A.

Basic Commodities

Cite Several Characteristics Of Commodities

*Standardized: Commodities are typically standardized in terms of quality, grade, and size
*Traded On Exchanges: Commodities are traded on organized exchanges. These exchanges
provide a platform for buyers and sellers to meet and trade commodities.
*Used As Inputs: Commodities are used as inputs in the production of other goods and
sevices.
*Primarily Traded In Bulk: Commodities are typically traded in large quantities, often in
bulk. This is because they are used as inputs in the production of other goods and services.

Provide At Least 3 Main Reasons Local Producers Important Good

*Economic Growth And Job Creation: Local producers create jobs and generate economic
activity within their communities. When people buy local, they support local businesses,
which in turn creates a ripple effect throughout the economy. Local businesses also tend to
reinvest their profits back into the community, further stimulating economic growth.
*Community Development and Sustainability: Local producers contribute to the overall well-
being of their communities. They often source their materials and labor locally, supporting
other local businesses and creating a more sustainable and self-reliant ecosystem. This can
lead to a stronger sense of community and a more vibrant local culture.
*Environmental Benefits: Local producers often have a smaller carbon footprint than large,
multinational corporations. This is because they are less likely to transport goods over long
distances and may use more sustainable practices. Supporting local producers can contribute
to a more environmentally responsible way of life.

B.What Are Demands?

*Demand, in simple terms, is the desire and ability of consumers to buy a particular good or
service at a given price. It's not just wanting something; it's about having the willingness and
the financial means to actually purchase it.
Here's a breakdown of what makes up demand:
*Desire: You must want the good or service. This could be because you need it, you like it, or
you think it's valuable.
*Ability: You must have the money to buy it. This means having enough income, credit, or
assets to make the purchase.
*Price: The price of the good or service also plays a big role. Generally, if the price goes up,
people will buy less of it (this is called the law of demand).

C. What Is The LAW Of Demend?

The law of demand is a fundamental principle in economics that states: as the price of a good
or service increases, the quantity demanded of that good or service will decrease, assuming
all other factors remain constant. This means that consumers tend to buy less of a product
when its price goes up, and they buy more when the price goes down. This happens for a few
reasons: Firstly, we all have limited budgets, so when prices rise, we have to make choices
about how to spend our money. Secondly, consumers often look for cheaper substitutes when
prices increase. Finally, as prices rise, our purchasing power decreases, meaning we can buy
less overall. Understanding the law of demand is essential for businesses to set prices
effectively and for policymakers to understand how price changes affect consumer behavior
and the economy.

D. What Is Income?
Income is the money or other forms of payment that individuals and households receive over
a period of time. It's the regular flow of funds that people use to support themselves and their
families, enabling them to meet their basic needs, such as food, shelter, and healthcare, and
enjoy a certain standard of living. Income comes from various sources, including wages and
salaries, self-employment income, investments, government benefits, rental income, and
retirement income. The level of income significantly influences an individual's ability to live
comfortably, access opportunities, and contribute to the economy. However, income
distribution can be uneven, leading to disparities in living standards and opportunities.
Understanding income's multifaceted nature is crucial for creating a more equitable and
prosperous society.

E. State The Engel`s LAW

1. Inferior Goods: An inferior good is a product whose demand decreases as consumer
income increases. This means that as people become wealthier, they tend to buy less of these
goods. The term "inferior" doesn't imply low quality; it simply describes the relationship
between income and demand.
2. Luxury Goods: Luxury goods are products that experience a greater increase in demand
than the proportional increase in income. In other words, as people become wealthier, they
spend a larger percentage of their income on luxury goods. These goods are often associated
with high quality, exclusivity, and status.
3. Income Elasticity: Income elasticity of demand measures the responsiveness of the
quantity demanded for a good to a change in consumer income. It helps us understand how
much demand changes when income changes
4. Necessary Goods: Necessary goods are essential items that consumers need for their basic
survival and well-being. The demand for these goods is generally less sensitive to income
changes.
5. Substitutes: Substitutes are goods or services that can be used in place of each other to
satisfy the same need or desire. When the price of one good rises, consumers may switch to a
substitute, affecting the demand for both products.
6. Complementary Goods: Complementary goods are products that are typically used
together. The demand for one good can influence the demand for the other.
7. Consumer Expectations: Consumer expectations refer to consumers' anticipations about
future economic conditions, their personal financial situations, and the availability and
pricing of goods and services. These expectations can significantly influence their purchasing
decisions.

