Examkin

Demand, Supply and Price Determination

112 soru

Tüm türler112Çoktan seçmeli65Doğru / Yanlış4Sayısal15Eşleştirme24Boşluk doldurma4
Soru 61Soru →

Which of the following statements best expresses the fundamental law of supply in economics?

Cevabı ve açıklamayı göster

Cevap: Producers offer a larger quantity of a commodity for sale at higher prices than at lower prices, ceteris paribus.

Cevap

Producers offer a larger quantity of a commodity for sale at higher prices than at lower prices, ceteris paribus.
The law of supply states that, holding all other factors constant (ceteris paribus), an increase in price leads to an increase in quantity supplied, showing a direct relationship between price and quantity supplied.

Adım Adım Çözüm

1
Identify the basic relationship defined by the law of supply.
The law of supply establishes that price and quantity supplied are directly (positively) related.
Higher prices increase profit margins, incentivizing suppliers to increase output.
2
Differentiate price effects from shift factors.
A change in the good's own price causes a movement along the supply curve (change in quantity supplied), rather than a shift of the supply curve.
Non-price determinants (such as technology and input prices) cause supply curve shifts.

Anahtar Kavram

Law of Supply
Soru 62Soru →

In a competitive market, an increase in the market price of locally manufactured footwear leads producers to allocate more resources to expand output. Assuming all other factors remain constant, which of the following correctly describes this producer response?

Cevabı ve açıklamayı göster

Cevap: An expansion of quantity supplied, represented by a movement upward along the existing supply curve

Cevap

The economic response is an expansion of quantity supplied, represented by a movement upward along the existing supply curve.
The correct response highlights that an increase in the market price of a commodity, assuming all non-price factors remain constant (ceteris paribus), causes an expansion of quantity supplied. Graphically, this is shown as an upward movement along the existing supply curve rather than a shift of the curve itself.

Adım Adım Çözüm

1
Identify the primary cause of the producer reaction
The change is triggered solely by an increase in the market price of the commodity itself, while all non-price determinants are held constant (ceteris paribus).
The law of supply specifically defines the direct relationship between price and quantity supplied.
2
Distinguish between a change in quantity supplied and a change in supply
A change in own-price leads to a movement along an existing supply curve, whereas changes in non-price factors shift the entire curve.
Graphical representation of price-quantity relationships keeps the supply schedule static when non-price parameters do not change.
3
Determine the direction of the movement along the curve
Since price increased, producers supply a larger quantity, resulting in an upward movement along the positive-sloped supply curve (an expansion of quantity supplied).
Higher market prices provide higher revenue incentives, motivating firms to increase output along their current cost and supply structure.

Anahtar Kavram

Law of Supply and Movement Along the Supply Curve
Soru 63Soru →

A rubber manufacturing firm in Ogun State utilizes a fixed capacity of raw latex and machinery to produce either industrial conveyor belts or motorcycle tires. If a surge in mining activities leads to a significant increase in the market price of industrial conveyor belts, what is the immediate effect on the market for motorcycle tires?

Cevabı ve açıklamayı göster

Cevap: The supply curve of motorcycle tires will shift to the left because the two goods are in competitive supply.

Cevap

The supply curve of motorcycle tires will shift to the left because the two goods are in competitive supply.
The correct answer states that the supply curve of motorcycle tires shifts to the left due to competitive supply. When two goods rely on the same factor inputs, an increase in the market price of one good makes its production more profitable, causing producers to reallocate factors of production away from the alternative good, thereby shifting its supply curve inward.

Adım Adım Çözüm

1
Identify the relationship between the two goods on the supply side
Industrial conveyor belts and motorcycle tires use the same pool of limited inputs (raw latex, machinery, labor), meaning they are in competitive (or alternative) supply.
When inputs can be switched between producing Good X or Good Y, the goods compete for production resources.
2
Analyze the producer response to the price change of industrial conveyor belts
The higher market price of conveyor belts increases their relative profitability, prompting the firm to shift resources toward producing conveyor belts.
Profit-maximizing producers allocate resources to goods offering higher returns.
3
Determine the impact on the supply of motorcycle tires
Fewer resources are dedicated to motorcycle tires, leading to a decrease in supply (a leftward shift of the supply curve) at every price level.
A reduction in available production inputs decreases total supply.

