What will be the effect of high demand of luxuries goods

Assignment Help Microeconomics

Reference no: EM13244657

Suppose a growing world with positive real income and economicgrowth. There are some lower income countries producing goods forbasic necessities of life. If income of the poor people belongingto lower income countries increases, they move towards theluxurious goods like cars and air conditioners etc. Since, incomeelasticity of luxurious goods is positive i.e. as income increases;demand also increases. So, with the increase in income, demand ofluxurious goods from abroad will increase because such types ofgoods are not produced domestically in lower incomecountries."

Keeping in view the above scenario, what will be the effect of high demand of luxuries goods from abroad on the balance of payment oflower income countries?

Reference no: EM13244657

Questions Cloud

Find present value for both choices if annual inerest given : Suppose you may choose between two machines for production atyour store. Both machines have a useful cycle of 10 years. MachineA cost $10,000, leaves an annual (EOY) income of $2,500, machine Ahas annual expenses of $1,000

Explain molecular orbital templates for diatomic molecules : Molecular orbital templates for diatomic molecules from the 2nd period elements are attached to the back of the exam. Use the appropriate diagram to determine the bond order in the O2+ ion.

Orbital hybridization around the central atom of molecules : What is the level of orbital hybridization around the central atom of molecules that belong to the following AXE classes: Select the one answer that is correct in all three columns.

Determine the magnitude of the earths gravitational force : A satellite of mass 5400kg orbits the Earth and has a period of 6580s, determine the magnitude of the Earth's gravitational force on the satellite

What will be the effect of high demand of luxuries goods : Since, income elasticity of luxurious goods is positive i.e. as income increases;demand also increases. So, with the increase in income, demand ofluxurious goods from abroad will increase because such types ofgoods are not produced domestically in..

Trade in the west african states of ghana and gao : Which of the following were major items of trade in the West African states of Ghana and Gao?

What proportion of variance is explained by model : Compute the standardized slopes for SES and English ability; interpret them, and specify what additional information is learned from the standardized slopes that cannot be learned from the unstandardized slopes.

Explain the molar enthalpy of formation for nitrogen dioxide : the molar enthalpy of formation for nitrogen dioxide is +33.18 kj/mol. the chemical equation that corresponds to this value of (delta)Hf is

Confucian philosophy emphasized : Confucian philosophy emphasized

User Account

All Pages