I was watching TV and realized that people kept misusing some basic economic terms! So, here’s a list to help Nigerians who’ve forgotten their basic Economic terms (or who failed it!). They’re all explained using the everyday Nigerian scenario: the average Nigerian and the rich corrupt Nigerian (we all know one ). We’ll abbreviate this to CGO (Corrupt Government Official). After all, we seem to love obscure acronyms in this country.

I’ve also broken it down into levels, so if you’re unable to understand the first level, maybe starting Secondary School again might not be a bad idea. 😉 Kiddin! If you don’t get it, click on the subtitles. They lead to a more ‘academic’ explanation of these terminologies. And if you still don’t get it, well….

BEGINNER’S LEVEL:

Opportunity cost:

Citizen’s Version: Choosing to eat Eba instead of Pounded Yam at Mama Put’s eatery. The opportunity cost is Pounded Yam.

CGO’s Version: Choosing Between a mansion in Abuja or a mansion in Lagos (Easy. There is no opportunity cost. With the amount of money stolen, they just buy both of them!)

Law of Demand:

Citizen’s Version: As the price of the meat increases, the lower the number of meats in the pepper soup ordered.

CGO’s Version: The higher the price of Jets, the number of jets demanded remains the same.

Law of Supply :

Citizen’s Version: As the price of the meat increases, the more meats are supplied (the meat gets smaller too!)

CGO’s Version: The higher the price of Range Rovers, the higher the number of Range Rovers supplied.

Market equilibrium:

Citizen’s Version: occurs when the amount the taxi driver demands is equal to the amount one is willing and able to pay.

CGO’s Version: occurs where demand (and amount of cash in State coffers) for new houses, cars, and jets meet the supply of these ‘necessities’.

INTERMEDIATE LEVEL:

Diminishing Marginal Returns:

Remember when you saw that road open years ago? Hardly any cars on it. Diminishing Marginal Returns occurs when there is a decrease in the satisfaction of using the road while the number of cars on the road increases and the width/number of the road stays constant. Go to Lagos (and recently, Abuja) and you’ll completely understand this. The traffic is insane! Some enterprising folks have turned these places to markets. Given my simulation of the traffic in Abuja over the next year, I’ll start investing in selling mattresses and pillows on the streets.

NOTE: Who can guess why this isn’t the best example of diminishing marginal returns? Diminishing marginal returns starts off as increasing. I personally would like a road all to myself! (yeah.I’m selfish) The point at which I see someone else’s car on the road, the returns being to fall..well, for me it does.. Maybe a better example would be eating pounded yam(all the guys with big belles, stop licking your lips). You start with one wrap, finish it and you want another. By the time you get to your third one, you probably won’t want to even look at another wrap of pounded yam(except you’re guys with big belles). This is specifically referred to as Diminishing Marginal Utility.

Comparative Advantage:

Let’s assume your state sells cows and cars. Another state (Let’s say Lagos) also sells cows and cars. Now, your marginal cost of rearing a goat is lower than the Lagos’ marginal cost of rearing a goat too. And on the reverse, your state’s marginal cost of making a car is greater than Lagos’ marginal cost of making that same car. You achieve comparative advantage when you focus on rearing and selling cows, while Lagos focuses on making and selling cars.

I.T.K (I TOO KNOW) LEVEL:

Privatization, Deregulation, Subsidization and the rest of the big name ‘ions’ you hear on the news… :

You don’t need the definition of these. Just understand that after these policies are enacted, a government official somewhere gets more money in his account than you’ll get after diligently and honestly working for 10 years.

So as you can tell from the Beginner’s list, Nigeria is an interesting place when you’re very rich. Most of the rules of Economics don’t apply to rich and corrupt government officials . Heck, even the Rule of Law doesn’t apply! I’m sure I’m missing a number of economic terminologies. Let me know in the comments! Oh. Please don’t forget to share on Facebook and Twitter! Cheers!