Question

(B) Distinguish between : (Any THREE)
(1) Desire and Demand
(2) Income Elasticity of Demand and Cross Elasticity
(3) Average Revenue and Average Cost (4) Demand Deposits and Time Deposits (5) Balance of Payments and Balance of Trade​

Answer 1

Desire and Demand

1. Desire is a wish to have something but it is not backed by the willingness or ability to fulfill that wish. Whereas demand is an effective desire i.e. it is backed by willingness and ability to pay.
2. Desire is not determined by any factors whereas demand is determined by many factors such as price of the good, income of the person, price of substitutes etc.

Income Elasticity of Demand and Cross Elasticity

1. Income elasticity tells about change in quantity as a result of small change in income. Whereas cross elasticity of demand refers to the change of quantity of one good as a result of change in price of another good.
2. Income elasticity helps us in differentiating between normal and inferior good whereas cross elasticity helps us in differentiating between complements and substitutes.

Average Revenue and Average Cost

1. Average revenue = total revenue/total units of output sold .Whereas, average cost = total cost/total units of output produced.
2. Average revenue is revenue per unit of output whereas average cost is cost per unit of output.