different quantities of commodity X that all the sellers are willing and able to offer for sale at different prices (assuming that A, B and C are the only sellers in the market). It is called Market Supply Schedule. The market supply is obtained by horizontal summation of individual supplies of A, B and C.

As you can see in the above table, if you want to find market supply of the commodity X at price of Rs.1/- per unit then you need to find sum of individual supplies of all the suppliers (i.e, A, B and C) when the price is Rs.1/- per unit. Accordingly, the market supply, at the price of Rs.1/- per unit, would work out to 60 units (10 units + 20 units + 30 units)

Also refer - Demand

Qualities of Good Money-HSC/Class 12,Money and Finance/Banking,Macroeconomics

Qualities of Good Money Material-

For anything to be called money, it requires some characteristics.

The qualities of good money are as follows -

1. Divisibility - It should be divisible in different denominations. For example, 5 rupees, 10 rupees, 50 rupees, etc. Money material should be capable of division. Cattle were used as money in the past. But they lacked divisibility. You can't divide a cattle. So, over a period of time, cattle were replaced by the better forms of money




2. Durability - The commodity used to produce money must be durable. It should be capable of lasting longer. Anything perishable cannot be used as money nor can be used to make money. For example, metals are durable. Hence they are used to make metallic coins.

3  General Acceptance - For a thing to be used as money, it should have general acceptance. People should be ready to accept it as money without any hesitation.

4. Recognition - Anything to be used as money should be easily recognizable. One should easily be able to recognize it and should be able to distinguish it from anything else.

5. Homogeneity - Money should be homogeneous, in the sense that money of equal denomination should be of equal size, shape, quality etc. For example, cattle lack this quality. They all are not of the same size, same colour, same shape, etc. And so eventually, over a period of time, they were replaced by the better forms of money.




6. Portability - Money should be easily portable. It should not be very difficult for someone to take it from one place to another. For example, paper currencies are very portable, but carrying cattle from one place to another is very difficult.

7. Stability - Money should have general stability in value. It should not be subject to fluctuations in the value.

Also refer - Functions of Money

Keynes' Psychological Law of Consumption-Class 12,Economics,NCERT/CBSE

Psychological law of Keynes:

This law states that with the increase in income, consumption also increases but at a lower rate.

In simple words, with an increase in income, the proportion of income spent on consumption of various goods and services decreases and the proportion of income that goes towards saving increases.

For Example:

If a person is earning Rs. 10,000 per month and spends Rs.7,000 per month on consumption, the proportion of his income spent on consumption is 70%. Balance 30% will be his savings.

But when his income increases to Rs.1,00,000/- per month, then he will not spend 70% of income (i.e, Rs.70,000/-) on consumption. He will spend less than Rs.70,000/- on consumption. Let's say he spends say Rs.60,000 per month on consumption. Hence, the proportion of income spent on consumption now is 60%. Balance 40% of his income is savings.

This shows that with the increase in income, consumption also increases but the proportion of income spent on consumption decreases. And the proportion of income that goes towards savings increases

Transfer Income/Transfer Payment-Meaning with examples | What is a Transfer Income/Transfer Payment?

Meaning of Transfer Income/Transfer Payment:

Transfer Income refers to income received by a person without rendering any productive service in return.

It is a unilateral (one-sided) concept i.e, such income is earned without providing any goods or service in return.

It is not included in National Income as it does not reflect any production of goods and services.

It can be received either within the domestic territory of a country or from abroad.

Examples: Old age pension, Scholarship, Unemployment allowance, Pocket money etc. All these incomes are received without giving any product or service in return.

Let's take the example of Old age pension. In the case of old-age pension, the person gets this income without doing any work (job). This income is generated without any increase in goods or services produced within that year. The person has not produced any goods nor given any service. And since there is no production of goods or services against this income, it is not added to national income.

In the case of transfer income, money just changes hands. But it doesn't lead to the production of any goods/services in the economy. Hence it is not added to the national income as it is just transfer of money from one pocket to another that takes place without production of any goods or services.

What is Microeconomics? What are the features of Micro-Economics? HSC/Class 12

Meaning of Microeconomics-

There are basically two branches of Economics - Microeconomics and Macroeconomics.

The word Microeconomics is derived from the Greek word 'Mikros' which means 'Small'.

Microeconomics is the branch of economics, which studies the behaviour of individual economic units like an individual buyer, individual seller, etc. Microeconomics deals with the study of economic issues related to such individual economic units.

Under Microeconomics, we split the economy into small individual units and then study each individual unit separately.