Anahtar Kavram

Competitive Supply
Tahmini Süre:1m 30s
Soru 64Soru →

A agricultural processing factory in Benue State crushes soybeans to extract soybean oil for domestic cooking. In the same production process, soybean cake used for livestock feed is inevitably produced along with the oil. What type of supply is illustrated by soybean oil and soybean cake?

Cevabı ve açıklamayı göster

Cevap: Joint supply

Cevap

Joint supply
Joint supply (also known as complementary supply) occurs when two or more goods are produced simultaneously from a single process or raw material. An increase in the output of the main product (soybean oil) automatically leads to an increase in the output of the byproduct (soybean cake).

Adım Adım Çözüm

1
Identify the production relationship between soybean oil and soybean cake in the scenario.
Both products originate simultaneously from processing the same raw material (soybeans).
Understanding whether goods are produced together or compete for factors determines their supply classification.
2
Match the production relationship to the appropriate economic term.
Products that are derived together from the same origin represent joint supply.
An increase in the production of one product automatically increases the supply of the byproduct.

Anahtar Kavram

Joint (Complementary) Supply
Soru 65Soru →

A commercial cassava processing firm operates under a linear supply function Qs=a+bPQ_s = a + bP, where QsQ_s represents the quantity supplied in bags and PP represents the market price per bag in Naira (N\text{N}). Operational market records show that when the price of cassava flour was N400\text{N}400, the firm supplied 1,200 bags1,200\text{ bags}. When the market price rose to N550\text{N}550, the quantity supplied increased to 1,800 bags1,800\text{ bags} in accordance with the law of supply. What is the reservation price (the minimum threshold price) below which the firm will offer zero bags to the market?

Cevabı ve açıklamayı göster

Cevap: N100\text{N}100

Cevap

The reservation price below which the firm will offer zero supply is N100\text{N}100.
The slope of the supply function is derived as b=ΔQΔP=600150=4b = \frac{\Delta Q}{\Delta P} = \frac{600}{150} = 4. Substituting into Qs=a+bPQ_s = a + bP yields an intercept a=−400a = -400, giving the supply equation Qs=−400+4PQ_s = -400 + 4P. Setting Qs=0Q_s = 0 gives 4P=4004P = 400, which solves to a reservation price of N100\text{N}100.

Adım Adım Çözüm

1
Calculate the slope coefficient bb using the law of supply relationship.
b=ΔQsΔP=1,800−1,200550−400=600150=4b = \frac{\Delta Q_s}{\Delta P} = \frac{1,800 - 1,200}{550 - 400} = \frac{600}{150} = 4
The slope bb reflects how quantity supplied changes in response to price changes according to the law of supply.
2
Substitute b=4b = 4 and a known point (P=400,Qs=1200)(P=400, Q_s=1200) into Qs=a+bPQ_s = a + bP to find the autonomous supply constant aa.
1,200=a+4(400)  ⟹  1,200=a+1,600  ⟹  a=−4001,200 = a + 4(400) \implies 1,200 = a + 1,600 \implies a = -400
Finding the intercept aa defines the full explicit linear supply function: Qs=−400+4PQ_s = -400 + 4P.
3
Determine the reservation price by setting quantity supplied Qs=0Q_s = 0.
0=−400+4P  ⟹  4P=400  ⟹  P=N1000 = -400 + 4P \implies 4P = 400 \implies P = \text{N}100
The reservation price is the minimum market price required to induce producers to supply the first unit of output.

