1ST Term .SSS2 Economics
1ST Term .SSS2 Economics
SCHEME OF WORK
WEEK TOPIC
1 Measure of Central Tendency of Group Data
2. Measure of Dispersion of Variation of Grouped Data
3 Theory of Consumer Behaviour
4 Demand And Supply
5 Elasticity of Demand
6 Elasticity of Supply
7 Income Elasticity of Demand
8 Cross Elasticity of Demand
9 Price Control / Legislation
10 Rationing & Hoarding
11 Revision
12 Examination
REFERENCE BOOKS
Amplified and Simplified Economics for Senior Secondary School by Femi Longe
Comprehensive Economics for Senior Secondary School by J.V. Anyaele
Fundamentals of Economics for SSS By. R.A.I. Anyanwuocha
WEEK ONE
MEASURES OF CENTRAL TENDENCY
CONTENT
MEAN
MODE
MEDIAN
MEASURES OF CENTRAL TENDENCY: 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.
MODE: It is the number that appears most in any given distribution, i.e the number with the
greatest frequency. When a series has more than one mode,say two,it is said to be bi-modal or
tri-modal for three.
Mode= L + D1
D1+D2
Where, M=mode
L=the lower class boundary of the modal class.
D1=the frequency of the modal class minus the frequency of the class before the modal
class.
D2=the frequency of the modal class minus the frequency of the class after it.
C=the width of the modal class.
Example: The table below shows the marks of students of JSS 3 mathematics.
1-5 6-10 11-15 16-20 21-25 26-30
Marks
Frequency 2 3 4 5 6 7
Use the information above to calculate the following:
A. the mean
B. the median
C. the mode
Solution
mark frequency mid-point fx
1-5 2 3 6
6-10 3 8 24
11-15 4 13 52
16-20 5 18 90
21-25 6 23 138
26-30 7 28 196
27
506
A. Mean= ∑fx = 506\27
Ʃf =18.7
B. median
Mark F Cf
1-5 2 2
6-10 3 5
11-15 4 9
16-20 5 14
21-25 6 20
26-30 7 27
C. mode= L+ D1
D1+D2
L1=20.5
D1=7-6=1
D2=7-0=7
C=5
M=25.5+ (1\1+7)5
M=26.125.
EVALUATION
The table below shows the weekly profit in naira from a mini-market.
You are required to calculate:
A. The mean.
B. The median.
C. The mode.
Weekly 1-10 11-20 21-30 31-40 41-50 51-60
profit(#)
Frequency 6 6 12 11 10 5
READING ASSIGNMENT
1. Amplified and Simplified Economics for SSS by Femi Alonge page 29-30.
2. Further Mathematics Scholastics Series page 265-265.
SECTION B
The following table shows the distribution of marks scored by a class of students in a promotion
examination.
Marks Number of students
10-29 6
30-39 5
40-49 7
50-59 10
WEEK TWO
MEASURES OF DISPERSION OF A GROUPED FREQUENCY DISTRIBUTION
CONTENT
Range
Mean Deviation
Variance
Standard Deviation
MEASURES OF DISPERSION: 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 root of the average of the square of the deviations of
the measurement about their mean.
Standard Deviation =
∑f(X – X )2
Ʃf
Example:
The data below shows the weight of 50 students to the nearest kg.
65 58 51 36 23 40 53 59 70 51 46 59 50 67 46 39 61 62 73 60 71 51 47 32 48 40 40 51 58 67
60 69 43 52 37 26 38 50 59 40 44 54 42 68 74 45 39 48 55.
a. Prepare a grouped frequency table
b. Calculate:
i. The range
ii. The mean deviation
iii. The variance
iv. The standard deviation
NB: Note that the standard Deviation is the positive square root of the variance.
_ _ _ _
Class F Mid- FX /X- F/X- (X-X )2 F(X-X)2
point X/ X/
X
21-30 2 25.5 51 25.5 50.4 635.04 1270.08
31-40 10 35.5 355 15.2 152 231.04 2310.40
41-40 12 45.5 546 5.2 62.4 27.04 324.48
51-60 15 55.5 832.5 4.8 72 23.04 345.60
61-70 8 65.5 524 14.8 118.4 219.04 1752.32
71-80 3 75.5 226.5 24.8 74.4 615.04 1845.12
50 2535 529.60 7848
∑f/X – X /2 156.96
∑f = =12.53kg
EVALUATION QUESTION
1) How is the mid-point (X) ascertained in a grouped frequency table?