Following are the features of microeconomics:

1. Study of Individual Units - Micro Economics deals with the study of individual units of an economy like an individual consumer, individual producer etc.

2. Slicing Method - Study of microeconomics uses slicing method as under microeconomics, the whole economy is broken down into small individual units for the purpose of studying them individually

3. Price Theory - Micro Economics is referred to as price theory as it basically focuses on the determination of prices of various goods and also the prices of factors of production (land, labour, capital and enterprise are four factors of production)

4. Partial Equilibrium - Micro Economics deals with partial equilibrium analysis as it analyses the equilibrium position of individuals (individual consumer, individual industry etc.). Partial equilibrium analysis isolates an individual unit from other forces of the economy, thereby neglecting the impact of other forces on the individual units

5. Use of Marginalism - Micro Economics makes use of the principle of marginalism for the purpose of analysis. Marginal means change brought about in total by an additional unit. For example, marginal cost means an increase in total cost by producing one more unit of the product. The concept of Margin is used in all the areas of microeconomics

6. Based on Assumptions - Micro Economic theories make use of a lot of assumptions. Most theories are based on the assumption "other things being constant" (ceteries paribus assumption).

7. Analysis of Market Structures - Under microeconomics, we study different market structures like monopoly, oligopoly, perfect competition, etc. We study the behaviour of various individual units in these different forms of market structures

8. Microscopic Approach - Micro Economics uses a microscopic approach. Study of individual units as part of the whole economy is similar to the study of different cells (using a microscope) as parts of the whole body of an organism.

Also refer - Demand: Individual Demand and Market Demand

Measurement of Government Deficit - NCERT Class 12 Economics

What is Budget Deficit?

BUDGET DEFICIT = BUDGETED EXPENDITURES - BUDGETED RECEIPTS

Budget deficit is defined as the excess of total budgeted (estimated) expenditures over total budgeted (estimated) receipts of the government during a fiscal (financial) year. It occurs when total budgeted expenditures are more than total budgeted receipts.




Practically budget deficit never arises as planned expenditures can't exceed planned receipts. If there is any deficiency in the budget, then it will be fulfilled by loans and borrowings. So ultimately the budget becomes balanced and such loans & borrowings represent fiscal deficit.

So in the end, the equation is

Budgeted Expenses = Budgeted Receipts + Fiscal Deficit.



Fiscal deficit: Fiscal deficit is defined as the excess of total budgeted expenditures over total budgeted receipts (excluding loans and borrowings) during a fiscal year. Thus, the fiscal deficit is always equal to the loans and borrowing. This is because these loans & borrowings fill up the gap between budgeted expenditures and budgeted receipts

FISCAL DEFICIT = BUDGETED EXPENDITURES BUDGETED RECEIPTS (Other than loans and borrowings)

OR

FISCAL DEFICIT = LOANS AND BORROWINGS

Revenue deficit: Revenue deficit is defined as the excess of budgeted revenue expenditures over budgeted revenue receipts during a fiscal year. It occurs when budgeted revenue expenditure exceeds budgeted revenue receipts.

Revenue receipts are receipts which neither lead to an increase in liability nor reduction of assets of the government. For example, Income Tax. Income tax paid by the citizens is revenue receipt for the government. Income Tax amount is not supposed to be paid back by the government to the citizens. The receipt of income tax by the government does not create any liability for it. Hence, it is a revenue receipt.

Revenue expenditures are expenditures which neither lead to an increase in assets of the government nor lead to a reduction of liabilities of the government. For example, salaries paid by the government to government employees. This expenditure neither creates any asset nor reduces any liability of the government.




REVENUE DEFICIT = BUDGETED REVENUE EXPENDITURE - BUDGETED REVENUE RECEIPTS.

Revenue deficit does not take into account capital receipts and capital expenditures.

Primary Deficit - Primary deficit refers to fiscal deficit other than interest payment. It shows a deficiency in the budget which is created due to the current financial planning of the government.

PRIMARY DEFICIT = FISCAL DEFICIT - INTEREST PAYMENT

Three Central Problems of an Economy-Class 11/Class 12, Economics

The Central problems of an Economy refer to problems of allocation of limited resources to satisfy various human wants.

Human wants are unlimited. But resources to satisfy those wants are limited. Also, some of these limited resources have alternate uses. For example, water can be used for a variety of purposes like drinking, washing clothes, bathing etc. This situation gives rise to following problems (central problems of an economy)-

1. What to produce? - The problem of what to produce involves the selection of goods and services to be produced as well as quantities in which they should be produced.