Anahtar Kavram

Derivation and analysis of linear supply functions and reservation price under the Law of Supply
Soru 66Soru →

An agro-processing enterprise in Anambra State uses raw cassava tubers as the main factor input to manufacture either garri for household food consumption or industrial ethanol for bio-fuel blending. Following a policy shift that significantly boosts the market price of industrial ethanol, the enterprise reallocates its raw cassava supply and processing capacity toward ethanol production. What is the immediate impact on the supply of garri, and which type of supply relationship does this scenario demonstrate?

Cevabı ve açıklamayı göster

Cevap: The supply of garri decreases because garri and industrial ethanol are in competitive supply.

Cevap

The supply of garri decreases because garri and industrial ethanol are in competitive supply.
Garri and industrial ethanol are in competitive supply because both products compete for the same fixed input (raw cassava tubers). An increase in the price and production of ethanol diverts cassava tubers away from garri processing, leading directly to a decrease in the supply of garri.

Adım Adım Çözüm

1
Identify the resource relationship between the two commodities.
Garri and industrial ethanol both require the same fixed input of raw cassava tubers.
When two or more goods compete for the same raw material or factor of production, they are in competitive supply.
2
Analyze the impact of an increase in ethanol price.
Higher ethanol prices incentivize the enterprise to divert raw cassava toward ethanol manufacturing.
Producers reallocate scarce resources toward higher-priced, more profitable output options.
3
Determine the resulting supply response for garri.
With less raw cassava available for garri processing, the supply curve of garri shifts leftward (decreases).
An increase in the supply of one competitively supplied good leads to a decrease in the supply of the alternative good.

Anahtar Kavram

Competitive Supply
Soru 67Soru →

A commercial livestock farm in Sokoto State raises sheep primarily to supply mutton to urban markets. In the same rearing process, raw sheep hides are produced as a byproduct. If a surge in consumer demand causes the price and production volume of mutton to increase significantly, what immediate effect will this have on the market for raw sheep hides?

Cevabı ve açıklamayı göster

Cevap: The supply curve of raw hides shifts to the right, leading to a decrease in its equilibrium price.

Cevap

The supply curve of raw hides shifts to the right, leading to a decrease in its equilibrium price.
Mutton and raw hides are in joint (complementary) supply because both are yielded from the same production process (raising and slaughtering sheep). When an increase in mutton demand drives producers to slaughter more sheep, the total market supply of raw hides increases. This represents a rightward shift of the supply curve for raw hides, which, assuming demand for hides is constant, causes its equilibrium price to decrease.

Adım Adım Çözüm

1
Identify the economic supply relationship between mutton and raw sheep hides
Mutton and sheep hides are produced jointly from the single process of sheep rearing/slaughtering, making them joint (complementary) supplies.
When two or more goods are derived from a single production source such that increasing the production of one inherently increases the yield of the other, they exhibit joint supply.
2
Determine how the increase in mutton production affects raw hide availability
A higher output of mutton leads directly to an increase in the quantity of raw hides brought to market at any given price level.
Slaughtering more sheep to meet mutton demand generates more raw hides simultaneously.
3
Analyze the impact on the supply curve and market equilibrium price of raw hides
The overall supply curve of raw hides shifts to the right, creating excess supply that depresses the market equilibrium price of hides.
According to supply and demand theory, an increase in supply while market demand remains constant results in a lower equilibrium price and higher equilibrium quantity.

Anahtar Kavram

Joint (Complementary) Supply Dynamics
Soru 68Soru →

Electricity in Nigeria can be obtained from several alternative sources, such as hydroelectric dams, natural gas power plants, and solar energy installations, to satisfy the total market demand for power. Which type of supply is demonstrated when a single commodity is made available through multiple distinct sources?

Cevabı ve açıklamayı göster

Cevap: Composite supply

Cevap

Composite supply
The correct answer is composite supply because composite supply refers to the aggregate supply of a commodity that comes from different, alternative sources to fulfill one overall consumer demand (in this case, total national demand for electricity).

