TRADE UNION
DEFINITION: A trade union is an association of workers in a particular firm or industry aimed at promoting the interests or welfare of its members in such areas as better wages, better conditions of work (e.g. working hours).
EMPLOYERS’ ASSOCIATION
DEFINITION
An employers’ association is a voluntary association of employers in a particular firm or industry to represent the interest of members in areas such as wages, labour markets, government polices on employment and settlement of trade disputes. Employers’ associations are also called trade associations. Examples of employers’ associations are manufacturers’ association, Private Medical Practitioners’ associations, Bar Association (i.e. association of lawyers, e.g. Ghana Bar Association), and Private Schools Proprietors’ Association
UNEMPLOYMENT
DEFINITION
Unemployment refers to a situation whereby people who are within the working age and are able and willing to work at the going wage rate are unable to find work and therefore remain idle or unutilized
Unemployed workers are, therefore, those who are willing and able to work and are looking for work but do no have jobs
CYCLICAL UNEMPLOYMENT
DEFINITION: Cyclical unemployment is associated with the deflationary phase of a business cycle when nearly all forms of production are adversely affected. It is caused by a general decline or deficiency in the effective aggregate demand for goods and services resulting in the laying off of workers. This situation, in turn, further reduces purchasing power thereby worsening the general deficiency in demand and then deepening the deflationary situation to cause further laying off of more workers.
It is a type of cycle hence the name cyclical unemployment.
Cyclical unemployment is more a feature of advanced economies which occasionally experience severe economic recession or depression.
STRUCTURAL UNEMPLOYMENT
DEFINITION: Structural unemployment is unemployment which arises from changes in demand conditions for goods and services or changes in technology.
In the event of changes in a country’s industrial structure leading to firms switching from one kind of production to another, labour, being immobile becomes unemployed as it cannot quickly supply the new skills being demanded by the emerging system of production.
An example is untrained teachers becoming unemployed as demand has shifted to trained teachers.
Another example is a fall in demand for the services of copy typists making them unemployed due to the emergence of computers and a shift to the demand of computer services instead.
FRICTIONAL UNEMPLOYMENT
DEFINITION: Frictional unemployment is the type of unemployment that occurs as workers temporarily become jobless as they take steps to search for jobs of their choice having decided to change jobs, or having just completed training or school, or having completed an existing job (e.g. painters, masons, carpenters, electricians etc.).
It is also called ‘search unemployment’.
Frictional unemployment results from the ‘friction’ which reduces the speed at which supply of labour can adjust to meet demand for labour.
SEASONAL UNEMPLOYMENT
DEFINITION: Seasonal unemployment is unemployment caused by a fall in demand for labour at certain times of the year.
Examples of seasonal unemployment are outdoor construction workers becoming temporarily jobless during the rainy season, farmers during the dry season, vendors of certain goods and services associated with only festive occasions becoming temporarily unemployed in the off – festive season or period etc.
RESIDUAL UNEMPLOYMENT
DEFINITION: It is unemployment suffered by persons who are considered unemployable due to the fact that they are physically or mentally challenged.
DISGUISED UNEMPLOYMENT OR UNDER-EMPLOYMENT
DEFINITION: Disguised unemployment is a situation where labour or any other factor of production, though considered to be employed, is so under – utilized that the absence of some units of labour from the production process will not have any effect on the level of production. In other words, the marginal productivity of labour is zero.
URBAN UNEMPLOYMENT
DEFINITION: Urban unemployment is unemployment that results from rapid urbanization as a result of the movement of people, especially young school-leavers, from the rural areas to urban centres (rural-urban migration) in search of non-existent modern, formal sector jobs.
Such jobs are often largely non-existent. And in many cases, the job seekers hardly have the required training or skills. These and other factors help to create unemployment in cities and large towns.
VOLUNTARY UNEMPLOYMENT
DEFINITION: Voluntary unemployment is unemployment resulting from a deliberate choice, on the part of persons who are qualified and able to work, not to work.e.g. workers on strike.
THE PRICE MECHANISM/THE PRICE SYSTEM
DEFINITION
The price mechanism or the price system refers to the free interaction between buyers (demand) and sellers (supply) to determine what is bought and sold.
The price system operates or functions in the market economy where prices serve as means by which resources and goods or services are distributed or allocated by a central planning committee.
PRICE
DEFINITION: Price is the amount of money given or asked for when goods or services are bought or sold.
DEMAND
DEFINITION: Demand is the amount or quantity of a commodity or services which consumers are willing and able to buy at various prices per time period, all other things being equal or held constant.
DEMAND SCHEDULE
MEANING: Demand schedule is a table which shows the quantities of a commodity bought at different or various prices over a period of time, say, daily, weekly, monthly or yearly.
INDIVIDUAL DEMAND
MEANING: Individual demand is the quantity of a commodity that an individual or household purchases at various prices per time period.
MARKET DEMAND
DEFINITION: Market Demand is the sum of the individual demands of all households (i.e. consumers) in the market at various prices per time period.
DEMAND CURVE
DEFINITION: A demand curve is a line or curve that shows the relationship between prices and the quantities bought of a commodity by an individual consumer per time period.
DEMAND FUNCTION
DEFINITION: Demand function is a mathematical representation of quantity demanded of a commodity over a particular range of prices per unit of time.
Simply put, demand function is a mathematical equation that shows the relationship between the quantities demanded of a commodity and a particular range of prices per time unit
Example of Demand Function
- Qdx = 40 – 3px
- Qdx = 40 –
Px
In each of the two demand functions above,
Qdx = Quantity demanded of commodity x
Px = Price of commodity x
CHANGE IN QUANTITY DEMANDED ( PRICE INDUCED DEMAND)
MEANING: A change in quantity demanded means an increase or a decrease in quantity demanded of a particular commodity by consumers as a result of a change in the price of that commodity.
