Economics Examples
Learn economics through simple explanations and worked examples covering microeconomics and macroeconomics concepts.
๐ Demand
Law of Demand:
When price increases, quantity demanded falls.
When price increases, quantity demanded falls.
If price rises from KSh 50 to KSh 70 and quantity demanded falls from 100 to 60 units,
demand has decreased.
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๐ Supply
Law of Supply: Higher prices encourage producers to supply more.
Price increases from KSh 40 to KSh 60.
Quantity supplied increases from 200 to 300 units.
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Quantity supplied increases from 200 to 300 units.
๐ Elasticity
Price Elasticity of Demand (PED):
PED = %ฮQ รท %ฮP
PED = %ฮQ รท %ฮP
Quantity falls by 20%, price rises by 10%:
PED = 20 รท 10 = 2 (Elastic)
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PED = 20 รท 10 = 2 (Elastic)
๐ญ Costs of Production
Fixed Cost: Does not change with output (e.g., rent).
Total Cost = Fixed Cost + Variable Cost
TC = 20,000 + 30,000 = KSh 50,000
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TC = 20,000 + 30,000 = KSh 50,000
๐ฐ National Income
GDP = C + I + G + (X โ M)
C=400, I=200, G=300, X=150, M=100
GDP = 400 + 200 + 300 + 50 = 950
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GDP = 400 + 200 + 300 + 50 = 950
๐ช Market Structures
Perfect Competition:
Many buyers and sellers, identical products.
Monopoly:
One seller controls the market (e.g., water supply).
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