Adım Adım Çözüm

1
Analyze the scenario given in the stem
Electricity (a single product) is provided via hydroelectric power, natural gas plants, and solar installations (multiple separate sources).
Identifying the relationship between the sources of production and the final commodity helps classify the type of supply.
2
Apply economic definitions of supply types
When total market demand for a commodity is met by combining output from different sources, it matches the definition of composite supply.
Composite supply specifically describes a situation where alternative sources contribute to the overall market supply of one item.

Anahtar Kavram

Composite Supply
Soru 69Soru →

In an agro-processing factory in Kwara State where sugarcane is crushed to manufacture refined sugar, molasses is automatically yielded as a byproduct of the same production run. If an increase in consumer demand for sugar leads to a rise in its market price and output, the market supply of molasses will decrease because processing resources are diverted to sugar.

Cevabı ve açıklamayı göster

Cevap: False

Cevap

The statement is False. Sugar and molasses are in joint (complementary) supply, meaning an increase in the production of sugar leads to an increase—not a decrease—in the supply of molasses.
The statement is false because refined sugar and molasses exhibit joint (complementary) supply. When two goods are yielded together from a single production process, an increase in the production of the primary good inherently increases the total availability and supply of the secondary byproduct.

Adım Adım Çözüm

1
Identify the relationship between the two goods
Refined sugar and molasses are derived simultaneously from processing the same raw material (sugarcane). Therefore, they are in joint or complementary supply.
Determining whether goods are in joint, competitive, composite, or derived supply dictates how changes in the production of one impact the supply of the other.
2
Analyze the effect of a price/demand increase for the main product
Higher market demand and prices for refined sugar incentivize factory owners to expand total sugarcane crushing operations.
According to the law of supply, higher prices induce higher output of the primary product.
3
Deduce the effect on the joint product (molasses)
Expanding sugarcane crushing yields a larger quantity of molasses as an inevitable byproduct, shifting the supply curve of molasses to the right.
In joint supply, the supply of the byproduct moves in the same direction as the supply of the main product.

Anahtar Kavram

Joint (Complementary) Supply vs. Competitive Supply
Soru 70Soru →

In a local market, the demand function for rice is given by Qd=80−4PQ_d = 80 - 4P and the supply function is given by Qs=20+6PQ_s = 20 + 6P, where PP is the price in Naira per bag. What is the market equilibrium price (in Naira)?

Cevabı ve açıklamayı göster

Cevap: 6

Cevap

The market equilibrium price is 6 Naira.
At market equilibrium, quantity demanded equals quantity supplied (Qd=QsQ_d = Q_s). Setting 80−4P=20+6P80 - 4P = 20 + 6P leads to 60=10P60 = 10P, which gives an equilibrium price of 6 Naira.

Adım Adım Çözüm

1
Equate the demand function and the supply function to establish market equilibrium.
80−4P=20+6P80 - 4P = 20 + 6P
Market equilibrium is defined as the price point where quantity demanded equals quantity supplied (Qd=QsQ_d = Q_s).
2
Collect like terms with price (PP) on one side and constant numerical terms on the other side.
80−20=6P+4P  ⟹  60=10P80 - 20 = 6P + 4P \implies 60 = 10P
Moving −4P-4P to the right side changes its sign to +4P+4P, and moving 2020 to the left side changes its sign to −20-20.
3
Divide both sides by 10 to isolate PP.
P=6P = 6
Dividing 60 by 10 yields the exact equilibrium price of 6 Naira.

Anahtar Kavram

Market Equilibrium Price Determination
Soru 71Soru →

A small-scale manufacturer of woven baskets in Anambra State observes that at a market price of N2,000\text{N}2,000 per basket, weekly supply is 250250 units. When the market price rises to N5,000\text{N}5,000 per basket, weekly supply increases to 850850 units. Assuming a linear supply relationship of the form Qs=c+dPQ_s = c + dP, what is the value of the autonomous supply constant cc?

