{"id":2825,"date":"2023-10-03T13:51:44","date_gmt":"2023-10-03T13:51:44","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=2825"},"modified":"2023-10-03T13:53:39","modified_gmt":"2023-10-03T13:53:39","slug":"week-7-ss2-first-term-economics-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-7-ss2-first-term-economics-notes\/","title":{"rendered":"Week 7 &#8211; SS2 First Term Economics Notes"},"content":{"rendered":"<p><strong>WEEK SEVEN<br \/>\n<\/strong><strong>INCOME ELASTICITY OF DEMAND<br \/>\n<\/strong><strong>CONTENT<br \/>\n<\/strong><\/p>\n<ul>\n<li>Definition\n<\/li>\n<li>Types (Positive and Negative)\n<\/li>\n<li>Measurement of Income Elasticity of Demand\n<\/li>\n<\/ul>\n<p><strong>DEFINITION:<\/strong> Income elasticity of demand is the degree of responsiveness of quantity  demanded of a commodity to a little change in consumer&#8217;s income. That is, it measures how changes in income of consumers will affect the quantity of commodities demanded by such consumers.<br \/>\nMathematically, income elasticity of demand is expressed as:<br \/>\n% change in Quantity Demanded<br \/>\n% change in Income<br \/>\nWhen the percentage change in income brings about an equal change in the quantity demanded, then income elasticity is unit.<br \/>\nWhen the percentage change in income is greater than the percentage change in quantity demanded, income elasticity is less than unit, hence income is inelastic.<br \/>\nWhen 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.<br \/>\n<strong>TYPES OF INCOME ELASTICITY OF DEMAND<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div><strong>Positive Income Elasticity of Demand: <\/strong>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.<strong><br \/>\n\t\t\t\t\t<\/strong><\/div>\n<\/li>\n<li>\n<div><strong>Negative Income Elasticity of Demand: <\/strong>is the type in which an increase in income of consumers will lead to a decrease in the quantity of commodity demanded. This is applicable to inferior goods.<strong><br \/>\n\t\t\t\t\t<\/strong><\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>EVALUATION<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>Define income elasticity of demand.\n<\/div>\n<\/li>\n<li>\n<div>State the formula for calculating income elasticity of demand.\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>Illustration:<\/strong> The table below shows the various income and demand for different commodities.<br \/>\n<strong>Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Quantity Demanded<br \/>\n<\/strong>       #\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0             Kg<br \/>\nA.  20,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0            120<br \/>\nB.  36,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0              96<br \/>\nC.  40,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0             160<br \/>\nD.  44,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0             200<br \/>\nE.  45,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0             240<br \/>\nF.  47,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0             252\u00a0<br \/>\na)\u00a0\u00a0\u00a0\u00a0Calculate the income elasticity between (i) A and B  (ii) C and D  (iii) E and F<br \/>\nb)\u00a0\u00a0\u00a0\u00a0What kind of good relationship is between (i) A and B (ii) C and D<br \/>\n<strong>SOLUTION<br \/>\n<\/strong>Income Elasticity of Demand      =\u00a0\u00a0\u00a0\u00a0% Change in Quantity Demanded<br \/>\n\t\t\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0                           % Change in Income<br \/>\n(a)\u00a0\u00a0\u00a0\u00a0Income Elasticity of Demand<br \/>\ni\u00a0\u00a0\u00a0\u00a0Between A and B<br \/>\n\u00a0\u00a0\u00a0\u00a0= 120\u2013 96 x 100<br \/>\n                     120\u00a0\u00a0\u00a0\u00a0                              = 0.25<br \/>\n\u00a0\u00a0\u00a0\u00a036000 \u2013 20,000 x 1000\u00a0\u00a0\u00a0\u00a0<br \/>\n\u00a0\u00a0\u00a0\u00a0      20,000<br \/>\nii\u00a0\u00a0\u00a0\u00a0Between C and D<br \/>\n\u00a0\u00a0\u00a0\u00a0200 \u2013 160 x 100<br \/>\n                   160                                            = 2.5<\/p>\n<p>\t\t\t44000 \u2013 40,000 x 100\u00a0\u00a0\u00a0\u00a0<br \/>\n \u00a0\u00a0\u00a0\u00a0     40,000<br \/>\niii\u00a0\u00a0\u00a0\u00a0Between E and F<br \/>\n<img decoding=\"async\" align=\"left\" src=\"https:\/\/ecolebooks.com\/nigeria\/wp-content\/uploads\/9jalessonsimages\/100323_1351_Week7SS2Fi1.png\" alt=\"\"\/>\u00a0\u00a0\u00a0\u00a0  252   \u2013    240    x 100<br \/>\n\u00a0\u00a0\u00a0\u00a0          240<br \/>\n                                                                    = 1.125<br \/>\n\u00a0\u00a0\u00a0\u00a047000 \u2013  45000 x 100<br \/>\n\u00a0\u00a0\u00a0\u00a0     45000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n(b)   i.    Giffen goods or inferior good<br \/>\n  ii.   