2) State two advantages of the mean over other measures of central tendency (i.e
median and mode)
3) The table below shows the income of forty Workers in a factory in N
61 78 70 83 92 67 66 83
76 68 79 84 82 86 81 60
78 77 86 77 81 92 80 70
70 40 75 60 74 82 77 87
63 94 76 87 81 77 87 84.
Using a class interval of 40-49, 50-59 etc
A. Construct a grouped frequency table of the distribution.
B. Calculate the mean of the distribution.
READING ASSIGNMENT
1. Fundamentals of Economics for SSS by R.A I. Ayanwuocha Page 97-101
2. Comprehensive Economics for SSS by J.U Anyaele page 36 –38
WEEKEND ASSIGNMET
1. In a class of 5 students the following scores were obtained in a mathematics test
10,2,6,7,12. What is the median score (A) 2 (B) 4(C) 6 (D) 7
2. Which measure of central tendency can be applied to find the highest goal scorer in a
football match (A) mean (b) Mode (C) Median (D) range
3. If the following scores 2, 4, 6, and 10 with frequencies 3,5,7, and 10 respectively makes
up a distribution, then the mean score is (A) 5.7 (B) 6.7 (C) 7.5 (D) 5.4
4. In the formula X = ∑fx
∑f
∑fX stands for (A) total number of observations (B) Sum of frequencies times
observations (C) Sum of frequencies (D) number of elements times frequencies
5. The most reliable measure of central tendency is (a) Mode (b) median (c) Histogram (d)
mean
SECTION B
1. Give the definition of the mean deviation and the standard deviation
2. Explain the difference between continuous data and discrete data.
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
1. Define utility.
2. What is consumer behaviour?
There are basically two schools of thought in the analysis of utility and they are as
follows:
1. Cardinal school of thought
2. Ordinal school of thought.
10
X
1 2 3 4 5
Qty of goods
AVERAGE UTILITY: This derived by dividing total utility by the units of the commodity
consumed. That is, it is the satisfaction which a consumer derives per unit of a commodity
consumed. AU = TU/Q
y
AU
x
Qty
MARGINAL UTILITY: This means the additional satisfaction a consumer derives from the
consumption of additional unit of a particular commodity. It is then the change in the total utility
as a result of the consumption of additional unit of a commodity. MU = ∆TU/∆Q
y
Utility
x
Qty
MU
UTILITY SCHEDULE
Quantity of Goods Total Utility Average Utility Marginal Utility
consumed
1 4 4 -
2 7 3.5 3
3 9 3 2
4 10 2.5 1
5 10 2.0 0
TU
MU x
Qty
EVALUATION
1 Calculate the missing value from the table below.
Quantity of goods consumed Total utility Marginal utility
1 10 -
2 16 A
3 B 4
4 20 C
UTILITY MAXIMIZATION
Utility maximization is also known as equilibrium of the consumer. A point where a consumer
derives maximum satisfaction when his marginal utility equates the price of the commodity
consumed. That is, the additional utility derived from the consumption of additional commodity
is equal to price of the commodity.
In the case of one commodity, a consumer will maximize his satisfaction in the consumption of a
particular commodity when the MU of that commodity equals the price of that commodity, eg
MUx = Px
CONSUMER SURPLUS
Consumer surplus is define as the difference between the amount a consumer budgeted to pay
for a commodity based on the anticipated level of satisfaction, and the amount he actually paid
to have it. When he consumed the first unit, he was willing to pay as much as #50, but the
commodity’s price was #30. Thus, he saved #20.Therefore any amount above the market price
of #30 represents the consumer’s surplus.