Cevabı ve açıklamayı göster

Cevap: −150-150

Cevap

The autonomous supply constant cc is −150-150.
The linear supply function is defined as Qs=c+dPQ_s = c + dP. Determining the price responsiveness parameter d=ΔQsΔP=850−2505,000−2,000=0.2d = \frac{\Delta Q_s}{\Delta P} = \frac{850 - 250}{5,000 - 2,000} = 0.2, and substituting this back into 250=c+2,000(0.2)250 = c + 2,000(0.2) yields c=250−400=−150c = 250 - 400 = -150.

Adım Adım Çözüm

1
Set up linear supply equations using given price and quantity pairs
Equation 1: 250=c+2,000d250 = c + 2,000d; Equation 2: 850=c+5,000d850 = c + 5,000d
The linear supply function follows the formula Qs=c+dPQ_s = c + dP.
2
Calculate the slope coefficient dd
d=ΔQsΔP=850−2505,000−2,000=6003,000=0.2d = \frac{\Delta Q_s}{\Delta P} = \frac{850 - 250}{5,000 - 2,000} = \frac{600}{3,000} = 0.2
The slope dd measures the change in quantity supplied per unit change in price.
3
Substitute d=0.2d = 0.2 into Equation 1 to solve for the autonomous supply constant cc
250=c+2,000(0.2)  ⟹  250=c+400  ⟹  c=250−400=−150250 = c + 2,000(0.2) \implies 250 = c + 400 \implies c = 250 - 400 = -150
Isolating cc provides the baseline intercept parameter of the supply function.

Anahtar Kavram

Linear Supply Function Parameters (Qs=c+dPQ_s = c + dP)
Soru 72Soru →

Which of the following factors will cause an outward (rightward) shift in the supply curve of a manufactured commodity?

Cevabı ve açıklamayı göster

Cevap: An improvement in technology that reduces production costs

Cevap

An improvement in technology that reduces production costs
Technological advancement reduces unit production costs, making production more profitable and causing producers to supply more output at all price levels. This shifts the supply curve outward to the right.

Adım Adım Çözüm

1
Distinguish between a shift in the supply curve and a movement along the supply curve.
A change in the commodity's own price causes movement along the curve. Non-price determinants cause the entire curve to shift.
Only non-price factors (like technology, input costs, taxes, and subsidies) shift the supply curve.
2
Determine the direction of the supply curve shift for each non-price factor.
Favorable factors (technological progress, government subsidies, lower input costs) shift supply rightward. Unfavorable factors (higher taxes, higher input costs) shift supply leftward.
An improvement in technology reduces cost per unit, encouraging producers to offer a larger quantity for sale at every price level.

Anahtar Kavram

Determinants of Supply and Curve Shifts
Soru 73Soru →

A commercial farming enterprise in Nigeria allocates its available acreage between growing yam and growing cassava, as both crops compete for the same land and labor resources. If the market price of yam rises sharply while the market price of cassava remains constant, what is the direct impact on the cassava market?

Cevabı ve açıklamayı göster

Cevap: The supply curve of cassava shifts to the left because resources are reallocated toward yam production.

Cevap

The supply curve of cassava shifts to the left because resources are reallocated toward yam production.
Yam and cassava are in competitive supply because they compete for the same productive inputs (farmland and labor). When the price of yam increases, farmers gain a higher profit margin on yam and shift resources away from cassava production. Since this change is driven by a factor other than the price of cassava itself, it constitutes a change in supply, causing the cassava supply curve to shift to the left.

Adım Adım Çözüm

1
Identify the relationship between the two goods in production
Yam and cassava use the same land and labor resources, making them goods in competitive supply (substitutes in production).
Understanding whether goods are in competitive or joint supply determines how price changes in one good affect the supply of the other.
2
Analyze the profit incentive created by the price change of yam
A higher price for yam increases the profitability of yam relative to cassava.
Producers seek to maximize profit and will divert land and labor away from cassava toward yam.
3
Determine the impact on the supply of cassava
Less cassava will be supplied at every price level, causing a leftward shift of the cassava supply curve (a decrease in supply).
A change in the price of a competitive product acts as a non-price determinant, shifting the entire supply curve rather than moving along it.

