2011 JAMB ECONOMICS PAST QUESTIONS AND ANSWERS

This question checks which type of paper is being administered. It ensures that students understand the classification of the exam, which could help them prepare for different structures.

To control inflation, increasing productivity helps meet demand with more goods and services, preventing price hikes. This addresses inflation without constraining overall economic growth.

The production possibility curve (PPC) assumes limited resources but doesn’t account for technological advancements, which can allow economies to produce more than the curve suggests.

The arithmetic mean is sensitive to extreme values (outliers), which can distort the data, making it unrepresentative for certain datasets like income distribution or wealth.

Demand patterns are largely driven by consumer sovereignty, meaning consumers determine what is demanded based on preferences, which in turn drives market production.

Consumer surplus is the benefit a consumer receives when they pay less than what they were willing to pay for a good. It is the difference between the price consumers are willing to pay and what they actually pay.

Competitive demand refers to goods that are substitutes, where an increase in demand for one good leads to a decrease in demand for another, like tea and coffee.

A normal demand curve typically slopes downward, showing the inverse relationship between price and quantity demanded. A kinked or abnormal demand curve behaves differently based on market factors.

The median is the middle value in an odd-numbered dataset, which separates the higher half from the lower half. It is useful for datasets with outliers that might skew the mean.

An increase in demand, with supply remaining constant, will result in a higher equilibrium price and quantity, as more people are willing to buy the good at a higher price.

The total output reaches its maximum when marginal product (MP) equals zero. At this point, no additional output can be produced, indicating the optimal production level.

Price elasticity of supply measures how responsive the quantity supplied of a good is to a change in price. The formula is Δ% quantity supplied / Δ% price, which can be derived from the table.

The marginal rate of substitution (MRS) refers to the rate at which a consumer is willing to trade one good for another. At equilibrium, MRSxy equals the price ratio between the goods.

Minimum price legislation (price floors) leads to a surplus because producers supply more at the higher price, but consumers demand less, creating an imbalance in the market.

Ordinal utility uses ranking to measure satisfaction. Unlike cardinal utility, which assigns numerical values, ordinal utility only ranks preferences without quantifying the level of satisfaction.

When the supply curve is elastic, a price increase leads to a more than proportional increase in quantity supplied, increasing total revenue for the firm.

In perfect competition, the optimal output occurs when marginal cost (MC) equals average cost (AC), ensuring the firm maximizes profit without increasing costs unnecessarily.

Diseconomies of scale occur when a firm’s costs increase as output increases, often due to inefficiencies such as coordination problems or increased complexity.

The law of variable proportions is a short-run concept, describing how changing one factor of production while keeping others constant affects output. It does not apply in the long run.

The optimal point of production is where the firm’s marginal cost (MC) intersects with marginal revenue (MR). At this point, the firm achieves the highest profit.

If real income increases while nominal income stays the same, inflation has likely decreased, causing the purchasing power of the currency to increase.

Oligopoly is a market structure with few firms that dominate the market, leading to limited competition. Firms in this structure often have pricing power and influence over market trends.

Average total cost is calculated by dividing total cost (TC) by the quantity produced. It reflects the per-unit cost of production for a specific output level.

Total cost (TC) is the sum of fixed and variable costs at a given output level. It reflects the firm’s total expenditure in producing 20 units.

A monopolist earns profit when the price is above average cost (AC). If the price is equal to average cost (AC), the firm will break even, eliminating profit.

The consolidation of banks is aimed at increasing the capital base, which improves financial stability and enables banks to better withstand economic shocks.

If money supply increases without a corresponding increase in output, inflation occurs as the demand for goods outstrips supply, leading to price increases.

Government spending in national income accounting includes all expenditure on goods and services, including salaries for public servants, infrastructure projects, and other services.

If aggregate demand falls short of total output, national income will decrease. Producers cut back on production to align with lower demand, reducing overall economic activity.

During the barter system, goods and services were exchanged directly, but commodities like precious metals were often used as a medium of exchange.

Economic development is typically marked by an increase in per capita income, which indicates improvements in the standard of living and economic growth.

GDP at market price is a common indicator used to measure economic growth, representing the total value of goods and services produced in an economy over a period of time.

Deficit financing occurs when a country borrows to finance government spending, typically to stimulate economic activity, especially when there is a shortfall in tax revenue.

The deflationary gap occurs when actual output is less than potential output, indicating that the economy is not operating at full capacity and may lead to lower national income.

In this context, X represents the recessionary gap, where the actual output is below the economy’s potential output, indicating an economic downturn.

The import-substitution strategy focuses on encouraging domestic production to replace imported goods, thereby fostering economic independence and industrial growth.

Upstream oil activities include the exploration and extraction of crude oil, while downstream involves refining and marketing the products.

Agricultural production is limited in Nigeria due to factors like poor implementation of policies, lack of infrastructure, and inadequate investment in the sector.

The Nigerian National Petroleum Corporation (NNPC) oversees the development of the oil sector, including exploration, production, and distribution of oil and gas resources.

Heavy investment in agriculture improves productivity, ensuring sufficient food production, creating jobs, and stabilizing the market for agricultural commodities.

Government can promote industrial development by investing in efficient infrastructure, which reduces costs and makes businesses more competitive in both local and international markets.

The balance of payments records all economic transactions between a country and the rest of the world, including trade in goods and services, and transfers of capital.

Privatization involves the transfer of state-owned enterprises to private ownership, which aims to increase efficiency, competition, and profitability in the economy.

The multiple exchange rate system occurs when a country uses more than one exchange rate, such as an official rate and a parallel market rate, for different transactions.

The Malthusian theory, which predicts that population growth will outstrip food production, is less relevant in modern economies due to technological progress and government intervention.

An optimum population is one where the workforce and resources are balanced, leading to the highest economic output and improved standard of living.

Horizontal mobility refers to the movement of workers between similar levels in different industries, which could be driven by personal choice or market opportunities.

The wage rate is the amount of money a worker earns per hour of work. It is a key factor in determining labor costs and the distribution of income in the economy.

Trade occurs because of comparative advantage, where countries specialize in producing goods at a lower opportunity cost, leading to mutually beneficial exchanges.

The World Trade Organization (WTO) helps facilitate international trade by reducing trade barriers, promoting free trade, and providing a platform for resolving trade disputes.