50
40 Consumer
30
MR20OSHO/1STsurplus
TERM/ECONOMICS/SS2 Page 8
10 Total expenditure
1 2 3 4 5 6 MU
EVALUATION
1. Define consumer surplus.
2. State the law of diminishing marginal utility.
3. Use the tale below to answer the following questions:
READING ASSIGNMENT
1. Fundamental Principles of Economics for SS by S. A. Akande, J. A. Azike Pages 86 –
95.
2. Amplified and Simplified Economics for SSS by Femi Alonge page 29-30.
WEEKEND ASSIGNMENT
1. Which one of these assumptions do economists always make about consumers?
(a) That they are all wage earners (b) That they make rational decisions in the market
(c) That they cannot spend more than their incomes (d) That they can measure utility
derived from consumption
2. The aim of the consumer in allocating his income is (a) to maximize his marginal utility
(b) to buy goods he wants most whatever the price. (c) to maximize his total utility (d)
to buy those goods which fallen in price.
3. ........................takes place when the ratio MU of a commodity consumed is equal to the
ratio of its price (a) consumer surplus (b) law of diminishing marginal utility (c) consumer
behaviour (d) utility maximization
4. Total utility (TU) attains its peak when the Marginal utility (MU) is ..... (a) zero on x- axis
(b) above x- axis (c) close to x – axis (d) under x- axis
5. The difference between the amount of money a consumer planned to pay for a
commodity and the actual amount of money he paid is.......... (a) commodity price (b)
consumer surplus (c) marginal cost (d) producer surplus
THEORY
1. With the use of table, explain the concept of diminishing marginal utility
WEEK FOUR
DEMAND AND SUPPLY
CONTENT
Change in Quantity Demanded
Change in Demand
Change in Quantity Supplied
Change in Supply
Effects of change in demand and supply on equilibrium price and quant
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.
Y Price
D
10
5
D
x
0 20 30
Quantity
Change in Quantity Demanded
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
commodity other than the price of the commodity; For example changes in taste and fashion,
changes in income etc Change in demand shows a shift of the demand curve to an entirely new
position. A shift of the demand curve to the right is termed an increase in demand while a shift
of the demand curve to the left is a decrease in demand.
Price
D2
D1
D2
D1
Q1 Q2
Quantity
(i) Increase in Demand
D1 D2
Price
D2
D1
Q1 Q2
Quantity
(ii) Decrease in Demand
EVALUTION
1. State three factors responsible for the change in demand.
2. What is change in quantity demand?
P2
P1
S
x
Q1 Q2
Quantity
Change in Quantity Supplied
CHANGE IN SUPPLY
Change in supply is caused by factors other than the price of the commodity. It involves a bodily
shift of the supply curve either to the right (increase in supply) or to the left
(decrease in supply
Price So S1 Price S2 S0
1
P
S2
So
So
S1
Q2 Q0 Qty
Qo Q1 Qty (ii) Decrease in supply
(i)Increase in supply
EVALUATION
1. What is change in quantity supplied?
2. State the factors responsible for change in supply.
P1
S D2
D1
Q1 Q2 Quantity
2. Decrease in Demand
D1
Price S
D2
P1
P2
S D1
D2
Q2 Q1 Qty
3. Increase in Supply
S1 S2
Price
D
P1
P2
S1 D
S2
Q1 Q2
Quantity
Effects of Increase in Supply
a. Decrease in the equilibrium price from P1 to P2
b. Increase in the equilibrium quantity from Q1to Q2
4. Decrease in supply
S2
D S1
Price
READING ASSIGNMENT
Amplified and Simplified Economic for SSS by Femi Longe page 290--296
Fundamentals of Economics by Anyawuocha page 166-168
WEEKEND ASSIGNMENT
1. At the equilibrium price, quantity demanded is (a) greater than quantity supplied (b)
equal to quantity supplied (c) less than quantity supplied (d) equal to excess supply
2. If the government fixes a price of a commodity above the equilibrium price, the quantity
supplied will be (a) less than the quantity demanded (b) equal to the quantity demanded
(c) greater than the quantity demanded (d) equal to zero
3. The market price of a commodity is normally determined by the (a) law of demand (b)
interaction of the forces of demand and supply (c) total number of people in the market
(d) total quantity of the commodity in the market
4. The gap between demand and supply curves below the equilibrium price indicates (a)
excess demand (b) excess supply (c) equilibrium quantity (d) equilibrium price
5. If prices fall below the equilibrium (a) demand will equal supply (b) demand will be
greater than supply (c) supply will be greater than demand (d) quantity supplied will be
