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SS 2 Economics (1st Term)

economics

RATIONING AND HOARDING

RATIONING This is a prevailing economic situation of scarcity  of essential commodities in the market in which consumers are allowed to have access to these commodities at specified quantities and at regulated period of times. The scarcity of these essential commodities in the market may be man – made, and which is known as artificial scarcity,  created majorly by some people to make super- normal profits from the sales of their goods.   Effects of Rationing It denies some people access to essential commodities It involves struggle and uncertainty Insufficient rationing affects people standard of living   HOARDING This is a situation in which a deliberate effort is made by a seller or a producer of a particular commodity who decides to create artificial scarcity of such commodity by keeping it locked up in his store and not releasing it to the market to circulate for sales. Hoarding of essential… Read More »RATIONING AND HOARDING

economics

PRICE CONTROL/ LEGISLATION

PRICE CONTROL POLICY This is defined as a process by which the government or its agency fixes the price of essential commodities. That is, it is a situation where the government uses the instrument of law to fix the price of certain commodities.  It can be in the form of maximum or minimum price control. In Nigeria, price regulation or control on essential commodities is being carried out by the Price Control Board.   OBJECTIVES OF PRICE CONTROL POLICY To prevent exploitation of consumers by producers. To avoid or control inflation. To help low income earners, eg minimum wage earners. To control the profits of companies especially monopolists. To prevent fluctuation of prices of some goods, eg agricultural produces To stabilize the income of some producers, eg farmers. To make possible planning for future output.   TYPES OF PRICE CONTROL POLICY Minimum Price Control Policy: is the lowest price by… Read More »PRICE CONTROL/ LEGISLATION

economics

CROSS ELASTICITY OF DEMAND

Cross Elasticity of Demand is the degree of responsiveness of quantity demanded of commodity X to a little change in the price of commodity Y.  Cross elasticity of  demand is applicable mainly to goods that are close substitute as well as complementary goods.   For example the demand for Milo will increase as a result of an increase in the price of Bournvita, all other things being equal. Mathematically, cross elasticity of demand can be expressed as % change in quantity demanded of commodity  X % change in price of commodity Y   TYPES OF CROSS ELASTICITY OF DEMAND Positive Cross Elasticity of Demand: With substitute goods, the cross elasticity of demand is always positive, ( ie greater than zero), which means it is Elastic. This positive relationship is high with close substitutes and low with substitutes not very close.   Negative Cross Elasticity of Demand: With complementary (or jointly demanded… Read More »CROSS ELASTICITY OF DEMAND

economics

INCOME ELASTICITY OF DEMAND

Income elasticity of demand is the degree of responsiveness of quantity  demanded of a commodity to a little change in consumer’s income. That is, it measures how changes in income of consumers will affect the quantity of commodities demanded by such consumers. Mathematically, income elasticity of demand is expressed as: % change in Quantity Demanded % change in Income When the percentage change in income brings about an equal change in the quantity demanded, then income elasticity is unit. When the percentage change in income is greater than the percentage change in quantity demanded, income elasticity is less than unit, hence income is inelastic. When the percentage change in quantity demanded is greater than the percentage change in income, then income elasticity is greater than unit, hence income elasticity is elastic. TYPES OF INCOME ELASTICITY OF DEMAND Positive Income Elasticity of Demand: is the type of income elasticity of demand… Read More »INCOME ELASTICITY OF DEMAND

economics

ELASTICITY OF SUPPLY

Elasticity of supply can be defined as the degree of responsiveness of change in quantity supplied as a result of change in price.  Elasticity of supply measures the extent to which the quantity of a commodity supplied by a producer changes as a result of a little change in the price of the commodity.   MEASUREMENT OF ELASTICITY OF SUPPLY Elasticity of supply can be measured or calculate by using the co-efficient of price elasticity of supply.  The formula used in calculating the elasticity of supply is : Elasticity of supply (ES)  =  % change in supply % change in price            =            %∆QS % ∆P       where ∆ = Change QS = Quantity supplied P = Price % = Percentage     The table below shows the relationship between prices of goods and the unit of commodity supplied. Price  (N)                    Quantity Supplied                  9                                850 10                              1000 11                           … Read More »ELASTICITY OF SUPPLY