Anahtar Kavram

Competitive Supply and Non-Price Determinants of Supply
Tahmini Süre:1m 30s
Soru 74Soru →

The table below shows the daily market demand and supply schedules for loaves of bread in a competitive local market:

Price (\text{N})Quantity Demanded (loaves)Quantity Supplied (loaves)
10101001002020
202080804040
303060606060
404040408080
50502020100100

What is the market equilibrium price and quantity?

Cevabı ve açıklamayı göster

Cevap: N30\text{N}30 and 6060 loaves

Cevap

N30\text{N}30 and 6060 loaves
Market equilibrium is determined at the price where quantity demanded equals quantity supplied (Qd=QsQ_d = Q_s). From the given schedule, at a price of N30\text{N}30, both quantity demanded and quantity supplied are equal to 6060 loaves.

Adım Adım Çözüm

1
Identify the equilibrium condition
Market equilibrium is established when Quantity Demanded (QdQ_d) equals Quantity Supplied (QsQ_s).
At equilibrium, there is neither an excess demand (shortage) nor an excess supply (surplus) in the market.
2
Locate the row in the table where Qd=QsQ_d = Q_s
At a price of N30\text{N}30, Qd=60Q_d = 60 loaves and Qs=60Q_s = 60 loaves.
This is the only price point in the schedule where buyer demand exactly matches seller supply.

Anahtar Kavram

Market Equilibrium Price and Quantity
Soru 75Soru →

A commercial farmer in Kaduna State owns a fixed 10-hectare plot of arable land that can be used to cultivate either maize or soybeans. Following a sharp increase in the market price of maize, the farmer reallocates 8 hectares to maize production, which leads to a direct reduction in the market supply of soybeans.

Which type of supply relationship is illustrated between maize and soybeans in this scenario?

Cevabı ve açıklamayı göster

Cevap: Competitive supply

Cevap

Competitive supply
The scenario describes competitive supply (also known as alternative supply), which occurs when two or more commodities compete for the use of the same limited productive resource (in this case, arable land). Because the land input is fixed, allocating more resources to increase the output of maize leaves fewer resources for soybeans, causing the supply of soybeans to fall.

Adım Adım Çözüm

1
Analyze the production constraint in the scenario
Identified that the land resource (10 hectares) is fixed and shared as an input for producing either maize or soybeans.
Determining whether products share a common resource or come from the same process is critical for defining the supply type.
2
Evaluate the impact of reallocating resources
Increasing land allocation to maize automatically reduced the land available for soybeans, lowering soybean supply.
When products compete for the same input, increasing the supply of one reduces the supply of the other.
3
Match the economic relationship to supply definitions
This inverse supply relationship caused by competition for factor inputs defines competitive supply.
Competitive supply (or alternative supply) specifically describes goods competing for identical factor inputs.

Anahtar Kavram

Competitive Supply
Soru 76Soru →

In a market for cassava flakes, the daily quantity demanded is given by the linear demand function Qd=120−4PQ_d = 120 - 4P and the daily quantity supplied is given by the linear supply function Qs=30+5PQ_s = 30 + 5P, where PP is the price per bag in Naira (N\text{N}). What is the market equilibrium price?

Cevabı ve açıklamayı göster

Cevap: N10\text{N}10

Cevap

The market equilibrium price is N10\text{N}10.
Market equilibrium is established at the price where quantity demanded equals quantity supplied (Qd=QsQ_d = Q_s). Equating 120−4P=30+5P120 - 4P = 30 + 5P gives 90=9P90 = 9P, which yields P=10P = 10. Therefore, N10\text{N}10 is the correct equilibrium price.