zero
SECTION B
1. Given the demand and supply function for a crate of eggs as follows:
Qd = 12 –2p; Q = 3+1p
Determine the equilibrium price and quantity
2. What is the excess supply at the price of N3.50?
WEEK FIVE
ELASTICITY OF DEMAND
CONTENT
Definition of Elasticity of Demand
Types of Elasticity of Demand
Price Elasticity of Demand
Types of price elasticity of demand and graphical representation
EVALUATION
1. Define Elasticity.
2. State three types of Elasticity of demand.
Quantity
2. Perfectly Inelastic (or Zero Elasticity) Demand
When the quantity demanded remains the same regardless of the change in price. The demand
is said to be perfectly inelastic. The co-efficient of elasticity is zero
Price
D
Quantity
3. Unitary (or Unity) Elasticity of Demand
This is the situation where a change in price or income brings about the same percentage
change in the quantity demanded. The co-efficient of elasticity of demand is equal to 1
Price
D
P1
P2
D
Q1 Q2
Quantity Quantity
4. Fairly Elastic Demand
In this case a small percentage change in price gives rise to more than proportionate change in
the quantity demanded. For example where a 20% fall in price leads to 50% rise in demand,
the co-efficient of elasticity is greater than 1 but less than infinity.
Price D
P1
P2
D
P2
P1
D
Q1 Q2
Quantity
EVALUATION
1. Define price elasticity of demand.
2. The figure below was-extracted from the demand schedule of Kingsley Nanta, a
consumer of bread.
Price in naira Quantity Demanded
READING ASSIGNMENT
1. Comprehensive Economics by J.U Anyaele page 124-127
2. Fundamentals of Economics by Anyanwuocha page 227-236
WEEKEND ASSIGNMENT
1. If elasticity of supply is greater than 1 supply is (a) Unitary elastic (B) Inelastic (c) Elastic
(d) Infinitely elastic
2. When the demand curve is a straight line parallel to x axis, demand is (a) fairly elastic
(b) fairly inelastic(c) Perfectly elastic (d) Perfectly inelastic
3. If elasticity of demand for a commodity is less than 1, demand is (a) Unitary elastic (b)
Inelastic (c) Infinitely elastic (d) Zero elastic
4. If the price of a commodity rises from N2 o N4 and its demand decrease from 125 to 100
then the co-efficient of elastic of demand is (a) 0.02 (b) 0.20 (c) 0.25 (d) 5
5. For a good having close substitutes the price elasticity of demand is likely to be (a) Zero
(b) negative (c) more than (d) less than
SECTION B
1. Define elasticity of demand.
2. State three factors that determine the elasticity of demand for goods.
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 1,150
1. Calculate the elasticity of supply when price falls from N10.00 to N9.00 State
whether the supply in (iii) above is elastic or inelastic (WASSCE 1994)
New Qty - Old Qty x 100
Old Qty 1
Old Quantity = 1000
New Quantity = 850
New – Old x 100
Old 1
850 - 1000 x 100
1000 1
150 x 100 = 15%
1000 1
Old Price = N10
New Price = N9
New Price – Old Price x 100
Old Price 1
9 – 10 x 100 = 1 x 100 = 10%
10 1 10 1
Elasticity of Supply = 15 = 1.5
10
EVALUATION
1. Define elasticity.
2. State the formula for calculating price elasticity
Price s
10
O q1 Qty
O 10 12 Qty
3. Unity or Unitary Elastic Supply: Supply is said to be unitary when a change in price
leads to an equal change in the quantity of goods supplied. In other words, a 5% change
in price will equally lead to a 5% change in supply. In this case, elasticity of supply is
equal to one, E = 1.
