{"id":2821,"date":"2023-10-03T13:50:50","date_gmt":"2023-10-03T13:50:50","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=2821"},"modified":"2023-10-03T13:53:39","modified_gmt":"2023-10-03T13:53:39","slug":"week-5-ss2-first-term-economics-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-5-ss2-first-term-economics-notes\/","title":{"rendered":"Week 5 &#8211; SS2 First Term Economics Notes"},"content":{"rendered":"<p>\u00a0<strong>WEEK FIVE<br \/>\n<\/strong><strong>ELASTICITY OF DEMAND<br \/>\n<\/strong><strong> CONTENT<br \/>\n<\/strong><\/p>\n<ul>\n<li>\n<div>Definition of Elasticity of Demand\n<\/div>\n<\/li>\n<li>\n<div>Types of Elasticity of Demand\n<\/div>\n<\/li>\n<li>\n<div>Price Elasticity of Demand\n<\/div>\n<\/li>\n<li>\n<div>Types of price elasticity of demand and graphical representation\n<\/div>\n<\/li>\n<li>\n<div>Factors affecting elasticity of demand\n<\/div>\n<\/li>\n<\/ul>\n<p><strong>DEFINITION OF ELASTICITY OF DEMAND<br \/>\n<\/strong>Elasticity of demand may be defined as the degree of responsiveness of demand as changes in price, income, prices of other commodities etc. <\/p>\n<p>\u00a0<strong>Types of Elasticity of Demand<br \/>\n<\/strong>1. Price elasticity of demand<br \/>\n2. Income elasticity of demand<br \/>\n3. Cross elasticity of demand<\/p>\n<p>\u00a0<strong>EVALUATION<br \/>\n<\/strong>1. Define Elasticity.<br \/>\n2. State three types of Elasticity of demand.<\/p>\n<p>\u00a0<strong>PRICE ELASTICITY OF DEMAND<br \/>\n<\/strong> Price elasticity of demand is the degree of responsiveness of demand for a particular commodity to changes in its price.  It is the rate at which the quantity demanded changes as its price changes.<br \/>\n\u00a0\u00a0\u00a0\u00a0To measure price elasticity of demand we use the formula:<\/p>\n<p>\t\t\t   % change in Quantity Demanded<br \/>\n   % change in price<br \/>\nThis formula can be broken down or simplified as: <\/p>\n<p>\u00a0Old Quantity \u2013 New Quantity  X  100<br \/>\n               Old quantity<br \/>\n                       E=       Old Price \u2013 New Price   X 100<br \/>\n                  Old Price<br \/>\n<strong>Illustration<br \/>\n<\/strong>When the price of a given product is reduced from N90 to N80, the quantity demanded increases from 50 to 60 units.   Deduce the co-efficient of elasticity of demand.<br \/>\n<strong>Solution<\/strong><br \/>\n\t\tOld price = N90, New price = N80<strong><br \/>\n\t\t\t<\/strong>Change in price = 80 \u2013 90 = -10<br \/>\n                            =    10   x  100<br \/>\n\t\t                                   90         1\u00a0\u00a0\u00a0\u00a0     =   11.1%<br \/>\nOld quantity = 50, New quantity = 60<br \/>\nChange in quantity = 60 \u2013 50 = 10<br \/>\n                                 =  10  x  100<br \/>\n\t\t                                      50         1     =  20%<br \/>\n         PE      =      20<br \/>\n\t\t                           11.1    =   1.8%<\/p>\n<p>\u00a0<strong>TYPES OF PRICE ELASTICITY OF DEMAND<br \/>\n<\/strong>The types of elasticity of demand and their graphical representation can be shown as follows:<br \/>\n1.\u00a0\u00a0\u00a0\u00a0<strong>Perfectly Elastic (or Infinitely Elastic) Demand<\/strong>.<br \/>\nConsumers react sharply to changes in price. They are willing to buy all the goods available at a particular price and none at all at a slightly higher price. The co-efficient of elasticity tends to infinity.<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi1.png\" alt=\"\"\/>                  Price<\/p>\n<p>\u00a0<br \/>\n\u00a0                                             D                            <\/p>\n<p>\u00a0<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0                            Quantity<\/p>\n<ol>\n<li>\n<div><strong>Perfectly Inelastic (or Zero Elasticity) Demand<\/strong>\n\t\t\t\t<\/div>\n<\/li>\n<\/ol>\n<p>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<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi2.png\" alt=\"\"\/>     \u00a0\u00a0\u00a0\u00a0Price\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi3.png\" alt=\"\"\/>                                             D<\/p>\n<p>\u00a0<br \/>\n\u00a0<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi4.png\" alt=\"\"\/><br \/>\n\t\t                              Quantity<br \/>\n3.