Role of infrastructure in the economy, Microeconomics

Assignment Help:

ROLE OF INFRASTRUCTURE IN THE ECONOMY:

Economic Infrastructure produces services that directly facilitate and are basic to the carrying out of a wide variety of economic activities. Infrastructure contributes to development both directly and indirectly. The output or the final products of different segments of infrastructure is the direct effect. Infrastructure's indirect contribution is as an intermediate input that enhances the productivity of all inputs of different sectors. For example, the quality of labour is enhanced by human capital improvements. Similarly, productivity of physical capital is improved by power and transportation etc.    

The linkages between economic infrastructure and development are as follows: 

•  Infrastructure lowers the cost of producing a given level of output or, alternatively, can increase the amount of output produced by all other inputs for a given cost.  

•  Infrastructure enables markets to work better. Transactions are made less costly and this increases the benefits  of trade. For example, advances in transport and communications have considerably lowered storage costs by permitting producers to respond rapidly to changing consumer demands even in international trade. (this  is referred to as "modern logistics management"). 

•  Unit costs tend to rise due to unreliable or inaccessible public infrastructure. Both small and big firms spend a significant portion of their expenditure on buying infrastructure services and suffer when these are not available. Electricity shortage has been a notorious constraint faced by expanding business units.  

 


Related Discussions:- Role of infrastructure in the economy

Production possibility curve, what are things you need to look in manner of...

what are things you need to look in manner of functions,elements,purpose,types and definitions?

Demand, demand elasticity in urdu

demand elasticity in urdu

The demand for big macs., illustrate and explain the changing demand for bi...

illustrate and explain the changing demand for big mac using indifference curve and budget line

Price determination, illustrate and discuss the implications of various mar...

illustrate and discuss the implications of various market structures (competitive and non-competitive) for price determination

Perfect competition, demand: Qd=100=Px supply: MC=10+1/2Qs assume first th...

demand: Qd=100=Px supply: MC=10+1/2Qs assume first that this firm operates in a perfectly competitive market. find the price and quanity in this market.

Production possibility curve, construct your own version of a production po...

construct your own version of a production possibility curve and use it to explain scarcity, opportunity cost and choice

Private, Question: (a) Using an example, differentiate between private...

Question: (a) Using an example, differentiate between private, social and external costs and benefits. (b) With the use of a diagram, describe the difference between profi

Imf-world bank harmony, IMF-World Bank Harmony: Bretton Woods institut...

IMF-World Bank Harmony: Bretton Woods institutions work in tandem. World Bank BOP support is not available with a Fund Programme, while a Fund Programme cannot be finalised w

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