Objectives of icas, Managerial Economics

Assignment Help:

Objectives of ICAs

Most schemes have as their main objective to stabilize and/or increase the world price of commodity, producers' incomes, foreign exchange earnings of exporting countries and governing revenues from taxes on the commodity.  More stable prices are desired because wildly fluctuating prices may cause hardship and are likely to increase the costs of both producers and consumers through increasing uncertainty and producing exaggerated responses in production and consumption.  Where these responses are lagged one or more seasons behind the price change they can be particularly damaging in producing 'cobweb' cycles.  High current prices for coffee, for example, may stimulate planting of new coffee trees that will only bear fruit five or more years hence when  the prices may become, as a result very depressed. More stable earnings for producers becomes a particularly important objective when the producers are small farmers with low incomes and little or no reserves, though most countries have national measures such as marketing boards which try to stabilize producers' earnings.  Greater stability in export revenues should reduce uncertainty in economic planning and where taxes are geared to export revenues, as is the case for many primary exports, this objective is reinforced.

The aim of raising prices, incomes or export earnings above the levels that would prevail without intervention has to be seen as a form of disguised economic aid or as compensation for declining terms of trade.  The charters of several ICAS also include the aim of expanding the markets for their primary products by developing new uses, reducing trade barriers and increasing sales promotion.

As is often the case in economics, many of these objectives are mutually incompatible.  A world price stabilized within narrow limits could cause greater instability in export earnings for some commodities, whereas a raised price may involve lower incomes and will certainly militate against expanded markets.  Obviously these possibilities depend on assumptions about elasticities of demand and supply for specific commodities, but are in fact more than likely.  For example, where demand shifts are the main cause of fluctuations but demand is  price elastic, an export  quota agreement  will destabilize export earnings.   Similarly, where supply variations are the basic cause, holding price stable though a buffer stock can destablise income if the price elasticity of demand is greater than 0.5.  a stable price can also involve lower total export earnings.  But recently research shows these results are less likely than was previously considered to be the case, particularly if the bank within which a buffer stock seeks to confine price movements is fairly wide.  In practice the conflict between price stabilization and stabilization of export earnings for most countries' export earnings is unlikely.


Related Discussions:- Objectives of icas

Substitution effect on law of demand, Substitution Effect on law of demand ...

Substitution Effect on law of demand When price of a commodity falls it becomes comparatively cheaper if price of all other related goods, particularly of substitutes, remain c

Early theories about wage determination, Theories of wage determination ...

Theories of wage determination Early theories about wages The earliest theories about wage determination were those put forward by Thomas Malthus, David Ricardo and Karl

Homework, 1. What does a MNC have to consider that a domestic company does ...

1. What does a MNC have to consider that a domestic company does not, and how does this impact capital budgeting? in addition to the complications encountered in doing a capital bu

The extreme end of the beach, Assume that Nicolas and Orson plan to sell so...

Assume that Nicolas and Orson plan to sell soft drinks on a beach this summer. The beach is 400 meters long and sunbathers are spread evenly across its length. Nicolas and Orson se

Opportunity costs, When Burton Cummings graduated with honors from the Cana...

When Burton Cummings graduated with honors from the Canadian Trucking Academy, his father gave him a $350,000 tractor-trailer rig. Recently, Burton was boasting to some fellow truc

What is the equilibrium in the labor market, What is the equilibrium in the...

What is the equilibrium in the labor market? Explain briefly. Equilibrium in the Labor Market a. The market labor of demand curve is the horizontal total of the individual l

Types of unemployment, TYPES OF UNEMPLOYMENT   A  person  can  be  eith...

TYPES OF UNEMPLOYMENT   A  person  can  be  either  in the labour force  or  not  in  the  labour  force  of  an economy. The person not  included  in  the  labour force includ

What do you mean by kinked isoquant, Q. What do you mean by Kinked Isoquant...

Q. What do you mean by Kinked Isoquant? This isoquant presumes only limited substitutability of labour andcapital. There are just a few processes for generating any one commodi

Approaches to measuring national income, APPROACHES TO MEASURING NATIONAL I...

APPROACHES TO MEASURING NATIONAL INCOME The compilation of national income statistics is a very laborious task.  The total wealth of a nation has to be added up and there are

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd