(a) Define increase in supply. [4 marks] (b) With the aid of diagrams, explain the
ECONOMICS
WAEC 2010
(a) Define increase in supply. [4 marks]
(b) With the aid of diagrams, explain the effect of an increase in the supply of fish on the price of beef [16 marks]
Explanation
(a) An increase in supply is an improvement In supply conditions such that more will be offered for sale at each particular price.
(b) Candidates are expected to include the following steps in the analysis
(1) An increase in the supply of fish. other things being equal, will reduce the price of fish.
(2) Fish Will become relatively cheaper than beef.
(3) As a result, the demand for beef will decrease.
(4) Given the supply of beef the price of beef Will fall.
(5) The extent to which the price of beef, will fall depends on the price elasticity of supply and demand.
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