A change in quantity demanded is also referred to as price-induced demand.
This is because a change in quantity demanded is caused solely by a change in the price of the commodity, while other factors that affect demand remain unchanged.
- An increase in Quantity Demanded, i.e. expansion/Extension in Demand.
- A Decrease in Quantity Demanded, i.e. Contraction in Demand
- A change in Quantity Demanded results in a Movement along the same Demand Curve
CHANGE IN DEMAND (A SHIFT IN DEMAND)
MEANING: A change in demand refers to an increase or decrease in the number of units of a particular commodity that can be purchased while price remains constant.
A change in demand is due to changes in the conditions of demand (i.e. the factors determining demand, except price, of the commodity).
A change in demand results in a:
- New demand schedule
- New demand curve, i.e. shift in the demand curve either to the right (increase in demand) or to the left (decrease in demand).
AN INCREASE IN DEMAND
DEFINITION: An increase in demand refers to a situation where there is a greater quantity of a commodity demanded by consumers at each price of the commodity per time period as a result of favourable or positive changes in any of the conditions of demand (i.e. the determinants of demand except price of the commodity) e.g. taste and fashion, disposable income, whether conditions, etc.
A DECREASE IN DEMAND
DEFINITION: A decrease in demand refers to a situation where there is a smaller quantity of a commodity demanded by consumers at each price of the commodity per time period. This is the result of unfavourable or negative changes in any of the conditions of demand (i.e. the determinants of demand except price of the commodity) e.g. taste and fashion, disposable, income, whether conditions etc.
DERIVED DEMAND
MEANING: Derived demand is the demand for a commodity not for direct consumption or for its own sake but for the production of another commodity or other commodities
***** In general, the demand for all raw materials or all factors of production (i.e. land, labour, capital and entrepreneurship) is a derived demand for finished or final goods. For example, the demand for cassava for the purpose of producing “gari” or starch is derived demand. Cassava, here, is not demanded for direct consumption, it is demanded for the purpose of making “gari” or starch. That is, the demand for “gari” or starch calls for the demand for the cassava. Therefore the demand for cassava is derived from the demand for “gari” or starch.
*****Generally, a change in demand for a commodity will lead to a change in the demand for the raw material or factors of production used in producing that good and, hence, a change in the price of the raw material or those factors of production.
COMPETITIVE DEMAND
MEANING: Competitive demand is the demand for two or more goods which satisfy the same want and for which reason one of them can be used to replace the other or others.
Such goods are called substitutes and may be either perfect substitutes such as Milo and Bournvita, beef (cow meat) and mutton (sheep meat), meat and fish, etc or imperfect substitutes such as hydro-electric power and lantern as hydro – electric power performs more functions than just provision of light. Since such goods can serve the same purpose, they are said to be competing for consumer’s income or money. In general, a change in the price of one good e.g. Bournvita, leads to a change in the demand for its substitute, say, Milo and, as a result, a change in the price of that substitute (e.g. Milo).
JOINT OR COMPLEMENTARY DEMAND
MEANING: Joint or complementary demand is the demand for two or more commodities which are used or consumed together to obtain a given level of satisfaction.
Such goods are called complements and they may be either perfect complements (such as cars and fuel, lantern and Kerosene, torchlight and batteries in which case the consumer cannot use one of the commodities without the other) or imperfect complements such as radio and battery or kenkey and fish.
A consumer can do without one as there are substitutes or alternatives.
For example, a consumer can use electric power for his radio instead of batteries whereas kenkey can be eaten with meat or sugar instead of fish.
Generally, however, emphasis is on perfect complements for examination purposes. In general, a change in the price of one affects the equilibrium price and quantity supplied or demanded of the other.
COMPOSITE DEMAND
MEANING: Composite demand is the total demand for a commodity for more than one purpose or use. For instance individual buyers of cassava may demand the commodity for various purposes such as fufu, gari, starch, etc. The total (the sum) of all individual demands for a commodity for the various uses or purposes that commodity serves is the composite demand for that commodity.
Generally, a change in demand for a commodity for one purpose will have an effect on the total (or composite) demand for that commodity and hence, on the price of that commodity.
For example, shortage of starch for export will cause an increase in demand for cassava for making starch. This will have an effect of increasing the total demand (i.e. the composite demand) for cassava and, hence, an increase in the equilibrium price of cassava.
As the price of cassava increases, producers of cassava will eventually increase the supply of cassava to meet the increased demand for cassava since, at a higher price, more of a commodity is supplied.
ELASTICITY OF DEMAND
DEFINITION: Elasticity of demand refers to the degree of responsiveness of quantity demanded to changes in the price of a commodity or income of the consumer or the price of a related (or another) commodity be it a substitute or a complement
PRICE ELASTICITY OF DEMAND
DEFINITION: Price Elasticity of Demand is the degree (or extent) of responsiveness of quantity demanded to a change in the price of a commodity.
POINT ELASTICITY OF DEMAND.
DEFINITION: Point elasticity of demand measures the percentage or proportionate change in quantity demanded as a result of a very small proportionate or percentage change in price.
ARC OR MIDPOINT ELASTICITY OF DEMAND.
DEFINITION: Arc elasticity of demand measures the average elasticity of a range of points or a portion or an arc on a demand curve.
CROSS ELASTICITY OF DEMAND
MEANING: Cross elasticity of demand is the degree or extent of responsiveness of quantity demanded of one commodity to a change in the price of another (related) commodity, be it a substitute or a complement.
Go to the Next Page
The definition of supply and a lot more Economics terms associated with it can be found by clicking the next page button below.
