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Equilibrium –> Qd = Qs
50 – 5P = 15P + 10….eqn3
-5P – 15P = 10 – 50
-20P = -40
Divide both sides by -20
-20P/-20 = -40/-20
P = 2
.:. Equilibrium price = ₦2
Substitute P = 2 in eqn 3
50-5×2 = 15×2+10
50 – 10 = 30+10
40 = 40
Equilibrium quantity = 40units
Substitute P = 3 in eqn 3
50 – 5×3 = 15×3+10
50 – 15 = 15+10[45 + 10]
35 = 55
Excess supply = 55 – 35
= 20 units
Draw the diagram [CLICK HERE]
Values for letters A to E are given by
A = TP/Q = 44/4 = 11
B = TP/Q = 49/7 = 7
C = ΔTP/ΔQ = 27-14/3-2 = 13/1 = 13
D = 54-50/6-5 = 4/1 = 4
E = 49-54/7-6 = -5
Draw the diagram [CLICK HERE]
Relationship between Total product and Marginal product[MP]:
Over a production stage, when total product is increasing at an increasing rate, marginal product rises faster. When total product increases and gets to maximum, marginal product is zero and when total product decreases, marginal product is negative.
Price system is a component of any economic system that uses prices expressed in any form of money for the valuation and distribution of goods and services and the factors of production.
(i) Neutral: It is neutral because the prices isn’t in favor of the manufacturers or consumers will. Neither producers nor consumers can impact prices; this means that consumers can buy whatever they want and producers can make and sell whatever they want. Producers offer goods and consumers either say ‘yes’ or ‘no’ with dollars. Thus, prices are decided by many interactions between producers and consumers.
(ii) Market-Driven: It is market-driven because, for each product, the market determines the price which depends on the productivity of the product.
(iii) Flexible: Prices are in a constant state of fluctuation as a result of interactions between sellers, buyers, and the economic environment.
(iv)Efficient: It is efficient because the prices of products adjust to the sale level increasing chances of profit.
(i) Provision of Food: Agriculture provides food such as maize, rice, yam, meat, milk, egg. etc for human consumption, either in fresh or processed form. If agriculture fails to meet the rising demand of food products, it is found to affect adversely the growth rate of the economy. Raising supply of food by agricultural sector has, therefore, great importance for economic growth of nigeria.
(ii) Creation of Infrastructure: The development of agriculture requires roads, market yards, storage, transportation railways, postal services and many others for an infrastructure creating demand for industrial products and the development of commercial sector.
(iii) Employment Opportunities for Rural People: Agriculture provides employment opportunities for rural people on a large scale in Nigeria. It is an important source of livelihood.
(iv) Extension of Market for Industrial Output: As a result of agricultural progress, there will be extension of market for industrial products. Increase in agricultural productivity leads to increase in the income of rural population which is turn leads to more demand for industrial products, thus development of industrial sector.
(iv) Provision of raw materials: Agriculture helps to produce raw materials that are required by other industries. Processing of these raw materials helps in manufacturing products for several uses. If the supply of materials is not as per the demand, then it can affect the entire supply chain thereby impacting the economy, and can cause hindrances in the growth of a country. As a result, the nation’s economic turnover might take a hit thus adding to more expenses for the people.
(v) Source of foreign exchange: Through the export of Agricultural produce like cocoa, kola, groundnut, palm produce, cotton etc, Nigeria is able to earn from exchange. If exports of agricultural goods fail to increase at a sufficiently high rate,Nigeria will be forced to incur heavy deficit in the balance of payments resulting in a serious foreign exchange problem.
(i) What to produce?: The problem of what to produce is one of the major problems facing any society. This is because human wants are unlimited and the resources available are limited. The problem of “what to produce” can be divided into two questions:
-Which goods are to be produced and which are not?
-In what quantities those goods to be produced?
If productive resources were unlimited, we could produce as much as we want and the problem of what to produce and how to produce would have not arisen. But the resources are limited relative to human wants. So, an economy must choose among different alternatives collection of goods and services that it should produce.
(ii) How to produce?: The problem of “how to produce” means which combination of resources is to be used and which technology is to be used for production of goods and services. There are various alternative techniques of producing goods and services.
(iii) For whom to produce?: It is a known fact that production is not complete until all the goods and services produced gets to the final consumers. The society cannot satisfy all wants of all the people. Therefore, it has to decide who should get how much of the total output of goods and services. In other words, the third question is about problem of sharing of national product.
(iv) What provision should be made for economic growth?: It is important to know whether the productive capacity of an economy is increasing, static or declining. The increase in productive capacity is called economics growth which is aimed by every country. And to grow the economy in the future, a society would not like to use all its scarce resources for current consumption only. Therefore, a society made some provisions regarding how much saving and investment i.e. how much sacrifice of current consumption should be made for future progress.
(i) Multilateral Trade and Payments: To establish a multilateral trade and payment system in respect to current transactions between members in place of the old system of bilateral trade agreements was another important objective of IMF.
(ii) Ensure Exchange Stability: Another important objective of the Fund is to ensure stability in the foreign exchange rates by maintaining orderly exchange arrangement among members and also to rule out unnecessary competitive exchange depreciations.
(iii) Balanced Growth of Trade: IMF has also another important objective to promote international trade so as to achieve its required expansion and balanced growth. This would ensure development of production resources and thereby promote and maintain high levels of income and employment among all its member countries.
(iv) Eliminate Exchange Control: Another important objective of the Fund is to eliminate or relax exchange controls imposed by almost each and every country before Second World War as a device to deliberately fix the exchange rate at a particular level. Such elimination of exchange controls was made so as to give encouragement to the flow of international trade.
(i) Dealing with Social Instability
(ii) Performance Evaluation Difficulties
(iii) Increasing Level of Politicisation
(iv) Leadership challenges
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