Topics in Economics
Types of capital market: Primary market and secondary market Capital market explained with its functions Basic tools for economic analysis: Graphs explained with its characteristics and importance Basic tools for economic analysis: Tables explained with its characteristics and importance Factors affecting population in economics Advantages 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 What is a Market in Economics? Elasticity of supply explained with its types Supply Elasticity: Elasticity of Supply explainedAcademic Questions in Economics
_____ is defined as a gradual and sustained rise in price level of goods and services in relation to their availability.
A. Basis Point Rate
B. Hike Rate
C. Elastic Supply
D. Elasticity of Price
E. Price Inflation
F. Aggregate Supply
The wholesalers can bring about an economy of scale.
A. True
B. False
Which of the following statement isn't a characteristics of the wholesaler?
A. They may have to operate in specific areas or regions accorded them by the producer
B. They are often popular in the line of goods they supply
C. They are not risk bearers
D. They have good storage facilities
E. They often pay for goods supplied by the manufacturers in advance
F. They usually have business agents or brokers
The wholesalers act as the middlemen in supply chain.
A. True
B. False
Large retailers who buy directly from manufacturers are termed as _____.
A. Wholesale Retailers
B. Certified Retailers
C. Codified Retailers
D. Commodity Retailers
E. Manufacturers Retailer
F. Conspicuous Retailers
_____ is a market whereby the sellers buy goods in lesser quantities from the wholesalers and sells in bits to the final consumers.
A. Commodity
B. Retail
C. Wholesale
D. Labour
E. Common
F. General
Which of the following is not a financial market?
A. Money Market
B. Bond Market
C. Foreign Exchange Market
D. Virtual Market
E. Capital Market
F. Stock Exchange Market
A _____ market provides a platform whereby job seekers link up with employers in an attempt to be hired.
A. Wholesale market
B. Bond market
C. Physical market
D. Virtual market
E. Factor Market
F. Labor Market
Cost can be expressed in various forms. Generally, cost will refer to money spent on a variety of things.
Below are some of the ways we may have spent money:
Recall that both the physical and financial inputs are necessary if we intend to enhance our productivity. Based of this fact, it will be a good idea if entrepreneurs and those intending to start a business understand the concept of cost analysis; and this is what this article is about.
You can read on production here.
Cost can be put into the following types:
When an entrepreneur pays cash (money) for the needed materials of production, such money is referred to as accounting cost.
Accounting cost may be paid in the following ways:
Note: In most cases, accounting costs are regarded as expenses and will be recorded in the credit side of an account.
Please read on the principle of double entry here.
Consider this scenario:
A man had a shop and intends to invest on the sale of phones; but he feared the risk involved in the business. As a result, he did not make the investment.
The money (profit) that this man would had earned if he had invested in the phone business is referred to as economic cost.
Similarly, one person may decide to help the needy while another may choose to invest the money instead of helping the needy. If the latter made some profit in his investment and decides to help the needy with the profit, then that’s also an economic cost.
Please read on how to start a home based fish farming business here.
Outlay costs are considered as expenditure in a business. The expenditure may come in the form of rent, wages and salaries.
In a business, outlay costs are generally treated as expenses.
Please read on the various business structures - their advantages and disadvantages here.
Think of opportunity cost as the income that would have been generated if the next best alternative had been taken. Let’s consider the instance below:
A man with N100 intends to buy a phone and laptop; which he intends to use for maximizing his business.
From the above instance, if the N100 could only purchase one of these products: (Let's assume he went with the phone); then the profit he would have made in his business if he had purchased the laptop is referred to as the opportunity cost.
Please read more on scale of preference and opportunity cost here.
These are costs that don’t change regardless the volume of output. This cost will always remain constant even if there is a significant increase or decrease in output.
Please read on the advantages and disadvantages of division of labour here.
Examples of fixed cost are rent and interest from loans.
This cost is a function of output volume; that is, it will increase if output increases and decrease if output decreases.
Please read on supply, law of supply and elasticity of supply here.
Examples of variable cost are cost of raw materials and payment of wages.
A direct cost is a traceable cost since it can be directly linked or traced to its specific purpose.
A direct cost is always easily identifiable.
One will need to know the purpose of a cost before concluding whether it’s direct or indirect.
An example of direct cost is the cost of acquisition of a specific material.
An indirect cost is not easily identifiable or traceable or linked to its specific purpose. For instance, this could be the cost of electricity if you don’t know how your electricity is measured.
As the name imply, they are forgone cost that cannot be recovered. An example is the money spent on advertising or research.
Incremental cost is incurred each time a change had been made. For instance, the cost made on software upgrade or machinery upgrade as a result of an increase in the number of customers is considered to be an incremental cost.
Please read on division of labour here.
Private cost results from the implementation of a personal objective.
An instance of private cost is when an entrepreneur invests on his personal business which may come in the form of marketing, advertising or purchase of machineries.
Please read on marketing here.
The entrepreneur do not bear this cost, rather the society takes on the responsibility.
In the above instance, the entrepreneur does not incur any expense on such projects eventhough he or she lives around this area.
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Amazing facts in Economics
Notable points in Economics
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.
Supply elasticity is defined as the rate at which an increase in price of goods translates into its increased production and availability in the market. Supply elasticity is also termed as price elasticity of supply.
Consider the statements below:
If a 100% increase in the price of rice translates into a 100% increase in the production and supply of rice, the supply elasticity is said to be unitary elastic and its value is equal to 1.
If a 100% increase in the price of rice translates into a 50% increase in the production and supply (quantity) of rice, the supply elasticity is said to be inelastic and its value will be greater than zero and less than 1. In this case, the exact value is 0.5: (value of change in the quantity of rice divided by value of change in price of rice = 50/100 = 0.5).
The individual demand schedule is a table that shows the demand of a commodity that an individual (consumer) purchased at various prices, and at a particular time.
The table below shows an individual demand schedule:
|
Price in Naira (of a tuber of yam) |
Quantity demanded (per week) |
|
500 |
5 |
|
400 |
10 |
|
300 |
15 |
|
200 |
20 |
|
100 |
25 |
The market demand schedule is also referred to as an aggregate demand schedule, total demand schedule or composite demand schedule.
This is a table that shows the different commodities purchased by all the consumers or customers in the market.
The market demand schedule is the summation of the individual demand schedules, showing the demand of different customers for a commodity at a particular price. It is shown in the table below:
|
Unit price of commodity (Naira) |
Quantity demanded by consumer A (QA) |
Quantity demanded by consumer A (QB) |
Market demand (QA + QB) |
|
50 |
20 |
15 |
35 |
|
40 |
40 |
30 |
70 |
|
30 |
60 |
45 |
105 |
|
20 |
80 |
60 |
140 |
|
10 |
100 |
75 |
175 |
From the above table, notice that when the unit price of the commodity was 50 Naira, consumer A demanded 20 quantities while consumer B demanded 15 quantities.
Below are definitions of demand from the perspective of some notable professors:
The demand for goods is a schedule of the amounts that buyers would be willing to purchase at all possible prices at any one instant of a time.
Professor Mayers
Demand is the various quantities of goods that would be purchased per time period at different prices in a given market.
Professor Hibdon
The demand for anything, at a given price is the amount of it which will be bought per unit of time at the price.
Professor Benham
Generally, demand is defined as the willingness of a person, buyer or consumer to buy a specific quantity of goods or service at a given price and time.
From the above definitions, we can infer that the definition of demand is referenced to three major factors. These are:
Quantity of Goods Demanded
Price
Time