It is related to the choice between

- Luxury and Necessary goods,

Or

- Consumer and Defence goods,

Or

- Capital and Consumer goods, etc.

As the available resources are limited, so all the goods can't be produced in the quantity desired by us. Hence this problem. For example, metals can be used to make machinery, utensils or car. As metals are limited in quantity, so the goods which metals can produce can't be produced in a desired quantity. Hence the problem of what to produce arises.




2. How to produce?
This problem involves deciding the type of technology which should be used for production.

There are basically two types of technology

Labour Intensive Technology: This technology requires more labour & less capital.

Capital Intensive Technology: This technology requires more capital & less labour

Capital intensive technology will lower the cost and increase the speed of production. On the other hand, labour intensive technology provides more employment (jobs). This gives rise to the problem of choice among these two technologies.

For example, Cloth can be produced by power looms as well as handlooms. Power looms reduce the cost and give more output. On the other hand, handlooms provide more employment. This gives rise to the problem of how to produce.




3. For whom to produce?

This problem is related to the distribution of goods & service in the economy.

It is related to the choice between

- Production of goods and services for richer section of society

Or

- Production of goods and services for the poorer section of society

Production of goods and service for poor leads to maximum social welfare, whereas production of goods and services for rich leads to more profit. For example, if an economy concentrates on the production of luxury goods, then this will improve the standard of living of rich class, but the life of poor will become more difficult. On the flip side, if an economy concentrates on the production of necessary goods, then this will serve the society but profits will reduce. Hence the problem of for whom to produce arises.

Also refer - Micro-Economics and its features

Demand-Individual Demand & Market Demand and factors that affect Demand, HSC/Class 12

In a Layman's language demand means desire. However, in economics demand has a different meaning. In economics, demand is desire backed by the ability and willingness to pay.

Hence, in economics desire becomes demand only when it is backed by ability as well as willingness to pay.

In other words, Demand = Desire + ability to pay for that desire + willingness to pay for that desire.

You may have a wish to have a private jet. But unless you have (a) capacity as well as (b) willingness to pay for it, it won’t be considered as demand. 

You may have a wish which you can afford to fulfill but you are unwilling to spend money for the fulfillment of wish. In this case also, desire won't be considered as demand.

People demand goods because they have utility. The demand is that quantity of a particular commodity which a consumer is ready to buy at a particular price and during a specified period of time. For example, if Mr X is willing to buy only 10 kgs of sugar when the price of sugar is Rs.40 per kg then demand of Mr..X for sugar can be considered as 10 kgs when the price of sugar is Rs.40 per kg (assuming he has the ability to pay for it). 

Thus demand is a relative concept. Demand is always stated with reference to price and time.

Individual Demand Schedule - This refers to various quantities of a particular commodity that an individual is willing and able to buy at different levels of prices during a specified period of time. For example, the below table shows various quantities of sugar, which Mr X is willing to buy at different levels of prices. In other words, it is an Individual demand schedule of Mr.X.

Price of the Sugar (in Rs.)          Demand in Kg

    500                                            1
    400                                            2
    300                                            3
    200                                            4
    100                                            5

Market Demand Schedule: This refers to the aggregate demand of all individuals in the market at different levels of prices during a specified period of time. For example, the table below shows the demand of three individuals in the market. It is called as market demand schedule (assuming that there are only three individuals in the economy i.e, A,B and C).

Sugar Price    A's demand    B's demand    C's demand        Markets's Demand
(in rupeee)          (in kg)           (in kg)              (in kg)                   (in kg)
25                            6                     7                         8                            21
26                            5                     6                         7                            18

27                            4                     5                         6                            15               
28                            3                     4                         5                            12
29                            2                     3                         4                              9
30                            1                     2                         3                              6

Factors that affect demand -

Price: It is the most important factor that affects demand. When price rises, demand falls and vice versa. 

Income: Demand also depends on Income of individuals in the society. More the income, more will be the demand. This is pretty obvious.

Population: An increase in population leads to higher demand. More the number of people in the economy, higher will be the demand.