Normal goods<br \/>\n It should be re-emphasized that positive income elasticity of demand is for &#8216;normal&#8217; or &#8216;superior&#8217; or &#8216;luxury goods&#8217;, whereas Negative income elasticity of demand is for &#8216;abnormal&#8217;, or &#8216;inferior goods.  <\/p>\n<p>\u00a0<strong>EVALUATION<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>What is income elasticity of demand?\n<\/div>\n<\/li>\n<li>\n<div>Explain two types of income elasticity of demand\n<\/div>\n<\/li>\n<\/ol>\n<p>\u00a0<strong>READING ASSIGNMENT<br \/>\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Comprehensive Economics Page 124 \u2013 127<br \/>\n2.\u00a0\u00a0\u00a0\u00a0Fundamentals of Economics Page 227 \u2013 236<\/p>\n<p>\u00a0<strong>GENERAL EVALUATION QUESTIONS<br \/>\n<\/strong><\/p>\n<ol>\n<li>Explain five reasons why a joint stock company is preferable to a one-man business.\n<\/li>\n<li>State the law of Diminishing returns.\n<\/li>\n<li>Define Labour as a factor of production.\n<\/li>\n<li>What are the factors affecting the size of a firm?\n<\/li>\n<li>Distinguish between fixed and variable cost.\n<\/li>\n<\/ol>\n<p>\u00a0<strong>WEEKEND ASSIGNMENT<br \/>\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0The responsiveness of demand to a change in income is the measurement of_______(a) arc elasticity of demand (b) cross elasticity of demand (c) income elasticity of demand (d) Price  elasticity of demand<strong><br \/>\n\t\t\t<\/strong>2.\u00a0\u00a0\u00a0\u00a0Given the income of A and B as________<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<strong>Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Quantity demanded  kg<br \/>\n<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0A\u00a0\u00a0\u00a0\u00a020,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0120<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0B\u00a0\u00a0\u00a0\u00a036,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a096<br \/>\nThe income elasticity between A and B is ________<br \/>\n<strong>\u00a0\u00a0\u00a0\u00a0<\/strong>(a) 0.25     (b) 0.95       (c)  2.3      (d)  2.7<br \/>\n3.\u00a0\u00a0\u00a0\u00a0What kind of good is between A and B above?<br \/>\n\u00a0\u00a0\u00a0\u00a0(a)  private good\u00a0\u00a0\u00a0\u00a0(b)  public good   (c)  luxury    (d)  necessity<br \/>\n4.\u00a0\u00a0\u00a0\u00a0Given  income  C and D and quantity demanded as follows:<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<strong>Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Quantity Demanded<br \/>\n<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a040,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0160<br \/>\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a044,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0200\u00a0\u00a0\u00a0\u00a0<br \/>\n\u00a0\u00a0\u00a0\u00a0Calculate the coefficient of income elasticity of demand<br \/>\n\u00a0\u00a0\u00a0\u00a0(a)  2.5     (b) 4.7    (c) 0.44     (d) 6.5<br \/>\n5.    \u00a0\u00a0\u00a0\u00a0When an increase in consumer&#8217;s income leads to a decrease in quantity demanded of a commodity, income elasticity of demand is&#8230;&#8230;&#8230;&#8230;? (a) indeterminable  (b) positive (c) constant (d) negative<br \/>\n6. \u00a0\u00a0\u00a0\u00a0Income elasticity of demand is negative for&#8230;&#8230;&#8230;&#8230;&#8230; (a) normal goods (b) competitive goods (c) inferior goods (d) complementary goods<\/p>\n<p>\u00a0<strong>SECTION B<br \/>\n<\/strong><\/p>\n<ol>\n<li>\n<div>Differentiate between normal goods and inferior goods\n<\/div>\n<p>2. \u00a0\u00a0\u00a0\u00a0The table below shows the various incomers and demand for different commodities.<strong><br \/>\n\t\t\t\t\t<\/strong><\/li>\n<\/ol>\n<p>\u00a0\u00a0\u00a0\u00a0<strong>Income     Quantity Demanded (kg)<br \/>\n<\/strong>A\u00a0\u00a0\u00a0\u00a010,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a060<br \/>\nB\u00a0\u00a0\u00a0\u00a018,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a048<br \/>\nC\u00a0\u00a0\u00a0\u00a020,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a080<br \/>\nD\u00a0\u00a0\u00a0\u00a022,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0100<br \/>\nE\u00a0\u00a0\u00a0\u00a022,500\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0120<br \/>\nF\u00a0\u00a0\u00a0\u00a023,500\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0126<br \/>\n(b)  Calculate the income elasticity between \u00a0\u00a0\u00a0\u00a0(i) A and B (ii) C and D (iii) E and F<br \/>\n(b)  What kind of good is between : (i) A and B  (ii) C and D<\/p>\n<p>\t\t\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>WEEK SEVEN INCOME ELASTICITY OF DEMAND CONTENT Definition Types (Positive and Negative) Measurement of Income&#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-2825","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\/2825","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=2825"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2825\/revisions"}],"predecessor-version":[{"id":2826,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2825\/revisions\/2826"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}