The supply situation for rice in a country over a period is as shown in the table below.Use the information in the table to answer the following questions that follow.
(i) calculate the coefficient of price elasticity for rice between December 2004 and January 2007.
(ii) Is the supply of rice elastic?
(iii)State any three reasons which may cause the supply of rice
(a) Explain the concept of diminishing marginal utility.
(b) How is utility maximized.
(a) Diminishing marginal utility is concerned with consumption. The concept states that the satisfaction derived from consuming each additional unit of a commodity will diminish as the total consumption increases as more is consumed, of the marginal utility decreases.
For Instance, the first cup of cold pure water will give a high level of satisfaction to a thirsty consumer during a hot day. However the second cup will not give him as much satisfaction as the first one.
(b) Utility is maximized when a consumer allocate his expenditure among commodities in such a way that the utility he derives from the last Kobo he spends on each commodity is the same.
For a commodity, utility is maximized when the satisfaction derived from it is equal to the last Kobo spent on it. This condition can be expressed as follows:
MUx = Px
MUx = marginal utility derived from commodity x
Px = price paid
For two commodities, utility maximization can be expressed as
MUx / Px = MUy / Py
Explain the factors, which influence the level of employment in your country.
- Government Wage Policy: government policies such as national minimum wage can affect the level of employment to stop for instance the demand for which employment will increase at a higher minimum wage than at a lower minimum wage.
- Official Retirement Age: the official retirement age is high; more people will remain in the employable bracket and vice versa.
- Number of Entrepreneur: if the number of people who are willing to set up business and create job increase there will be increase in the level of employment and vice versa.
- Lending policy: availability and access to credit facilities affect level of unemployment. For instance where enterpreneur can easily secured loans and advances from banks and other financial institutions, more jobs can be created.
- Trade Union Activities: in most cases, demand for higher pay by trade lead to retrenchment and this reduces the level of unemployment.
(a) Why is scale of preference important?
(b) Explain the concept "Opportunity Cost".
(c) State the opportunity cost in each of the following actions.
(i) A shirt was purchased for 500 naira instead of a pair of shoe.
(ii) Onions were planted on a farm realizing 20,000 instead of maize that would have realised 25,000
Scale of preference is important because:
- It helps us in ranking our wants in order of priority
- It ensures the optimum allocation and utilisation of scarce resources
- It helps in rational choice making by economic agents ( i.e households and government)
(b) Opportunity cost is the best alternative forgone or the real cost of purchasing one commodity instead of the other. For instance, if a student, who has only #10 with him is faced with the option of buying a biro or a pencil, if he decides to buy a pencil instead of a biro, the opportunity cost is the biro while the money cost is the #10 he paid for the pencil.
(c) the opportunity cost in the actions is:
(i) A pair of shoes
Why do government conduct population census
- To know the number of people living in the country as well as its structure
- To determine the People's need as well as to forecast their Future needs needs.
- To determine the per capita income of the country.
- To assist local and foreign investors in their decision-making.
- To assist international agencies in determining the extent of grants, aids,etc. to developing countries.
- To assist government in the formulation of economic and social policies.
- To assist in the allocation / distribution of revenue among the tiers of government.
(a) What is Monopoly?
(b) state the basis for Monopoly in a society.
(a) Monopoly can be defined as a situation where there's only one producer or supplier of a particular commodity and who has the power to influence the price of the commodity at his own favour.
(b) The basis for Monopoly in a society:
- Natural cause.
- Act of Parliament
- To protect public interest
- The level of technology
- Merging of firms or producers
- Patent law