economics

ELASTICITY OF DEMAND

DEFINITION OF ELASTICITY OF DEMAND Elasticity of demand may be defined as the degree of responsiveness of demand as changes in price, income, prices of other commodities etc.   Types of Elasticity of Demand Price elasticity of demand Income elasticity of demand Cross elasticity of demand   EVALUATION Define Elasticity. State three types of Elasticity of demand.   PRICE ELASTICITY OF DEMAND Price elasticity of demand is the degree of responsiveness of demand for a particular commodity to changes in its price.  It is the rate at which the quantity demanded changes as its price changes. To measure price elasticity of demand we use the formula:    % change in Quantity Demanded % change in price This formula can be broken down or simplified as:   Old Quantity – New Quantity  X  100 Old quantity E=       Old Price – New Price   X 100 Old Price   Illustration When the price of… Read More »ELASTICITY OF DEMAND

economics

DEMAND AND SUPPLY

CHANGE IN QUANTITY DEMANDED A change in quantity demanded, is otherwise known as movement along a particular demand curve that is only influenced by price. When there is a change in the quantity demanded, the demand curve does not shift. This is because the price of the commodity is the only cause of a change in the quantity demanded while other factors remain unchanged. From the above diagram, as the price falls from #50 to #30,  the quantity demanded increases from 60 to 80 units, Hence movement along the same demand curve took place from A to B. Further decrease or increase in price will also affect the movement along the same demand curve. CHANGES IN DEMAND When different quantities of goods and services are demanded at a particular price, it is called a change in demand. It is caused by those factors that generally affect the demand of a… Read More »DEMAND AND SUPPLY

economics

THEORY OF CONSUMER BEHAVIOUR

THEORY OF CONSUMER BEHAVIOUR The theory of consumer behaviour is also known as the theory of household behaviour.  It is primarily concerned with how the consumer or household tries to satisfy his/her wants by dividing his/her limited amount of income between the various commodities that give him equal amount of satisfaction.   WHAT IS UTILITY? Utility can be defined as the satisfaction derived from the consumption of a given commodity.  Hence, when a consumer derives satisfaction from the consumption of a commodity, it can be said that the commodity or service possesses utility. Utility therefore, is relative to a consumer, depending on the time, place, form, etc. A commodity that can satisfy a consumer’s want at a particular point in time and place may not satisfy another’s want.   EVALUATION Define utility. What is consumer behaviour?   There are basically two schools of thought in the analysis of utility and… Read More »THEORY OF CONSUMER BEHAVIOUR

economics

MEASURES OF DISPERSION OF A GROUPED FREQUENCY DISTRIBUTION

MEASURES OF DISPERSION This also known as measures of spread or variation describes how the data given in any distribution are spread about the ‘Mean’, or the overall spread of the data. These measures are the range, mean – deviation, standard deviation, variance, coefficient of variation, etc.   The Range: The range of a data is the difference between the highest and the lowest value in the data. The formula for calculation of range is: Range = Highest value – Lowest value   The Mean Deviation: This measures the dispersions around the arithmetic mean. It tells us how far, on the average, the individual observations are from the mean.  For a grouped frequency distribution Mean Deviation = ∑f/x- x/ ∑f Variance: This is the average of the square about the deviations of the measurement about their mean. Variance = ∑f(X – X)2 ∑f   Standard Deviation: This is the square… Read More »MEASURES OF DISPERSION OF A GROUPED FREQUENCY DISTRIBUTION

economics

MEASURES OF CENTRAL TENDENCY

MEASURES OF CENTRAL TENDENCY These are the values which show the degree to which a given data or any given set of values will converge toward the central point of the data. Measures of central tendency, also called measures of location, is the statistical information that gives the middle or centre or average of a set of data. Measures of central tendency include arithmetic mean, median and mode.   MEAN: This is the average of variables obtained in a study. It is the most common kind of average. For group data the formula for calculating the mean is ∑fx. ∑f Where, Ʃ =Summation F=frequency X=observation   MEDIAN: It is the middle number in any given distribution. The formula is Median = L + (N\2-Fb)c f Where; L = Lower class limit. N = Summation 0f the frequency. Fb = Cumulative frequency before the median class. f = frequency of the… Read More »MEASURES OF CENTRAL TENDENCY

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