Topics in EconomicsAdvantages of Inflation Disadvantages of Inflation Concept of Inflation in Economics Scheme of work for Economics, SS1, First Term Scheme of work for Economics, SS1, Second Term Scheme of Work for Economics, SS1, Third Term Functions of the Wholesaler Advantages and Disadvantages of the Wholesaler Wholesale Market: Who is a Wholesaler? Characteristics of the Wholesaler Retail Market: Who is a Retailer and Examples of Retailers Market: Types of Market Market - What is a Market in Economics? Elasticity of Supply: Types of Supply Elasticity Supply Elasticity: Elasticity of Supply explained Demand Schedule - Types of Demand Schedule Demand: What is Demand? Law of Demand Concept and Types of Cost Supply, Supply Curve and Law of Supply What is a Black Market, Its advantages and disadvantages
Academic Questions in Economics
Concerning demand curve, which of the following statement is incorrect?
A. It is a graphical represention of a table showing the price of commodities and quantity demanded
B. It can be an individual demand curve
C. The x-axis shows the price of commodities
D. The price and quantity demanded are expressed on different axis of the graph
E. It can be a market demand curve
F. All the options are correct
A table that shows the price of a commodity and the quantity demanded is termed _____.
A. Price table
B. Demand table
C. Demanded-price table
D. Demand preference table
E. Demand graph
F. Demand schedule
The concept of Ceteris Paribus Assumption in economics states that _____.
A. Supply and Demand are antagonistic
B. When given two choice of similar products with the same price (assuming all other factors are constant), you will prefer to buy that with a lower price
C. Supply and Demand are agonistic
D. When given two choice of dissimilar products with the same price (assuming all other factors are constant), you will prefer to buy that which you need most
E. When given two choice of similar products with the different prices (assuming all other factors are constant), you will prefer to buy that with a lower price
F. When given two choice of dissimilar products with the different prices (assuming all other factors are constant), you will prefer to buy that with a lower price
The willingness of a person to buy a specific quantity of goods or services at a given price and time is termed _____.
A. Scale of preference
B. Economies of scale
C. Opportunity Cost
Costs generally treated as expenses in business are termed _____.
A. Fixed cost
B. Variable cost
C. Sunk cost
D. Direct cost
E. Private cost
F. Outlay cost
When an entrepreneur pays cash (money) for materials needed for production, such money is termed as an _____ cost.
A government mandated maximum price for goods or services is termed _____.
A. Price height
B. Price maxima
C. Price ceiling
D. Price level
E. Price finale
F. Price top-zone
The quantity of supplied services or goods will increase as the price increases and they will decrease as the price decreases provided all other factors remain constant.
The above statement is attributed to the _____.
A. Law of price increase and price decrease
B. Law of product quantity
C. Law of demand
D. Law of supply
E. Law of quantity demanded and supplied in relation to price
F. Law of purchases on services and goods
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Elasticity of Supply (or Supply Elasticity) refers to the rate at which an increase in price of goods translates into an increased production and availability of such goods in the market.
For all commodities, the value of Elasticity of supply (Es) is not always uniform. Its value may be:
Below are the 5 types of supply elasticity with their respective explanations and graphical representations:
A product is considered to be perfectly inelastic when a change in the price of the product has no effect on the production and amount (or supply) of such product in the market.
Below is a graph that shows a Perfectly Inelastic Supply:
Note: Goods, services and commodities are said to be perfectly inelastic whenever a given quantity of it can be supplied, no matter the change in price.
Consider the instances below:
Instance 1: A 10% increase in the price of wheat translates into a 100% increase in the production and supply of wheat.
Instance 2: if a 100% increase in the price of wheat translates into a 100% increase (the same increase as above) in the production and supply of wheat, then the supply elasticity is said to be perfectly inelastic for wheat and its value becomes zero (0) in both instances.
Perfectly inelastic goods, commodities or services are considered to have zero elasticity: (Es = 0).
The curve lies parallel and straight to the y axis of the graph.
A supply curve is said to be inelastic when a change in price brings about a relatively less change in the quantity of goods or services supplied.
The graph below shows an Inelastic Supply Curve:
Consider the instance below:
If a 100% increase in the price of melon translates into a 50% increase in the production and supply of melon, then the supply elasticity is inelastic and its value becomes 0.5 in this case. (That is; Change in Quantity supplied divided Change in Price).
The price elasticity of inelastic products are always given a value greater than 0 and lesser than 1.
Es > 0 and Es < 1.
Please see the graph of Elastic Supply above
An elastic supply is seen when a change in price brings about a relatively greater change in the quantity of goods or services supplied.