s
Price
10
O 10 15 Qty
10
O 25 30 Qty
5 S
O 10 15 20 Qty
EVALUATION
1. Define price elasticity of supply
2. State the formula for calculating price elasticity
WEEKEND ASSIGNMENT
1. If the co-efficient of elasticity of supply is 0.3, then the supply is........... (a) fairly
inelastic (b) perfectly elastic (c) fairly elastic (d) perfectly inelastic
2. Price elasticity of supply measures the responsiveness of quantity supplied to.... (a)
changes in suppliers’ income (b) changes in prices of other commodities (c) a change in
the price of the commodity (d) a change in the demand for the product
3. The price elasticity co-efficient indicates...... (a) how far business can reduce cost (b)
the degree of competition (c) the extent to which supply curve shifts (d) consumer
responsiveness to price changes
4. The equilibrium price of mangoes is #100. If the price falls to 50k, there will be...........
(a) an excess supply (b) no seller in the market (c) a shortage in supply (d) a surplus in
the market
5. When the price of a given commodity falls from #100 to #90, the quantity supplied
reduces from 60 to 50 units. From this, we can conclude that the product’s......... (a)
supply is elastic (b) supply is inelastic (c) supply is perfectly inelastic (d) supply is
perfectly elastic
SECTION B
1. What is price elasticity of supply?
2. State the formula for the calculation of the coefficient of price elasticity of supply
WEEK SEVEN
INCOME ELASTICITY OF DEMAND
CONTENT
Definition
Types (Positive and Negative)
Measurement of Income Elasticity of Demand
DEFINITION: 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
1. Positive Income Elasticity of Demand: is the type of income elasticity of demand in
which an increase in income of consumer will equally lead to an increase in the quantity
of commodity demanded. This is applicable majorly to normal goods.
EVALUATION
1. Define income elasticity of demand.
2. State the formula for calculating income elasticity of demand.
Illustration: The table below shows the various income and demand for different commodities.
Income Quantity Demanded
# Kg
A. 20,000 120
B. 36,000 96
C. 40,000 160
D. 44,000 200
E. 45,000 240
F. 47,000 252
a) Calculate the income elasticity between (i) A and B (ii) C and D (iii) E and F
b) What kind of good relationship is between (i) A and B (ii) C and D
SOLUTION
Income Elasticity of Demand = % Change in Quantity Demanded
% Change in Income
(a) Income Elasticity of Demand
i Between A and B
= 120– 96 x 100
120 = 0.25
36000 – 20,000 x 1000
20,000
ii Between C and D
200 – 160 x 100
160 = 2.5
44000 – 40,000 x 100
40,000
iii Between E and F
252 – 240 x 100
240
= 1.125
47000 – 45000 x 100
45000
(b) i. Giffen goods or inferior good
ii. Normal goods
It should be re-emphasized that positive income elasticity of demand is for ‘normal’ or ‘superior’
or ‘luxury goods’, whereas Negative income elasticity of demand is for ‘abnormal’, or ‘inferior
goods.
EVALUATION
1. What is income elasticity of demand?
2. Explain two types of income elasticity of demand
READING ASSIGNMENT
1. Comprehensive Economics Page 124 – 127
2. Fundamentals of Economics Page 227 – 236
SECTION B
1. Differentiate between normal goods and inferior goods
2. The table below shows the various incomers and demand for different commodities.
WEEK EIGHT
CROSS ELASTICITY OF DEMAND
CONTENT
Definition
Types (Positive and Negative)
Measurement of Income Elasticity of Demand
DEFINITION: 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
Negative Cross Elasticity of Demand: With complementary (or jointly demanded goods), eg
car and petrol, the cross elasticity of demand is always negative ( ie less than zero), which
means it is Inelastic. Here, too, a high negative cross elasticity of demand indicates that the
goods involves are highly complementary and, vice versa, i.e, a low negative cross elasticity of
demand means that the goods concerned are not highly complementary.
EVALUATION
1. Briefly explain cross elasticity of demand
2. Differentiate between complementary goods and substitute goods in relation to cross
elasticity of demand
Illustration:
The table below shows the response of quantity demanded to changes in price for two pairs of
commodities. Use the table to answer the questions that follow:
Commodities Changes in Commodities Changes in Quantity
Price Demanded
Old# New# Old kg New kg
Bread 25 40 Yam 1000 3000
Liter of petrol 50 100 Car 400 250
Calculate the cross elasticity of demand for : (i) Bread and Yam, (ii) Petrol and Car.
