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OPPORTUNITY COST OR REAL COST

OPPORTUNITY COST Opportunity cost is the sacrifice made in making an economic decision, expressed in terms of the next best available alternative foregone. It is a central concept in economics, and if often regarded as the ‘true’ cost of an economic decision.Its otherwise known as alternative forgone,real cost and true cost. Opportunity cost is defined as the alternative that has been forgone for instance if Mr Ola has to choose between buying a shirt and a pair of shoe the real or opportunity cost of a shirt is the pair of shoe he has to do with that. you can say the opportunity cost of any item is referred to as an alternative forgone in order to buy that Item  while money cost is the actual amount of money spent on buying such item BENEFITS OF OPPORTUNITY COST It helps individuals to allocate resourses It helps individuals to prioritise needs It helps firms in decision making on what,how and for whom to produce It's guides business firms in policy formulation and implementa

TUTORIAL QUESTIONS

SELECTED QUESTIONS QUESTION 1 (a) Describe the main types of public Expenditure (b) Give the reasons that may account for an increased government expenditure in your countr SOLUTION (a) Public expenditure can be classified into two headings namely, Recurrent  expenditure and Capital expenditure.  Recurrent Expenditure: These are the expenses on running costs which are repeated every year. Expenses on payment of wages and salaries, maintenance of infrastructure, payments of rents and interest are examples of recurrent expenditure. Capital Expenditure: are expenses on projects of permanent nature. These expenses do not recur every year. Examples of capital expenditure include building of schools, hospitals, roads, dams, electrification projects, procuring new machineries, aircrafts and construction of airports. (b) Government expenditure in Nigeria had been increasing year in year out for the following reasons. Population growth: the need to provide more social amenities such as sch

SUGGESTED QUESTIONS

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QUESTION 1 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 SOLUTION (I) (ii)   (iii)     QUESTION 2 (a) Explain the concept of diminishing marginal utility. (b) How is utility maximized. SOLUTION (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 fi

CLASS MEDICINE

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TUTORIAL QUESTION QUESTION 1  The table below represents a travelers consumption of bottles of cocoa-cola.Study the table carefully and answer the questions that follow. (i) complete the missing figures D,E,F,G,and H (ii)Draw the demand curve for the traveller,s consumption of coca- cola. (iii) Explain the law of diminishing marginal utility as the basis of slope of the traveller,s demand curve. SOLUTION (i)To calculate D(Total utility) Tu4=Tu3+Mu4        =42+12        = 54 To calculate E(Total utility) Tu7=Tu6+Mu7        =75+0         =75 To calculate F(Marginal utility)      Mu5=Tu2-Tu1              =29-15              =14 To calculate G(Marginal utility)      Mu5=Tu5-Tu4              =65-54               =11 To calculate H(Marginal utility) Mu6=Tu6-Tu5         =75-65         =10 (ii)To draw the demand curve (iii) According to the law ,marginal utility falls when quantity consumed increases.At Equilibrium M=P hence for my to fall,the price must fall to

INTERNATIONAL TRADE

WHAT IS INTERNATIONAL TRADE? International trade also known as Foreign trade refers to the exchange of goods and services across the border of two or more countries by their residents and government. The principle underlying international trade is that a country should specialise in the production of those goods for which it has the greatest advantage over other countries. Through Foreign trade or International trade, a nation can obtain goods that they have no capital to produce. It can also be defined as the exchange of goods and services between people of different countries. Foreign trade or International trade involves exports and import. For Example; Nigeria can sell crude oil to America and purchased electronics from her. WHAT ARE THE FORMS OR TYPES OF FOREIGN TRADE? Bilateral trade: This involves the exchange of goods and services between two countries. It takes place when each country tries to balance its payment and receipts separately and individually with every other

THEORY OF DEMAND

DEFINITION OF DEMAND  Demand can be defined as the quantity of a commodity (goods and services) that consumers are willing and able to buy at a given price and at a particular place and time. Demand is quite different from wants, need or desire. Effective Demand’ in economics must meet three conditions which are:  Ability to pay  Willingness to pay  Authority to buy a commodity  Demand must be related to price because to a great extent, price determines the quantity which consumers are willing to buy. LAW OF DEMAND  The law of demand states that, all things being equal (Ceteris Paribus), The higher the price, the lower the quantity of goods that will be demanded, or the lower the price, the higher the quantity of goods that will be demanded. This law is often regarded as the first law of demand and supply. It simply means that when the price of a commodity, like yam for instance, is high in the market, very few quantity of it will be demanded by the consumers and vice-versa. DEMAND

CONCEPT OF TOTAL, AVERAGE AND MARGINAL COST

FIXED COST Fixed cost may be defined as the cost of a firm which do not vary or change with every change of output. For example once a firm has built its factory and all the required machinery have been installed, the fixed costs remain the same whether the firm is working in full capacity or not. In some form of production , fixed cost forms a very high cost of total cost , in other firms the fixed cost forms only a small proportion of total cost. Fixed costs are those cost  that do not change with output ,they will remain no matter the amount of the output full-stop fixed costs are also referred to as overhead cost or unavoidable costs for example which cost include cost of machinery land rent interest on loan depreciation charges etc. It can be expressed mathematically as.                   FC = TC - VC VARIABLE COST Variable costs are direct cost which change in the short run with the scale of production. If the volume of output is increased variable cost will increase full-stop va