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  1. Asked: January 21, 2023In:

    Explain four assumptions implied in the law of supply. (8 marks)November 2022

    Best Answer
    Jemshah Enlightened

    The law of supply states that, all other things being equal, as the price of a good or service increases, the quantity supplied will also increase. The following are some of the assumptions implied in the law of supply: Constant technology: The law of supply assumes that the technology used to produRead more

    The law of supply states that, all other things being equal, as the price of a good or service increases, the quantity supplied will also increase. The following are some of the assumptions implied in the law of supply:

    1. Constant technology: The law of supply assumes that the technology used to produce a good or service remains constant. If technology changes, it could affect the cost of production, which in turn could affect the quantity supplied.
    2. Rational producers: The law of supply assumes that producers are rational and will respond to changes in price in a logical manner. If producers are not rational, they may not respond to changes in price in the way that the law of supply predicts.
    3. Perfect competition: The law of supply assumes that the market is perfectly competitive, meaning that there are many buyers and sellers in the market and no one buyer or seller has significant market power.
    4. No external factors: The law of supply assumes that there are no external factors that could affect the quantity supplied. For example, if a natural disaster destroys a key production facility, it could affect the quantity supplied of a good or service.
    5. No change in production cost: The law of supply assumes that the cost of production remains constant. If the cost of production changes, it could affect the quantity supplied.
    6. No change in government policies: The law of supply assumes that there is no change in government policies that could affect the quantity supplied, such as taxes, subsidies, or regulations.
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  2. Asked: January 21, 2023In:

    Explain six factors that may lead to an increase in demand for commodities in a market. (12 marks)November 2022

    Best Answer
    Jemshah Enlightened

    There are several factors that can lead to an increase in demand for commodities in a market. Some of the most important include: Population growth: As the population increases, so does the demand for goods and services. This can lead to an increase in demand for commodities, as more people need toRead more

    There are several factors that can lead to an increase in demand for commodities in a market. Some of the most important include:

    1. Population growth: As the population increases, so does the demand for goods and services. This can lead to an increase in demand for commodities, as more people need to purchase them to meet their basic needs.
    2. Income growth: As incomes rise, people have more disposable income to spend on goods and services. This can lead to an increase in demand for commodities, as people are able to afford to purchase more of them.
    3. Changes in consumer preferences: Consumers’ preferences and tastes can change over time, leading to an increase in demand for certain commodities. For example, if there is a trend towards more healthy eating, there will be an increase in demand for organic fruits and vegetables.
    4. Technological advancements: Technological advancements can make it easier and cheaper to produce goods and services, which can lead to an increase in demand. This can be the case with digitalization and automation in production process.
    5. Government policies: Government policies can also affect demand for commodities. For example, if the government increases taxes on certain goods or services, it can lead to a decrease in demand for those goods or services. On the other hand, if the government provides subsidies for certain goods or services, it can lead to an increase in demand for those goods or services.
    6. Advertising and marketing: The marketing and advertising efforts of firms can also affect the demand for their products. Advertising and marketing campaigns can increase awareness of a product, which can lead to an increase in demand for that product.
    7. Seasonal fluctuations: demand for certain goods and services may be affected by the seasons, for example, ice-cream in summer or Christmas gifts in December.
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  4. Asked: January 21, 2023In:

    Explain four differences between micro-economics and macro-economics.(8 marks)November 2022

    Best Answer
    Jemshah Enlightened

    Microeconomics is the study of individual economic behavior, such as that of consumers, firms, and markets. It examines how these actors make decisions and how they interact with one another in specific markets. Microeconomics is concerned with understanding the behavior of individual agents such asRead more

    Microeconomics is the study of individual economic behavior, such as that of consumers, firms, and markets. It examines how these actors make decisions and how they interact with one another in specific markets. Microeconomics is concerned with understanding the behavior of individual agents such as households and firms, and how they interact in markets.

    Macroeconomics, on the other hand, is the study of the economy as a whole. It examines aggregate economic phenomena such as gross domestic product (GDP), inflation, and unemployment. Macroeconomics is concerned with the economy as a whole, and with the large-scale phenomena that affect it. It looks at issues such as growth, inflation, and unemployment.

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