WAEC Economics Past Questions & Answers - Page 51

In most cases, the supply curve is drawn as a slope rising upward from left to right, since product price and quantity supplied are directly related (i.e., as the price of a commodity increases in the market, the amount supplied increases, and at a lower price, supply decreases).

Subsidy impact. Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the per unit subsidy; when other things remain equal, this will decrease price paid by the consumers (which is equal to the new market price) and increase the price received by the producers.

An uncommonly high product demand that is outside the normal parameters established by the management policy is called anAbnormal Demand.

A Giffen good, in economic theory, is a good that is in greater demand as its price increases. For example, if the price of an essential food staple, such as rice, rises it may mean that consumers have less money to buy more expensive foods, so they will actually be forced to buy more rice.

If the cost of resources used to produce a good increases, sellers will be less inclined to supply the same quantity at a given price, and the supply curve will shift to the left. 

Middlemen intervention raise price for consumers. The real profit goes to the middlemen who buy up the farm products at almost give away prices and sell at outrageous prices to the consumers.