\u00a0\u00a0\u00a0\u00a0<strong>Unitary (or Unity) Elasticity of Demand<\/strong><br \/>\n\t\tThis 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<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi5.png\" alt=\"\"\/>  Price<br \/>\n                           D<br \/>\n                 P1<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi6.png\" alt=\"\"\/><br \/>\n\t\t                P2<\/p>\n<p>\u00a0<br \/>\n\u00a0                                     Q1      Q2<br \/>\n                                  Quantity   \u00a0\u00a0\u00a0\u00a0<br \/>\n4.\u00a0\u00a0\u00a0\u00a0 <strong>Fairly Elastic Demand<\/strong><br \/>\n\t\tIn 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.<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi7.png\" alt=\"\"\/><\/p>\n<h2>              Price                D<br \/>\n<\/h2>\n<p>\u00a0                   P<sub>1<\/sub><\/p>\n<p>\u00a0                   P2<br \/>\n                                                    \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0       D<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n\u00a0                                                       Q1           Q2<br \/>\n                                             Quantity<\/p>\n<p>\u00a05.\u00a0\u00a0\u00a0\u00a0<strong>Inelastic Demand (Fairly Inelastic Demand)<\/strong><br \/>\n\t\tWhen a change in price of a commodity leads to a less than proportionate change in the quantity demanded then demand is inelastic e g a 15% increase in price bringing about 10% decrease in quantity demanded.<br \/>\nThe co-efficient of elasticity is less than 1 but greater than zero\u00a0\u00a0\u00a0\u00a0<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi8.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi9.png\" alt=\"\"\/>             Price              D<\/p>\n<p>\u00a0<br \/>\n\u00a0       P2<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi10.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi11.png\" alt=\"\"\/><\/p>\n<p>\u00a0<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi12.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi13.png\" alt=\"\"\/>       P1<br \/>\n                                                  D<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi14.png\" alt=\"\"\/><br \/>\n\t\t        Q1   Q2       <sub>\u00a0\u00a0\u00a0\u00a0                   <\/sub><br \/>\n\t\t             Quantity        <\/p>\n<p>\u00a0<strong>FACTORS AFFECTING (OR DETERMINING) ELASTICITY OF DEMAND<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div><strong>Availability of Close Substitutes:<\/strong> A commodity that has close substitutes is likely to have an elastic demand <strong><br \/>\n\t\t\t\t\t<\/strong><\/div>\n<\/li>\n<li>\n<div><strong>Degree of Necessity of the Goods: <\/strong>If a commodity is a necessity or a near-necessity, increase or\n<\/div>\n<p>decrease of its price are not likely to affect its demand\n<\/li>\n<li>\n<div><strong>Proportion of Consumer&#8217;s Income that Is Spent on that Commodity: <\/strong>Generally the higher a persons income, the more inelastic  his demand for commodities\n<\/div>\n<\/li>\n<li>\n<div><strong>Habit:<\/strong> If a consumer has become addicted to a commodity, his demand for the good will tend to be monastic. An increase in the price of the commodity may therefore not affect (reduce) his quantity demanded.\n<\/div>\n<\/li>\n<li>\n<div><strong>The Level of Consumer&#8217;s Income: <\/strong>The larger the income of the consumer the more inelastic is his demand for commodities. On the other hand, the demand of consumers with low income tends to be elastic.\n<\/div>\n<\/li>\n<li>\n<div><strong>Cheap Commodities:<\/strong> The cost of some commodities are relatively insignificant and as such consumers demand for them will be inelastic.