2010 JAMB ECONOMICS PAST QUESTIONS AND ANSWERS

The question asks to identify the type of Economics paper being given. This is a standard question in examination setup to ensure students know the classification of their paper.

Economics studies human behavior concerning resource allocation, production, and income generation. It evaluates how choices affect supply and demand, pricing, and overall economic activity.

This question relates to a market concept where stock prices fall. It refers to “the invisible hand,” a term by Adam Smith to describe natural economic processes without government intervention.

The formula Σfx refers to the sum of frequency multiplied by the value of the observation. Given the values, one can easily calculate it using basic arithmetic to derive the correct total.

Standard deviation measures the dispersion or spread of a set of data points. It helps determine how data varies from the mean, useful in many statistical analyses.

The mean is a balancing point of a dataset, representing the average. Unlike the median or mode, it accounts for all data points and is widely used for analyses involving large datasets.

Mode is the most frequently occurring value in a dataset. In the case of dresses and shoes, the size that appears most often is the mode, representing popular trends or consumer preferences.

When demand is more elastic, consumers are more responsive to price changes, meaning the tax burden will largely fall on producers. This is a principle from elasticity theory in economics.

With elastic demand, a price increase leads to a drop in quantity demanded, meaning total revenue decreases for the producer. This reflects how price sensitivity influences sales.

Excess demand occurs when the price of a commodity falls below its equilibrium, creating a shortage. This can be caused by a decrease in supply, driving up demand relative to supply.

Consumer surplus is higher when demand is elastic, as consumers are more responsive to price reductions, resulting in more benefit from lower prices than when demand is inelastic.

Ordinal utility theory assumes that utility can be ranked, allowing for the comparison of preferences without requiring a specific numerical measurement of satisfaction.

The law explains that as a person consumes more of a good, the additional satisfaction or utility derived from each extra unit decreases, which is why demand curves typically slope downward.

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. In this case, the surplus is the difference between 120k and 80k for four oranges.

Factors like technology, population, and weather can shift the supply curve by altering production capabilities or the availability of goods in the market.

When the price elasticity of supply exceeds one, the supply is considered elastic. This means that producers can increase production significantly when prices rise.

Jointly supplied goods are produced together, meaning that the supply of one good is tied to the supply of another. A by-product is a secondary output of a production process.

In a perfectly competitive market, the price is determined by market forces, where the collective supply and demand of many firms and consumers set the equilibrium price.

Governments may introduce maximum price controls to prevent price gouging and reduce the burden on consumers, particularly during inflationary periods.

When marginal product exceeds average product, the average product is rising. However, once marginal product falls below average product, the average product starts to decrease.

Economies of scale occur when increasing production leads to a reduction in average cost, benefiting firms as they expand their operations and reduce per-unit costs.

Diseconomies of scale are reflected when the long-run average cost curve rises. This suggests that as production increases, inefficiencies in the firm’s operations begin to emerge.

Elastic supply occurs when firms are able to adjust their production easily in response to price changes. Free entry and exit allow firms to increase or decrease production quickly.

In monopolistic competition, firms sell differentiated products and have some degree of pricing power. Unlike in perfect competition, no single firm dominates the market.

The demand curve for factors like labor or capital slopes downward, reflecting the principle of diminishing returns. As more of a factor is employed, its marginal value decreases.

This practice is known as collusion, where firms secretly agree to set prices or limit production in a way that benefits them collectively, often at the expense of competition.

Taxes in national income accounting are based on the level of income. A higher income leads to higher taxes in most progressive tax systems.

A decrease in aggregate spending typically results in lower demand across the economy, leading to a slowdown or recession, which reduces economic activity and output.

Using the multiplier effect formula, a marginal propensity to consume of 0.7 with an increase in government spending of ₦150m will lead to a higher equilibrium national income.

Money serves as a medium of exchange, facilitating trade by eliminating the need for bartering. This function makes specialization and the division of labor more efficient.

Buying treasury bills reduces the money supply, helping the central bank control inflation and stabilize the economy by removing excess liquidity from the system.

The velocity of money refers to how often a unit of currency is used in transactions over a period of time. It is calculated by dividing nominal GDP by the money supply.

Commercial banks primarily function to facilitate transactions, including granting loans and maintaining customers’ accounts, which helps in economic development and financial stability.

Increasing government expenditure and reducing taxes stimulates demand and creates jobs, which can reduce unemployment by encouraging investment and consumption.

The Nigerian government typically employs zero budgeting to allocate resources based on the immediate needs of sectors, which helps in addressing gaps in employment distribution.

National development plans often fail due to poor implementation strategies and lack of sufficient funding, leading to incomplete or inefficiently executed projects.

Agricultural policies aim to increase food production and ensure food security for the population, which also supports broader goals like employment and economic growth.

Subsidies on farm inputs such as fertilizers and seeds can make farming more affordable and productive, helping to increase agricultural output in Nigeria.

Localization refers to the concentration of firms within a particular industry in a specific area, benefiting from close proximity to resources and markets.

Governments in developing nations direct industry locations to ensure balanced regional development, economic growth, and to address imbalances in resource distribution.

Overreliance on imported petroleum products can result in supply disruptions and economic instability, as Nigeria is vulnerable to external market fluctuations.

Limited liability companies (LLCs) in Nigeria can have a maximum of 50 shareholders, which helps to limit ownership and liability for individuals involved in the company.

Producers are motivated primarily by the desire to generate profit, using inputs efficiently to create goods and services that satisfy market needs.

The population growth rate is calculated based on the increase in population compared to the previous year, highlighting the rate of demographic expansion.

The working population percentage is derived by dividing the number of working individuals by the total population, giving a sense of labor force participation.

In free trade zones, member countries eliminate tariffs and trade barriers within the zone, promoting smooth and efficient economic activity among nations.

Imports are recorded as debits on the balance of payments, reflecting the outflow of funds from Nigeria to Japan for the vehicles.

The African Development Bank (ADB) aims to promote economic and social development in African countries through financial support and technical assistance for development projects.

The availability of resources, technological know-how, and the cost of production all influence how goods and services are produced in an economy.

The demand for labor is closely tied to its marginal productivity. The more productive labor is, the more valuable it becomes to employers, driving higher hiring rates.