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
The above diagram on the quantity supplied against a change in price is _____.
C. Perfectly Elastic
D. Perfectly Inelastic
E. Zero Elastic
F. Unitary Elastic
The rate at which an increase in the price of a product translate into the product's increased production and availability in the market is termed _____.
C. Demand Elasticity
D. Supply Elasticity
E. Demand Curve
F. Supply Curve
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.
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Inflation is not always a bad event. Infact, deflation (an opposite to inflation) can prove very harmful to a nation's economy.
Although inflation is said to occur when there is a general increase in the price of goods and services, the pace at which this increase occur is what's of interest here.
If the price level increases slowly or moderately, then the effects of inflation can be advantageous, otherwise it becomes devastating if price increases in a rapid, sudden and unpredictable pattern.
Below are some of the advantages of inflation in an economy:
Deflation is bad for an economy. It will surely lead to recession, depression and a lack of investment into such economy.
Conversely, inflation in required for the growth of an economy. Although not all economist are in support of a high inflation rate, a moderate and gradual inflation rate will eventually result into a standard living for both the citizens and residents alike.
In 2013/2014, an instance of little economic growth occured in the Euro-zone countries as a result of a very low inflation rate; and this eventually led to an increased rate of unemployment.
Note: Had it been the Euro-zone aimed at a higher inflation rate, their economies wouldn't have suffered such increased unemployment rate.
A moderate rate of inflation can have a positive effect on the wages and salaries of workers who are deserving. Interestingly, one of the reasons why salaries and wages are increased is due to an increase in the standard of living; and that's influenced by inflation.
As an instance, a person who had worked for over 10 years in an organization will likely not continue to earn the same amount as salary (even when he or she isn't promoted). This is true because the standard of living between the present time and '10 years ago' must have changed.
Again, this change will be in the upwards direction if inflation had occur in the economy. For this reason, productive and dedicated workers will earn a pay rise while the unproductive ones may have their wages frozen with new workers occupying their position.
Note: The above process makes an organization attractive, thus indirectly creating more employment opportunities.
This is particularly important for countries that utilizes the same currency, for instance, the Euros which happens to be a currency used in the 'Euro-zone' countries.
At one point in time, the southern Euro-zone countries (Spain and Italy) had an uncompetitive economy which lead to account deficits for the citizens and residents alike. To worsen the situation, both countries utilize the Euros (a general currency for the Euro-zone countries) which can't be single-handedly devaluated.
In summary both countries had to cut the relative prices of goods and services in an attempt to regain competitiveness.
Note: The process of cutting down relative prices implied that wages and salaries are reduced as a result of deflation. Had it been the Euro-zone had a low to moderate Inflation rate, it would have been much easier for Spain and Italy (from the above instance) to regain economic competitiveness without undergoing the dangerous processes of deflation.
Generally, when people take up debts; for instance, a mortgage, they usually envisage that an impending inflation rate will aid them cancel out the value of such debt overtime.
In a scenerio where inflation fails to occur (rather deflation took its place), such events can become catastrophic for those who had taken up the debt as some may even contemplate suicide as a result.
Note: An instance of the above explanation occured in United Kingdom in 1920s and 'Euro-zones' in 2010s and these led to serious problems in the affected economies.
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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: