Size of Market and Inducement to Invest
Investment means the expenditure on the making and installation of capital goods construction of factories and the making of machines and
their installation. execution of irrigation and power projects. the construction of roads. railway. u Obviously an entrepreneur will be induced to invest III factories. machinery etc if he expects sufficient return on his investment. Businessmen ill ave incentive to invest only from a motive of earning a profit It is the expectation f profit which is a fundamental factor influencing the amount of investment in a country at a given time. In a poor country the low level of investment is due to low expectation of profit because of less demand for goods or a small size of the market. Let us understand clearly why there less inducement to invest in a poor country. t is easily understandable that. in under developed countries
said Division of labor is limited shy the size of the market can say in the same manlier that inducement to invest depends on the size of the market. Inducement to invest. in the last analysis depends on the size of the amend or market. The small size of The market or the low level of Ill maid for the products concerned discourages the entrepreneurs from investing. This will be clear Rom an illustration. In a modem dairy. milking. filling up bottles and their loading all these operations are done with the aid of automatic machinery. Will the instillation of such a machinery in every Indian town be profitable for individual entrepreneurs Obviously it will not be profitable. Per
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