Which of the following industries are less sensitive to business cycle...
**Less Sensitive Industries to Business Cycle**
Certain industries are less sensitive to business cycles because their demand and revenue tend to remain relatively stable regardless of economic conditions. These industries are considered non-cyclical or defensive as they are less affected by fluctuations in the economy.
The following industries are generally considered less sensitive to business cycles:
**a) Capital Goods Industries**
Capital goods industries refer to the sector that produces machinery, equipment, and other physical assets used in the production of goods and services. These industries tend to be less sensitive to business cycles due to the long-term nature of their investments.
- **Explanation:** During economic downturns, companies may postpone or delay their investments in new machinery and equipment. However, once the economy starts to recover, the demand for capital goods tends to rebound as companies resume their investments to improve productivity and expand capacity. As a result, capital goods industries are less affected by short-term fluctuations in the business cycle.
**b) Durable Consumer Goods Industries**
Durable consumer goods industries are involved in the production of goods that have a longer lifespan, such as automobiles, furniture, and appliances. These industries are generally less sensitive to business cycles due to the nature of their products.
- **Explanation:** While demand for durable goods may decline during economic downturns as consumers cut back on discretionary spending, it tends to recover as the economy improves. Furthermore, the replacement cycle for durable goods is typically longer, meaning that consumers may delay purchases during recessions but eventually need to replace worn-out or outdated items. This helps to stabilize demand for durable consumer goods industries compared to industries producing non-durable goods.
**c) Travel and Tourism Industries**
The travel and tourism industry encompasses various sectors, including hospitality, transportation, and entertainment. While this industry can be affected by economic downturns, it is generally considered less sensitive to business cycles due to several factors.
- **Explanation:** Firstly, travel and tourism are driven by a combination of business and leisure demand. While business travel may decline during economic downturns, leisure travel tends to be more resilient as individuals still desire vacations and leisure activities. Additionally, the travel and tourism industry benefits from international tourism, which can offset declines in domestic demand during economic downturns. Furthermore, the industry often experiences pent-up demand, meaning that individuals may delay travel plans during recessions but eventually resume their trips once the economy improves.
**d) Food Grains Processing Industries**
Food grains processing industries are involved in the production and processing of staple food items such as rice, wheat, and corn. These industries are considered less sensitive to business cycles due to the essential nature of their products.
- **Explanation:** Regardless of economic conditions, people still need to consume staple food items for sustenance. Therefore, the demand for food grains remains relatively stable, even during economic downturns. Furthermore, food grains processing industries may benefit from increased demand during recessions as individuals may shift towards more affordable food options and reduce spending on dining out. This stability in demand helps to make food grains processing industries less sensitive to business cycles.
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