One of the most important notions in economics is scarcity. It signifies that the demand for a product or service exceeds the supply of that product or service. On the other side, is a situation in which boundless desires outnumber limited resources.
A consumer's or producer's capacity to choose among a variety of goods, services, or resources is referred to as choice.
A scale of preference is a list of desires ranked in order of priority.
When a decision is made, opportunity cost refers to the worth of the next best alternative.
The appraisal of costs and benefits is known as economic analysis. Its goal is to assess a project's welfare impact. Cost-effectiveness and cost-utility analyses are two forms of economic study.
Economic agents refers to a person or legal entity that plays an active role in an economic process. They are three main groups of agent, such as produce, consumers and government.
The science of economics is concerned with the production, distribution, and consumption of commodities and services.
An economic activity is a process that results in the production of a thing or the provision of a service depending on inputs.
The term "economic system" refers to the process through which societies and governments arrange and distribute available resources, services, and products across a geographic region or country.
Economic data is used to assess a country's, region's, or market's financial health or well-being.
DEMAND AND SUPPLY ANALYSIS
Demand refers to consumer's desire to purchase goods and services at given prices.
Market is an institution or mechanism that brings together buyers and sellers of particular goods, services or resources for the purpose of exchange.
TYPES OF MARKETS
1. Goods and Service market '' This is a market within which consumable goods and services are bought and sold.
2. Factor market '' This is a framework within which factors of production (land, labor, capital) are bought and sold.
3. Foreign exchange market
4. Money market '' Is a market where money and other types of liquid assets are lent and borrowed over a period of time, but usually for a short - term period duration.
5. Capital market '' Is a financial market where long - term debt and securities are bought and sold.
VALUE IN ECONOMICS
1. Value in use describes the satisfaction or pleasure that the holder, consumer or owner derives from consuming, holding or owing the item.
2. Value in exchange defines the opportunity cost of obtaining a good, service or any item.
WAYS OF DETERMINING VALUE OF EXCHANGE
1. Market forces (Signals)
2. Haggling
3. Auctioning
4. Tendering
FUNCTIONS OF PRICES
1. Signaling '' Using price, producers or suppliers may determine which goods and services are in high demand so that they can respond accordingly. On the hand, it helps consumers also determine and decided on which goods and services would give them satisfaction that they desire but to the lowest price.
2. Incentive creating '' Prices provides incentives to economic agents to behave and make decisions in a manner that is consistent with what they consider to be their desires.
3. Rationing '' Prices serves as rationing tool if it provides agents with the room to be able to respond appropriately to the incentives being offered and by so doing, enable the market to operates in the most efficient manner.
Quantity demanded is the specific amount of a good or service that a consumer or consumers are willing and able to buy at a given price within a period of time.
Market demand is obtained by adding the quantities demanded by all consumers at each of the various possible prices.
Market demand schedule is a table that represents the price quantity combinations of a particular good for all buyers.
Abnormal demand is a demand that deviates from the law of demand.
Determinants Of Demand
1. Prices of the product
2. Income of consumers
3. Number of buyers
4. Consumers' tastes
5. Expectations
6. Population
7. Tastes and Preferences
SUPPLY is a schedule that shows the various quantities of commodities that producers are willing and able to make available for sale at each of a series of possible prices during a specific period.
Quantity Supplied is defined as the amount or quantity of a particular good or service that producers are willing and able to offer for sale at a given price within a period of time.
DETERMINANTS OF SUPPLY
1. Price of the product
2. Input or Resources prices
3. Technology
4. Taxes and Subsides
5. Expectations
6. The number of sellers in the market
Market Disequilibrium '' This occurs when at a given price there is an imbalance between quantity demanded and quantity supplied. In economic analysis, we come across two types of market disequilibrium which are surplus and storage.
CONSUMERS SURPLUS
Generally, when there exists a situation where a consumer is willing to pay a higher price for a given good than he actually does, we say that the consumer has achieved a surplus. Consumer Surplus is defined as the difference between how much the consumer is willing or prepared to pay for a specific quantity of a good and the actual amount he or she in getting that fixed quantity of the good.
PRODUCER SURPLUS
Producer surplus defined as the difference between the actual amount realized by a supplier from the sale of a specific quantity of a given good and the amount at which the producer is willing to supply that quantity of the good.
TYPES OF MARKET DISEQUILIBRIUM
1. Surplus or excess supply
2. Shortage or excess demand