Adım Adım Çözüm

1
Set quantity demanded equal to quantity supplied to find market equilibrium (Qd=QsQ_d = Q_s).
120−4P=30+5P120 - 4P = 30 + 5P
Market equilibrium occurs where the quantity demanded equals the quantity supplied.
2
Collect like terms by moving price terms to one side and constant terms to the other.
120−30=5P+4P  ⟹  90=9P120 - 30 = 5P + 4P \implies 90 = 9P
Grouping algebraic terms isolates the price variable PP.
3
Solve for the price PP.
P=909=10P = \frac{90}{9} = 10
Dividing both sides by 9 yields the equilibrium price of N10\text{N}10.

Anahtar Kavram

Market Equilibrium Price Determination
Soru 77Soru →

A petroleum refinery operating in Rivers State processes crude oil through fractional distillation, resulting in the simultaneous production of premium motor spirit (petrol) and bitumen from the same refining process. An increase in the output of petrol automatically leads to an increase in the output of bitumen. Which type of supply is demonstrated in this scenario?

Cevabı ve açıklamayı göster

Cevap: Joint supply

Cevap

Joint supply
Joint supply (also known as complementary supply) occurs when two or more goods are produced simultaneously from the same raw material or production process. Because petrol and bitumen are co-products of refining crude oil, an increase in petrol production inherently expands the supply of bitumen.

Adım Adım Çözüm

1
Analyze the production process described in the scenario.
Petrol and bitumen are yielded simultaneously from a single origin (crude oil via fractional distillation).
Identifying whether products originate concurrently from one process determines the supply relationship.
2
Evaluate the directional output relationship between the two products.
Increasing petrol output automatically yields additional bitumen.
When products are joint outputs of a single process, expanding production of one increases the supply of the co-product.
3
Match the economic situation to the definition of supply types.
The relationship is classified as joint (or complementary) supply.
Joint supply specifically defines co-products generated together from the same raw material source.

Anahtar Kavram

Joint (Complementary) Supply
Tahmini Süre:1m 0s
Soru 78Soru →

In a regional agricultural market for cashew nuts, total market demand consists of domestic processing demand (Qdd=500−8PQ_{dd} = 500 - 8P) and export demand (Qdx=300−4PQ_{dx} = 300 - 4P), where PP is the price per bag in thousands of Naira (\text{N}). The market supply from producer cooperatives is given by Qs=−100+8PQ_s = -100 + 8P. What is the equilibrium market quantity of cashew nuts in bags?

Cevabı ve açıklamayı göster

Cevap: 260

Cevap

260 bags
Total market demand is obtained by adding domestic processing demand and export demand (Qd=800−12PQ_d = 800 - 12P). Equating total demand to market supply (800−12P=−100+8P800 - 12P = -100 + 8P) yields an equilibrium price of P∗=45P^* = 45 (in thousands of Naira). Substituting P∗=45P^* = 45 into the supply function yields the equilibrium quantity Q∗=−100+8(45)=260Q^* = -100 + 8(45) = 260 bags.

Adım Adım Çözüm

1
Aggregate domestic and export demand functions to derive the total market demand function.
Qd=(500−8P)+(300−4P)=800−12PQ_d = (500 - 8P) + (300 - 4P) = 800 - 12P
Total market demand represents the horizontal sum of all demand sectors at any given price level.
2
Set total market demand equal to market supply to find the equilibrium price (P∗P^*).
800−12P=−100+8P  ⟹  20P=900  ⟹  P∗=45800 - 12P = -100 + 8P \implies 20P = 900 \implies P^* = 45
Market equilibrium requires total quantity demanded to equal total quantity supplied.
3
Substitute the equilibrium price (P∗=45P^* = 45) into the market supply function to solve for the equilibrium quantity (Q∗Q^*).
Q∗=−100+8(45)=260Q^* = -100 + 8(45) = 260 bags
Evaluating supply at the equilibrium price yields the final market equilibrium quantity.

