Alfred Ajibola
- Tue, 07th January, 2020 @ 22:10: PM
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
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 five 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.
Please read on supply, supply curve and law of supply here.
Below is a graph that shows a perfectly inelastic supply
Goods, services and commodities are said to be perfectly inelastic whenever a given quantity of these 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.
Please read on the graphical representation of supply curve here.
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.
You can read on scale of preference and opportunity cost here.
A service or commodity is said to be perfectly elastic when an increase in price results into 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:
Please read on the Concept and types of cost here.
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.
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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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