cee001:
**In the distribution channels for goods and services,the middleman’s mark-up margin provides a rough measure for theA.Quantity discount allowed final consumersB.Reward for business entrepreneurshipC.Effectiveness of government control overeconomy’s marketing channelsD.Extent of exploitation of the final consumer


** If an increase in income induces a reduction thedemand for beans, beans can be referred to asA. A normal goodB. An inferior goodC. A substituteD. A giffen good
,,,concerning this qst..pls can someone tell me d difference between a giffen good and an inferior good. I know inferior goods have a negative income elasticity,,but are they not also giffen goods help

cee001:
** A company is said to be highly geared if the A. Value of fixed interest loans is high compared with share capital B.Value of share capital is high compared with fixed interest loans C.Dividend rate is high D.Interest rate is high
My chief economists in the house,food is served. This will be all;for now..thanks in advance

Mogten:

lol. This dude, have you thought about strutting your stuff as a stand-up commedian? E go fit you bros. Heheh... thank you so very much! Humble me.... i am glad the prof approves of my points.

Martiyu:


A.
Gearing ratio is used to determine the financial strength of organisation. It measures the ratio of debts (numerator) to the shareholders equity or capital (denominator)

Interest on loan of course would be a debt to the company. If this is too high relative to the share capital, that spells doom. The ratio will be high and we say the company is highly geared and vice versa.

Goodnight

Martiyu:


First question, A.
Second question u were ryt on point. Now to explanation

When you refer to inferior goods, we talk relative to the income of the consumer yl when we talk about giffen goods, we talk with respect to the price of the commodity. They both have negative income effect but while the former is direct, the latter is indirect.



***I understand the above**



Changes in demand are relative to two effects, the income effect and substitution effect. Though this is beyond the scope of JAMB but it is not too early to learn.

For inferior goods, we assume that there are close substitutes for the goods and as such, the substitution effect dominates the income effect yl for giffen goods, because of the assumption that a giffen good has no close substitute, the income effect dominates the substitution effect which is assumed to be non existing... Hey! Don't get lost, stay with me..



**took me some time to digest this;so in essence,the abnormal relationship btw income and demand of an inferior good(since inferior goods are talked relative to income) is blamed on the substitution effect;but blamed on the income effect is the abnormal rel. btw price and a giffen good(since giffen goods are talked relative to price and no substitute is assumed)**



Using these empirical examples.

Let's assume that given my current income level, I eat eba considering the fact that garri is cheap. But later I got an upgrade in my income level, I may decide to now consume semovita or any other thing more and reduce my consumption of garri.

That is the substitution effect dominating. Moving to giffen goods. Let's assume that given my current income level, when I buy garri to make eba, I do add meat to my soup. But now the price of garri has increased and I can't shift to semovita that I consider as luxury. I would do everything needed to ensure that I take myself back to the position I was before the price increase. How would I do that, I would gv up meat to consume more garri despite the fact that its price has increased. Mark you, meat is not a substitute for garri.


**cool example^^***


The assumption that there are no close substitutes would make the income effect to overwhelm the substitution effect.

If you do not understand, please tell me.. I would look for ways to simplify it.





**I get u..thanks for clearing this up for me...now I know d difference btw d two**

Mogten:

Operating costs are cost of goods or services that are used up in a production process. Goods such as fuel, fertilizer, wages etc... all form the operating costs. Operating costs vary because their prices depend on the behaviour of other factors. Put in other words, they are externally determined. Take for instance, the amount paid labourers as wages depends on the volume of output and its marketability. The higher the volume of output and its marketability, ceteris paribus, the higher will be the wages paid workers as remuneration and vice versa. Likewise the price of fuel depends upon its output, its market and the cost incurred in producing it. Seeing as market conditions often change, their prices fluctuate and are therefore not constant. Fixed costs on the contrary do not vary with the level of output or any external factor. Take for instance, I lent you N100,000 on a written agreement that you will pay me 10% interest on it per annum, regardless whether you make profit or losses, you ought to honor the agreement and pay me the said amount as at when due. Wages on the other hand, can be reduced to cut losses. I hope that was clear enough. Pardon my epistle.

cee001:
ok...I get...thanks

MizyB:

have you reprinted?

cee001:
no.But about to..soonest...

MizyB:

bro am waiting for u o. Hearing some rumour that it might not be 'Today' again!

cee001:
I just did mine

MizyB:

when is ur date?

cee001:
13th

MizyB:

was it in the centre u registered ?

MizyB:
My Egbons, help a sister;
if the marginary propensity to consume is 0.80 and the investment expenditure changes fdrom N100M to N140M in a given economy, find the level of equilibrium in the given economy, using the formular
K=1/1-MPC
(K=multiplier, MPC=Marginal prospensity to consume)

A. N20M B. 40M V. 80M D. 200M

MizyB:
My Egbons, help a sister;
if the marginary propensity to consume is 0.80 and the investment expenditure changes fdrom N100M to N140M in a given economy, find the level of equilibrium in the given economy, using the formular
K=1/1-MPC
(K=multiplier, MPC=Marginal prospensity to consume)

A. N20M B. 40M V. 80M D. 200M

cee001:
more explanation on the concepts of the above question,anyone?

Oloro29:


The answer is D. Using k times change in investment exp. 40m X 5 =200m

Temmi001:
Hmmm,multiplier effect sha......

MizyB:

Temi no be small thing. My exam na wednesday sha. Dey pray fr me o

Martiyu:


K=1/1-b.

b = MPC = 0.8

1/1-0.8 = 1/0.2 = 5

Change in investment is = new level of investment minus initial level of investment I.e. 140 - 100 = 40

The multiplier which measures the multiple by which national income will change from a change in any of the exogenous variables (C, I & G.. Assuming a closed economy to simplify the model) that determine equilibrium level of income will act on the change in investment

#40×5= 200

Martiyu:
As You all prepare to write the much awaited exam, I wish you good success. And u know what, m waiting to hear d good news, not in this and the subsequent ones.

All the best.