SOLUTION:
i. Cross elasticity of demand for bread and yam
Let x = yam, y = bread
Old demand = 1000kg, New demand = 3000kg
Change in demand = 3000 – 1000 = 2000kg
2000 x 100
= 1000 1 = 200%
Old price = #25, New price = #40
EVALUATION
1. How would you deduce complementary goods from a calculation of cross elasticity?
2. WAEC June 2000 Question No 2.
READING ASSIGNMENT
1. Comprehensive Economics Page 124 – 127
2. Fundamentals of Economics Page 227 – 236
SECTION B
1. How is cross elasticity of demand measured?
2. Shoe the nature of cross elasticity of demand for : (i) substitute goods, (ii)
complementary goods
WEEK NINE
PRICE CONTROL/ LEGISLATION
CONTENT
Meaning
Objectives
Types (Minimum and Maximum)
Effects of price control policy
PRICE CONTROL POLICY: 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.
P2
P1
O q2 q3 Qty of labour
2. Maximum Price Control Policy: is the highest price by law, at which goods and services
can be sold. Sellers can sell at prices below it but not above it. The aim is to protect
consumers, in general, and the poor community, in particular, especially during a period of
rising prices.
A maximum price is usually below the equilibrium market price. Whereas this is agreeable to
consumers, suppliers find it highly unsatisfactory. Therefore, demand for the commodity
tends to be greater than the supply of it. This leads to excess demand and thus shortage of
the commodity in the market. It also leads to Black market in which sales are made secretly,
at higher prices to those who can afford it and, at the fixed price, to relatives and friends.
Also, there will be rationing in which consumers are allowed specified quantities at regulated
period of time.
Price D S
P1
P2
S D
Excess Demand
O q2 q3Qty
READING ASSIGNMENT
Amplified and Simplified Economics for SSS by Femi Longe Page 292-296
WEEKEND ASSIGNMENT
1. The gap between demand and supply curves below the equilibrium price indicates (a)
excess demand (b) excess supply (c) equilibrium quantity (d) equilibrium price.
2. A minimum price control is usually set ................ the equilibrium price. (a) below (b)
ahead (c) above (d) behind
SECTION B
1. Distinguish between minimum price control and maximum price control
2. List three objectives of price control.
WEEK TEN
RATIONING AND HOARDING
CONTENT
Meaning of Rationing and Hoarding
Effects of Rationing and Hoarding
Black Market and its Effects
DEFINITIONS:
RATIONING: 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 Hoarding:
1. It leads to artificial scarcity.
2. It makes price to go high.
3. Non-availability of goods through artificial scarcity affects economic and material welfares
of the people.
BLACK MARKET: is a market situation where trading transactions and allocation of resources
are being carried on outside the conventional norm or principle of market forces of demand and
supply or the price fixed by law for essential commodities by the government. This is a market
pattern which does not abide by the simple principle of the market forces of demand and supply,
and thus shrouded in secrecy, where exchange of goods and services cannot be done openly.
Hence, the reason why it is called black market.
EVALUATION:
1. How does black market affect the economic growth and development of a Country?
2. Explain hoarding in relation to people material welfares.
READING ASSIGNMENT
Amplified and Simplified Economics for SSS by Femi Longe Page 292 – 296
WEEKEND ASSIGNMENT:
1. One of the major effects of hoarding is................. (a) availability of goods (b) struggle
and uncertainty (c) increase in price (d) enjoyment of consumers
2. When the price fixed by law is below the equilibrium price, then the policy is,,,,,,,,,,,, (a)
minimum price control (b) normal price control (c) maximum price control (d) abnormal
price control
3. A deliberate effort to create artificial scarcity of commodities is called....... (a) rationing
(b) black market (c) hoarding (d) bargaining
4. When an exchange of goods and services does not abide by the conventional principle of
market forces of demand and supply or price fixed by law, such an exchange is
termed................ (a) rationing (b) black market (c) hoarding (d) auctioning
5. The practice of favouritism is a common effect in.............. (a) hoarding (b) auctioning
(c) rationing (d) black market
SECTION B