From Table 2.1, calculate the elasticity of supply between these points A and B, and D and E. State the nature of elasticity in (a)i above. Briefly explain any four types of elasticity of demand.

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Asked on July 20, 2026Economics

This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.

Accepted Answer · 2026-07-20T09:56:50.177Z

a) i. Calculate the Retail price index. Step 1: Identify the prices for the base year (2019) and the current year (2022). Prices in 2019 (P_0): Rice = N600, Beans = N500 Prices in 2022 (P_1): Rice = N1,000, Beans = N2,000 Step 2: Calculate the sum of prices for the base year and the current year. P_0 = 600 + 500 = 1100 P_1 = 1000 + 2000 = 3000 Step 3: Apply the formula for the Retail Price Index (RPI). RPI = ( P_1)/( P_0) × 100 RPI = (3000)/(1100) × 100 RPI ≈ 2.72727 × 100 RPI ≈ 272.73 ii. Calculate the Weighted retail price index if the consumer spends three times as much on rice than on beans. Step 1: Assign weights based on spending. Weight for Rice (W_rice) = 3 Weight for Beans (W_beans) = 1 Step 2: Calculate the weighted sum of prices for the base year (2019). (P_0 × W) = (600 × 3) + (500 × 1) = 1800 + 500 = 2300 Step 3: Calculate the weighted sum of prices for the current year (2022). (P_1 × W) = (1000 × 3) + (2000 × 1) = 3000 + 2000 = 5000 Step 4: Apply the formula for the Weighted Retail Price Index. Weighted RPI = ( (P_1 × W))/( (P_0 × W)) × 100 Weighted RPI = (5000)/(2300) × 100 Weighted RPI ≈ 2.17391 × 100 Weighted RPI ≈ 217.39 iii. Interpret your answer in (ii.) above. A weighted retail price index of 217.39 indicates that, considering the consumer spends three times more on rice than on beans, the overall cost of this basket of goods has increased by approximately 117.39% from 2019 to 2022. b) Briefly explain the three motives for holding money. The three motives for holding money are: • Transactions motive: Individuals hold money to facilitate everyday purchases and payments for goods and services. • Precautionary motive: Money is held as a reserve to cover unforeseen expenses or emergencies, providing a buffer against unexpected events. • Speculative motive: People hold money to take advantage of future investment opportunities, particularly in financial assets like bonds, when they anticipate changes in interest rates. Send me the next one 📸

Accepted Answer · 2026-07-20T09:56:50.177Z

a) i. Calculate the Retail price index. Step 1: Identify the prices for the base year (2019) and the current year (2022). Prices in 2019 (P_0): Rice = N600, Beans = N500 Prices in 2022 (P_1): Rice = N1,000, Beans = N2,000 Step 2: Calculate the sum of prices for the base year and the current year. P_0 = 600 + 500 = 1100 P_1 = 1000 + 2000 = 3000 Step 3: Apply the formula for the Retail Price Index (RPI). RPI = ( P_1)/( P_0) × 100 RPI = (3000)/(1100) × 100 RPI ≈ 2.72727 × 100 RPI ≈ 272.73 ii. Calculate the Weighted retail price index if the consumer spends three times as much on rice than on beans. Step 1: Assign weights based on spending. Weight for Rice (W_rice) = 3 Weight for Beans (W_beans) = 1 Step 2: Calculate the weighted sum of prices for the base year (2019). (P_0 × W) = (600 × 3) + (500 × 1) = 1800 + 500 = 2300 Step 3: Calculate the weighted sum of prices for the current year (2022). (P_1 × W) = (1000 × 3) + (2000 × 1) = 3000 + 2000 = 5000 Step 4: Apply the formula for the Weighted Retail Price Index. Weighted RPI = ( (P_1 × W))/( (P_0 × W)) × 100 Weighted RPI = (5000)/(2300) × 100 Weighted RPI ≈ 2.17391 × 100 Weighted RPI ≈ 217.39 iii. Interpret your answer in (ii.) above. A weighted retail price index of 217.39 indicates that, considering the consumer spends three times more on rice than on beans, the overall cost of this basket of goods has increased by approximately 117.39% from 2019 to 2022. b) Briefly explain the three motives for holding money. The three motives for holding money are: • Transactions motive: Individuals hold money to facilitate everyday purchases and payments for goods and services. • Precautionary motive: Money is held as a reserve to cover unforeseen expenses or emergencies, providing a buffer against unexpected events. • Speculative motive: People hold money to take advantage of future investment opportunities, particularly in financial assets like bonds, when they anticipate changes in interest rates. Send me the next one 📸

From Table 2.1, calculate the elasticity of supply between these points A and B, and D and E. State the nature of elasticity in (a)i above. Briefly explain any four types of elasticity of demand.

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From Table 2.1, calculate the elasticity of supply between these points A and B, and D and E. State the nature of elasticity in (a)i above. Briefly explain any four types of elasticity of demand.

Need help with your own homework?

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