As an instance, If a 100% increase in the price of beans translates into a 200% increase in the production and supply of beans, then the supply elasticity is elastic and its value becomes 2 in this case. (Change in Quantity Supplied divided by Change in Price).
The price elasticity of elastic products are given a value greater than 1 and lesser than infinity.
Es > 1 and Es < ∞.
A Unitary elasticity of supply is seen when a change in price brings about a corresponding and proportional change in the quantity of goods or services supplied.
The graph below shows a Unit Elasticity of Supply:
Below is an instance of a Unitary Elasticity of Supply:
If a 100% increase in the price of wheat translates into a 100% increase in the production and supply of wheat, then the supply elasticity is said to be unitary elastic and its value is equal to 1.
Unitary elasticity is always equal to 1, that is:
Es = 1
The supply curve runs diagonally and will pass through the center.
A service or commodity is said to be perfectly elastic when an increase in price results in an infinite or unlimited rise in the quantity of commodities or services supplied. In this case, (ES = ∞).
The graph below shows a Perfectly Elastic Supply:
The instances below illustrate a perfect elasticity for the product (fertilizer):
Instance 1: A 10% increase in the price of fertilizer translates into an infinite increase in the production and supply of fertilizer.
Instance 2: if a 100% increase in the price of fertilizer translates into an infinite increase in the production and supply of fertilizer, then the supply elasticity is said to be perfectly elastic for fertilizer and its value becomes infinite (∞) in both instances.
Note: Whenever there is a decrease in price, the supply of perfectly elastic commoditis or goods, their values become zero (0).
Consider the instances below:
Instance 1: A 10% decrease in the price of yam translates into a 0% increase in the production and supply of yam.
Instance 2: if a 100% decrease in the price of yam translates into a 0% increase in the production and supply of yam, then the supply elasticity is said to be perfectly elastic for yam and its value becomes zero (0) in both instances.
The curve is a straight line running parallel and horizontally (to the x axis).
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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.
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Amazing facts in Economics
NOTABLE POINTS IN Economics
A Black market is said to take place when there is illegal buying and selling of goods and services.
Black markets usually take place outside the government's rader and without government's knowledge so as to avoid tax or any other government regulations.
Black market presents the avenue for government prohibited goods like hard drugs, war weapons and firearms to be bought by criminals.
A black market can also occur on the web for cyber criminals or those who are involved in computer hacking. To achieve their malicious aim, these individuals will go into the dark web and purchase or rent their respective hacking tools for a fee. Normally, payments are made in crypto currencies.
However, a black market isn't generally considered as bad. Infact, it has its advantages and disadvantages.
Below are some advantages of black market:
Goods and services are sold at a cheaper price.
It helps some people make plenty of money.
The illegal sales of human organs, for example, the sale of human kidneys have aided in saving some lives.
Some people actually depend on black market for their daily bread.
Some of the proceeds from black market may been utilized towards the economic growth of a Nation. For instance, schools and hospitals had been from money made from black market.
The law of supply states that:
The quantity of the supplied services or goods will increase as the price increases and they will decrease as the price decreases provided all other factors remain constant.
These constant factors are very important when stating the supply law. They include:
The price of Input resources
The kind of technology used during production
The number of suppliers
The number of buyers; and so on.
A graph that shows the relationship between the price of a product or service, and its quantity supplied is the supply curve.
Supply curve can be defined as a graphical representation of the direct relationship between the prices of goods and services and the quantity supplied (of such goods and services) within a particular period of time provided all other factors remain constant.
Consider the table below:
Needs / Wants
The above table shows us what a scale of preference would look like.
A scale of preference can be defined as the list of a person's needs or wants written in an order of importance.
You will observe that the person puts his most important needs or wants at the top of the list. Further down the list are his less important needs.
Now, let's imagine that this individual has 170,000 Naira to spend. According to the above scale of preference, the followings can be deduced;
A phone will be considered to be the most important; and it costs 50,000. He buys the phone.
A console game according to this person is next in importance; and it costs 120,000. He buys the console game.
Another question worth asking is:
What happens to his other needs?
This is where the term 'Opportinity Cost comes into play.
Scale of Preference can be defined as the list of a person's needs or wants written in an order of importance. 📜✍️
When you have a limited amount of money and could only buy some of the items on your list (the top items on the list); then the remaining items that you didn't buy will be generally considered as your opportunity cost.
Opportunity cost can be defined as the value of the best alternative that a person could have achieved or bought but couldn't achieve after the best choice had been achieved.
Opportunity cost are of two types. They are: