Ayussh Sanghi is teaching live on Unacademy Plus
INFRASTRUCTURE Part 1 By Ayussh Sanghi
What is Infrastructure Infrastructure refers to economic and social overheads". These are the basic services which facilitate production, consumption distribution and exchange. - These basic facilities comprise- These basic faciliies comprise modes of transportation, . electricity communication, banking and insurance
Definition of Infrastructure Infrastructure can be defined based on six important features as identified by the National Statistical Commission(then headed by C Rangarajan) Six important features are: i. Natural Monopoly ii. High Sunk Costs . Six important features are:
iii. Price Exclusion iv. Non-rivalness in Consumption V. Non-tradability of output vi Externalities
Natural Monopoly NM is a situation where a firm can supply a market's entire demand for a good or service at a price lower than two or more firms can. . The above may happen due to a unique raw material, technology or other factors.
Sunk Cost A sunk cost is a cost that has already been incurred and thus cannot be recovered.
Price Exclusion Price exclusion means that the enjoyment of benefits is contingent on payment of user charges
Non - Rivalness in Consumption Non Rivalness in Consumption Non-rivalness implies that the cost of providing a good or service to an additional individual is zero.
Non Tradability of Output Non tradable good or service is one which is produced and sold at the same location.
Externalities An externality is a consequence of an economic activity experienced by unrelated third parties; it may be either positive or negative. . Pollution emitted by a factory that spoils the surrounding environment and affects the health of citizens is an example of a negative externality The effect of a well-educated labor force on the productivity of a company is an example of a positive externalitv