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Supply (Economics Lesson)
Economics
Inyang Umoh (tutor)
09-02-2016 05:58:00 +0000Understanding supply is critical to passing the JAMB economics exam. It is one of the basic concepts that underlies most of the questions you will see. So lets define supply and related terms.
Supply - The amount of some good or service a producer is willing to supply at each price. A rise in price almost always leads to an increase in the quantity supplied of that good or service, while a fall in price will decrease the quantity supplied
Price - What a buyer pays for a unit of the specific good or service is called price.
Law of Supply - A higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied - the law of supply
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Inyang Umoh (tutor)
This diagram illustrates the Law of Supply. As the price of something goes up, more and more supply will enter the market. To understand WHY this is so, Imagine if you owned a pure water factory and the normal price per bag is N100. Normally every week you sell 1000 bags. But there was a drought so people were desperate for water that they were willing N200 per bag. Assuming your costs did not change, would you not want to sell more bags when the price is N200? Also when people see how much money you are now making due to the higher price, don't you think more people will want to set up pure water factories so they can be rich like you?
0 17-02-2016 07:54:00 +0000
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