(Draw fig. 3.8)

Explain Tase and Preference: Taste and preferences, often referred to as consumer tastes,
encompass the subjective desires, likes, and dislikes that drive individual purchasing
decisions. These preferences are shaped by personal experiences, cultural influences, social
trends, and individual values. They can vary widely across individuals and evolve over time,
influencing the demand for specific products and services. Consumers may favor certain
brands, styles, flavors, or features based on their personal tastes, leading businesses to cater
to these preferences through product design, marketing strategies, and targeted promotions.
Understanding and adapting to changing consumer tastes is crucial for businesses to remain
competitive and meet evolving market demands.
(Draw fig. 3.9)

B. The Law Of Supply

The law of supply is a fundamental principle in economics that states that, all other
factors being equal, an increase in the price of a good or service will lead to an increase
in the quantity supplied, and conversely, a decrease in price will lead to a decrease in the
quantity supplied. This relationship occurs because higher prices provide greater
incentives for producers to produce and sell more of the good or service to maximize
profits.
 Fig. 3.10

The figure 3.10 demonstrates the law of supply, which states that, all other factors being
equal (ceteris paribus), as the price of a good increases, the quantity supplied of that good
will also increase. This is because higher prices incentivize producers to increase their
output to take advantage of higher potential profits. The upward slope of the supply curve
visually represents this positive relationship between price and quantity supplied. The
movement from point A to point B shows this increase in quantity supplied in response to
a price increase.

Fig 3.11
 The technology effect in Figure 3.11 shows a rightward shift of the supply curve from S to S',
indicating an increase in the quantity supplied at any given price level due to technological
advancements. This leads to a greater quantity supplied (Qs' ) at the same price compared to the
original quantity supplied (Qs).

Figure 3:12

The graph illustrates a leftward shift of the supply curve from S to S' due to an increase in input
prices. This results in a decrease in the quantity supplied from Qs to Qs' at the same price level.
 Figure 3:13

Graph (a) illustrates a change in quantity supplied due to a price change (movement along the
curve). Graph (b) illustrates a change in supply due to a factor other than price (shift of the
curve). The key difference is that (a) shows the law of supply in action, while (b) shows a
change in the underlying conditions of supply.

3:14
 The graph shows that producer expectations about future prices significantly influence the
current supply. Positive expectations (expecting higher future prices) lead to a leftward shift of
the supply curve (from S1 to S3), decreasing the current quantity supplied. Negative expectations
(expecting lower future prices) lead to a rightward shift (from S1 to S2), increasing the current
quantity supplied.

3:15

Both graphs illustrate shifts in the supply curve, but in opposite directions. Graph (a) shows a
decrease in supply, while graph (b) shows an increase in supply. These shifts are caused by
factors other than changes in the price of the good itself.

3:16
The graph depicts market equilibrium at the intersection of the supply and demand curves. The
equilibrium price (P*) and equilibrium quantity (Q*) represent the point where the quantity
demanded equals the quantity supplied, resulting in a stable market with neither shortage nor
surplus.

3:17

The graph shows a market shortage because the price (P1) is below the equilibrium price (P*).
At P1, the quantity demanded (QD) is greater than the quantity supplied (QS), resulting in a
shortage represented by the shaded area. This shortage creates upward pressure on the price, as
consumers compete for limited goods.

3:18
The graph depicts a market surplus because the price (P1) is above the equilibrium price (P*). At
P1, the quantity supplied (QS) exceeds the quantity demanded (QD), resulting in a surplus
represented by the shaded area. This surplus creates downward pressure on the price, as
producers compete to sell their excess goods.

3:19
The graph illustrates a decrease in demand. The demand curve shifts from D to D', leading to a
new equilibrium with a lower equilibrium price (P2) and a lower equilibrium quantity (Q2)
compared to the initial equilibrium (P1, Q1).

3:20

The graph shows a decrease in supply. The supply curve shifts from S to S', leading to a
new equilibrium with a higher equilibrium price (P2) and a lower equilibrium quantity
(Q2) compared to the initial equilibrium (P1, Q1).