Expectation of future prices: Expectation of future prices also affects the demand. If the consumers feel that the price of a particular commodity is likely to fall, then they may postpone their plan to purchase that commodity. This will lead to a decrease in demand of that particular commodity

Tastes habits and fashions- These also have an effect on demand for various products. The products which may be in fashion will be demanded more

Advertisement and promotion - Advertisement and promotion also play an important role in demand of a particular commodity. The goods which are highly promoted and advertised are likely to have more demand

Prices of substitute and complementary products: These factors also affect demand for a particular commodity. For example, Tea and Coffee can be considered as substitutes for each other and hence a change in the price of coffee will affect the demand for tea. Similarly, ink pen and ink are complementary. Change in price of anyone will affect the demand for another

Taxation policy- Demand for various goods depends upon the level of income of people in the economy. If the taxes are high, the consumers will have less income to spend on various commodities which can lead to lower demand for various products in the market.  

Distribution of income- The distribution of income in an economy also impacts the demand for various commodities in the economy. If there is an unequal distribution of income, a vast majority of the population will have a very low income which in turn would lead to lower demand.

Other factors- Factors like customs, traditions, change in climate, political and social factors also influence the demand for the various good in the economy. For example, in India, the demand for various goods and commodities is high during the Diwali festival.

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Factors affecting elasticity of demand

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Central Bank and its functions-HSC,Class 12,Macro Economics

What is a Central Bank?

Central Bank is an apex bank in banking structure of any country. It is single most important and influential bank in the economy. For example, RBI in India and Federal Reserve Bank of USA. 

Central Banks frame rules and regulations for banks in their respective countries. They are owned by the governments of their respective countries.

The Central bank also acts as a banker for government and other banks in the economy. That's why a central bank is also called as bankers bank.

The chief of the Central Bank is called as the governor in India.

Following are the functions of a central bank:

Acts as a banker to the government - It collects tax revenues on behalf of the government and uses it to make payment of goods purchased and services availed by the government.

Acts as banker to the commercial banks - Central Bank acts as the bank of all the bankers in the economy. Hence it is called the bank of the bankers. Holding accounts at central bank helps commercial banks to settle debts between each other.

Acts as lender of last resort- If a bank has a temporary shortage of funds it can approach the central bank for help. The temporary shortage of money may be due to customers withdrawing more money than usual. Central Bank is the last hope for any bank which is in trouble.

Manages the debt of the nation- Governments do raise money from time to time by issuing various securities. The government's debt is managed by the central bank by issuing government securities (Example, Government bonds), paying interest on them and repaying the debts (borrowings) as and when they are due

Issuing of currency notes - It has the monopoly of issuing currency notes of the country.

Holds the country's foreign exchange reserves and gold - The Central Bank holds foreign exchange reserves of the country

Controls the banking system - Keeping banking system safe and secure is the responsibility of the Central Bank. It has the authority to lay down rules and regulations to be followed by all the other banks in the country

Represents the government - It represents the government of the country at international forums like IMF and World Bank

Implements the government's monetary policies - The central bank implements the government's monetary policies.

Read further - Difference between Central Bank and Commercial Bank

Perfect Competition-Meaning and Features of Perfect Competition, HSC

A perfectly competitive market is one in which there are a large number of buyers as well as sellers of a homogeneous product. Hence supply/output of any one seller is just a fraction of total output/supply of the product

Perfect Competition

Following are features of Perfect Competition -

1. The sellers are the price takers- Since there are a large number of sellers in the market, no single supplier can influence the market price. This is because supply of each seller is just a negligible fraction of total supply. Hence, the market price of the product is determined on the basis of total market demand and the total market supply and so the sellers have to accept this market price. Hence, sellers are price takers and not price makers in this form of a market.

2. A large number of buyers- There are a large number of buyers in this form of market and hence even the buyers are price takers. The demand of each buyer is a negligible portion of total market demand.

3. Homogeneous Product- The product of every supplier is identical in every aspect. They are exactly same in shape, size, color, weight, quality etc. Thus the products of all suppliers are perfect substitutes for each other.

4. Free entry and exit- There are no barriers to entry and exit in the market. Any firm can enter or exit the market any time it wants

5. Single Price - All units of the product have a uniform price which is determined by the market. In other words, the price is determined by demand and supply position of the product in the market.

6. All factors of production are perfectly mobile- Under perfect competition, all the factors of production enjoy complete freedom of movement. Thus, all four factors can be moved from one place to another freely. Hence, no producer is at a disadvantage due to unavailability of any factor and has access to all factors all the time.

7. Perfect knowledge- All the buyers and sellers have perfect knowledge of the market. Hence, no buyer will end up paying a higher price. This also prevents any seller from charging a different price than the prevailing market price

8. The absence of transportation cost- It is assumed that there is an absence of transportation cost and hence there will be no difference in transportation cost between the sellers. Transportation cost will be zero for all the sellers.

9. No Interference of government - There is no interference of the government in the market.

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