Qualification > Commerce
ALL ECONOMICS DISCUSSION, PAPERS HELP HERE!!
J.Darren:
--- Quote from: Ari Ben Canaan on June 08, 2010, 10:47:29 am ---Could someone please provide me with the drawbacks of using the following to measure development of an economy:
GDP per Capita
HDI
Thank You !
--- End quote ---
Not included, but some possible downsides include :
- does not account for black market and non-monetised sectors such as barter and self-consumed products (i.e. DIY)
- regional variations of income and spending
- does not indicate inequalities of income and wealth
- does not put into account of work hours and leisure time of workers
workers working long hours may result in chronical illness such as heart disease.
- insufficent resources for investment
occurs when the firm has devoted too many resources into satisfying short-term wants.
GDP is calculated by the formula C + I + G + (X - M), more C means fewer I.
- does not put into account of negative externalities
e.g. depletion of finite resources such as oil, environmental impact such as pollution
aangel42:
--- Quote from: Ari Ben Canaan on June 08, 2010, 10:47:29 am ---Could someone please provide me with the drawbacks of using the following to measure development of an economy:
GDP per Capita
HDI
Thank You !
--- End quote ---
Well, I was hoping someone who had a better idea would answer, but seeing as no one has, I guess the disadvantages of using HDI could be along the lines of:
* not all factors taken into account
* changes occurring over time might not be taken into account because difficult/expensive to measure
* not all factors may be able to be measured (e.g. developed countries use a census, but LEDCs might not have the capital or proper government controls to do this, etc.)
* other factors that aren't measurable can't be taken into account (e.g. morale of people, ambition, future prospects, etc)
For the disadvantages of GDP per capita, I can't think of much, besides maybe:
1) regular, detailed calculations may be unable to be made as accurately as desired maybe because all the information is not available
2) businesses might cheat the government (e.g. not report profits/sales, so GDP may actually be higher/lower than what's officially thought to be so)
3) it can really ONLY BE AN ESTIMATE (logically speaking)
4) regular, frequent, or volatile changes in birth rate, death rate, net rate of migration, ILLEGAL IMMIGRANTS, etc. can't be taken into account, so population calculation isn't entirely accurate either, thus skewing the "per capita" part
Hope this helped? I tried...
What past paper did you get this question from anyway?
elemis:
--- Quote from: aangel42 on June 08, 2010, 11:54:52 am ---What exactly are normal and inferior goods?
Are normal goods just of a higher quality than inferior ones...?
--- End quote ---
Normal goods have a positive income elasticity of demand. As your income rises you buy MORE of these goods. An example might be Televisions.
Inferior goods have a negative income elasticity of demand. As your income rise you buy LESS of these goods. An example might be public transport on a bus. If you are rich you are unlikely to go to work via a bus but rather take a taxi or use a private car.
Thus public bus trasnport is an inferior good. ;)
J.Darren:
--- Quote from: Ari Ben Canaan on June 08, 2010, 11:59:18 am ---Normal goods have a positive income elasticity of demand. As your income rises you buy MORE of these goods. An example might be Televisions.
Inferior goods have a negative income elasticity of demand. As your income rise you buy LESS of these goods. An example might be public transport on a bus. If you are rich you are unlikely to go to work via a bus but rather take a taxi or use a private car.
Thus public bus trasnport is an inferior good. ;)
--- End quote ---
Normal goods can be sub-divided into necessities and luxury goods.
elemis:
--- Quote from: J.Darren on June 08, 2010, 12:17:11 pm ---Normal goods can be sub-divided into necessities and luxury goods.
--- End quote ---
Good point. :)
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