Anahtar Kavram

Market Equilibrium Price and Quantity with Aggregated Demand Sectors
Soru 79Soru →

In microeconomics, government interventions through price controls yield distinct market consequences depending on whether the regulated boundary is fixed above or below the equilibrium level. Match each regulatory policy or market outcome on the left with its corresponding economic mechanism on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Öğeler

Price Ceiling on Basic Foods
Statutory Minimum Wage
Agricultural Price Support
Black Market Emergence

Eşleşmeler

Cevabı ve açıklamayı göster

Cevap

Price Ceiling on Basic Foods pairs with legal maximum price below equilibrium creating excess demand; Statutory Minimum Wage pairs with legal minimum wage above equilibrium creating excess labor supply; Agricultural Price Support pairs with price floor above equilibrium creating agricultural surpluses; Black Market Emergence pairs with informal trading channel where buyers pay prices above statutory cap.
Each price control mechanisms correctly aligns with its economic rule: effective price ceilings are maximum limits below equilibrium producing shortages and black market conditions, whereas effective price floors are minimum boundaries above equilibrium producing excess supply in labor and commodity markets.

Adım Adım Çözüm

1
Analyze the impact of a price ceiling on essential goods.
Setting a statutory maximum price below market equilibrium creates excess demand (a shortage) because buyers want to purchase more at the lower price than producers are willing to supply.
To be effective or binding, a maximum price cap must be set below the market-clearing equilibrium price.
2
Analyze the effect of a statutory minimum wage in labor markets.
Establishing a minimum wage above equilibrium increases the quantity of labor supplied while reducing the quantity demanded by employers, creating involuntary unemployment.
Minimum wages operate as price floors, which bind only when established above equilibrium.
3
Evaluate agricultural price support programs.
Guaranteeing a minimum purchase price above equilibrium encourages farm production beyond market demand, resulting in excess commodity stocks.
Price supports insulate producers from market clearing prices by maintaining a price floor.
4
Connect price ceiling shortages to informal market reactions.
Persistent shortages resulting from price ceilings incentivize unsatisfied consumers to offer higher informal prices, forming black markets.
Rationing mechanisms fail to meet full consumer demand at capped prices, creating high willingness to pay in unofficial channels.

Anahtar Kavram

Comparative analysis of binding price ceilings (maximum prices below equilibrium causing shortages) and price floors (minimum prices above equilibrium causing surpluses).
Soru 80Soru →

A livestock ranching enterprise in Northern Nigeria significantly increases its herd size to meet a surging market demand for beef. As a direct result of this expanded beef production, what immediate change occurs in the market supply curve for cattle hides?

Cevabı ve açıklamayı göster

Cevap: The supply curve for cattle hides shifts outward to the right.

Cevap

The supply curve for cattle hides shifts outward to the right.
Beef and cattle hides are classic examples of joint (or complementary) supply. When farmers increase cattle production to supply more beef, cattle hides are automatically produced in larger quantities as a by-product. Because this increase in hide availability occurs independently of the market price of hides, it constitutes an increase in supply, which shifts the supply curve of hides outward to the right.

Adım Adım Çözüm

1
Identify the relationship between the two goods described in the scenario.
Beef and cattle hides are joint products derived simultaneously from cattle slaughtered for meat.
Understanding whether goods are in joint or competitive supply dictates how a change in the production of one affects the supply of the other.
2
Determine the impact of increased primary production on the joint product.
Increasing beef production yields more cattle hides as a natural by-product.
In joint supply, producing more of product X inherently increases the available quantity of product Y at every price level.
3
Translate the physical increase in production into graphical supply curve movement.
An increase in supply at all prices represents an outward (rightward) shift of the supply curve.
Changes caused by non-price determinants (such as increased output of a joint product) cause the whole curve to shift, rather than moving along the curve.

Anahtar Kavram

Joint Supply and Non-Price Determinants of Supply
Tahmini Süre:1m 0s
ÖncekiSayfa 4 / 6Sonraki
Demand, Supply and Price Determination Alıştırma Soruları — JAMB UTME — Sayfa 4 | Examkin