Economics Questions and Answers

A cooperative society as a voluntary business organization in which a group of individual with common interest pool their resources together to promote the economic welfare of the members in production, distribution and consumption of goods and services.

Cost push inflation occurs when increase in cost of production are passed on to consumers in the form of high price for the goods and services on sale. The price of goods are pushed up by rising costs.

The goods bought and sold in a perfect market must be homogeneous. That is, they must be identical. They must be of same size, shape, weight, colour etc. The goods must be the same in the eye of the customer.

From the graph above, there is a direct relationship between price and quantity supplied. As the price goes up, the quantity supplied also rises. But as price falls, so too does quantity supplied. When the price was P1, the supplier was willing to supply only one unit of his product. When the price increased to P2, the supply also increased.

The graph represents a “normal” supply curve, showing that as price changes, it brought about a change to quantity supplied.

Equilibrium price is the price where the demand for a product or a service is equal to the supply of the product or service. At equilibrium, both consumers and producers are satisfied, thereby keeping the price of the product or the service stable.