\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<br \/>\n\u00a0<strong>EVALUATION <\/strong><br \/>\n\t\t1.\u00a0\u00a0\u00a0\u00a0Define price elasticity of demand.<br \/>\n2.\u00a0\u00a0\u00a0\u00a0The figure below was-extracted from the demand schedule of Kingsley Nanta, a consumer of bread.<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi15.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi16.png\" alt=\"\"\/>Price in naira                 Quantity Demanded<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi17.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi18.png\" alt=\"\"\/><img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1350_Week5SS2Fi19.png\" alt=\"\"\/><br \/>\n\t\tOld\u00a0\u00a0\u00a0\u00a0  New\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Old \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0New<br \/>\n 50 \u00a0\u00a0\u00a0\u00a0  70 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0160  <\/p>\n<p>\u00a0You are required to calculate:<br \/>\ni.\u00a0\u00a0\u00a0\u00a0Percentage change in quantity demanded<br \/>\nii.\u00a0\u00a0\u00a0\u00a0Percentage change in price<br \/>\niii.\u00a0\u00a0\u00a0\u00a0Co-efficient of price elasticity of demand<br \/>\niv.\u00a0\u00a0\u00a0\u00a0From your answer in i-iii above state whether demand is elastic or inelastic.<br \/>\nv.\u00a0\u00a0\u00a0\u00a0Explain your answer in (c) above.<br \/>\n3.\u00a0\u00a0\u00a0\u00a0With the aid of sketch diagrams explain the following types of elasticity demand (a) Unity (b) Inelastic (c) Elastic (d) Zero (e) Infinitely.<\/p>\n<p>\u00a0<strong>READING ASSIGNMENT<br \/>\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Comprehensive Economics by J.U Anyaele page 124-127 <strong><br \/>\n\t\t\t<\/strong>2.\u00a0\u00a0\u00a0\u00a0Fundamentals of Economics by Anyanwuocha page 227-236<\/p>\n<p>\u00a0<strong>GENERAL EVALUATION QUESTIONS<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>What is abnormal demand?<strong><br \/>\n\t\t\t\t\t<\/strong><\/div>\n<\/li>\n<li>\n<div>High the importance of opportunity cost to the government.\n<\/div>\n<\/li>\n<li>\n<div>Explain three differences between public corporation and public limited liability company.\n<\/div>\n<\/li>\n<li>\n<div>Distinguish between peasant farming and commercial farming.\n<\/div>\n<\/li>\n<li>\n<div>Why is scarcity a fundamental problem in Economics?\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<\/p>\n<h2>WEEKEND ASSIGNMENT<br \/>\n<\/h2>\n<ol>\n<li>\n<div>If elasticity of supply is greater than 1 supply is (a) Unitary elastic (B) Inelastic (c) Elastic (d) Infinitely elastic\n<\/div>\n<\/li>\n<li>\n<div>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\n<\/div>\n<\/li>\n<li>\n<div>If elasticity of demand for a commodity is less than 1, demand is (a) Unitary elastic (b) Inelastic (c) Infinitely elastic (d) Zero elastic\n<\/div>\n<\/li>\n<li>\n<div>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\n<\/div>\n<\/li>\n<li>\n<div>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\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>SECTION B<\/strong><\/p>\n<ol>\n<li>\n<div>Define elasticity of demand.\n<\/div>\n<\/li>\n<li>\n<div>State three factors that determine the elasticity of demand for goods.\n<\/div>\n<p>\u00a0<\/li>\n<\/ol>\n<p>\u00a0\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0WEEK FIVE ELASTICITY OF DEMAND CONTENT Definition of Elasticity of Demand Types of Elasticity of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,229],"tags":[],"class_list":["post-2821","post","type-post","status-publish","format-standard","hentry","category-posts","category-first-term-ss2-economics"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=2821"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2821\/revisions"}],"predecessor-version":[{"id":2822,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2821\/revisions\/2822"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}