JAMB Economics 1993

20 reviewed questions with answers and explanations.

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Question 1

It is impossible to satisfy all human wants because

  1. Areas of fertile land are very limited
  2. Oceans and seas limit land space for farming
  3. Resources are not equitably distributed
  4. Available resources are limited
Answer and explanation

D: Available resources are limited

Available resources are limited relative to wants, so not every want can be satisfied. Scarcity persists even with fair distribution of existing resources.

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Question 8

An accurate census is important to a country because it helps

  1. In solving unemployment problem
  2. To ensure equitable population redistribu tion relative to natural resources
  3. In deciding on the creation of more local governments
  4. In providing a sound basis for formulating development policy
Answer and explanation

D: In providing a sound basis for formulating development policy

A census measures population size, distribution and characteristics. This information supports development-policy design and planning of public services.

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Question 9

If 502.75 million tonnes of grains are consumed annually by a population of 88.5 million people, the per capita grains consumption will be

  1. 6.00 tonnes
  2. 5.68 tonnes
  3. 0.60 tonnes
  4. 0.57 tonnes
Answer and explanation

B: 5.68 tonnes

Per-person consumption is502.75/88.5=5.68079 tonnes. The million units cancel; rounding to two decimal places gives5.68 tonnes.

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Question 10

In the theory of production and cost, the average total cost of a firm is minimized when the marginal cost curve cuts the average total cost at its.

  1. Lowest point
  2. Middle point
  3. Maximum point
  4. Downward-sloping section
Answer and explanation

A: Lowest point

In the usual smooth cost model, marginal cost intersects average total cost at its minimum. Marginal cost below the average pulls it down; above it, it raises it.

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Question 13

For a profit-maximising firm taking the market wage as given, the wage at an interior optimal employment level equals the

  1. Marginal revenue of the enterprise
  2. Marginal revenue product of labour in the enterprise
  3. Average revenue of the enterprise
  4. Marginal cost of production
Answer and explanation

B: Marginal revenue product of labour in the enterprise

A wage-taking firm hires to the point where another worker’s marginal revenue product equals the wage. This balances extra revenue with extra labour cost.

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Question 18

In the standard uniform-price monopoly model with downward-sloping demand and an interior profit maximum, a distinctive feature compared with perfect competition is that

  1. Price is always equal to marginal cost
  2. Supply is always equal to demand
  3. Price is always higher than marginal cost
  4. There are always many buyers and many sellers
Answer and explanation

C: Price is always higher than marginal cost

For uniform-price monopoly, marginal revenue is below price. At an interior profit maximumMC=MR, so price exceeds marginal cost.

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Question 20

At outputs1,2,3,4,5 units, total revenues areN20,N38,N54,N68,N80; average-revenue entries20,19,–,–,16; marginal-revenue entries–,18,16,–,–. What is average revenue at3 units?

  1. N16.00
  2. N18.00
  3. N20.00
  4. N24.00
Answer and explanation

B: N18.00

Average revenue equals total revenue divided by output. At3 units, it is54/3=N18 per unit.

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Question 21

At outputs1,2,3,4,5 units, total revenues areN20,N38,N54,N68,N80; average-revenue entries20,19,–,–,16; marginal-revenue entries–,18,16,–,–. What is marginal revenue when total revenue reachesN80?

  1. N12.00
  2. N14.00
  3. N16.00
  4. N18.00
Answer and explanation

A: N12.00

The fifth unit raises total revenue fromN68 toN80. Its marginal revenue is80−68=N12.

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Question 22

Which wholesaler functions spare retailers from carrying large stocks? I: Breaking bulk. II: Packing smaller containers. III: Providing information. IV: Granting credit.

  1. I and II
  2. I and IV
  3. II and III
  4. I, II and IV
Answer and explanation

A: I and II

Breaking bulk and packing smaller quantities let retailers buy manageable lots. Credit and information serve other functions rather than physically dividing stock.

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Question 23

Production is said to be completed when

  1. Goods and services reach the consumers
  2. Prices of goods or services are determined
  3. Goods are sold to the wholesaler
  4. Goods are packaged
Answer and explanation

A: Goods and services reach the consumers

In the broad production-and-distribution chain, goods and services must reach users to provide their intended utility. Packaging and wholesaling are intermediate stages.

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Question 27

Wheat grows best in

  1. Tropical climate
  2. Temperate climate
  3. Equatorial climate
  4. Hot desert
Answer and explanation

B: Temperate climate

Wheat is suited to temperate conditions. It also grows in suitable cool tropical highlands or winter seasons, while hot humid conditions are generally unfavourable.

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Question 32

The money market is a financial market that special izes in the provision of

  1. Short-term loans and advances
  2. Medium-term loans
  3. Long-term loans
  4. Venture capital for development projects
Answer and explanation

A: Short-term loans and advances

Money markets specialise in short-term funding. Medium- and long-term finance and equity capital primarily belong to capital markets.

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Question 35

Economic development differs from economic growth because the former

  1. Is not concerned with growth parameters
  2. Affects only poor people
  3. Also includes efficient distribution of the benefits of economic growth
  4. Is an increase in production of goods and services
Answer and explanation

C: Also includes efficient distribution of the benefits of economic growth

Development includes growth and broader improvements in living conditions and distribution of benefits. Growth alone concerns increased production.

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Question 36

Which of the following can be considered as being outside the objectives of public finance?

  1. The allocation of resources to various sectors of the economy
  2. The objectives of even distribution of income and wealth
  3. The achievement of economic stability
  4. The deregulation of the economy
Answer and explanation

D: The deregulation of the economy

Allocation, distribution and stabilisation are conventional public-finance objectives. Deregulation is a policy instrument rather than one of these core objectives.

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Question 38

Which are potential disadvantages of direct taxation? I: Disincentive to hard work. II: Assessment and collection difficulties. III: Imperfect tax assessment.

  1. I and II
  2. I and III
  3. II and III
  4. I, II and III
Answer and explanation

D: I, II and III

Direct taxes can affect work incentives and create assessment and collection difficulties. All three are potential disadvantages depending on design and administration.

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Question 41

The best index for international comparison of standards of living is the

  1. Gross national product
  2. Net national income
  3. Per capita income
  4. Gross national income
Answer and explanation

C: Per capita income

Income per person adjusts for population size, making it more informative than total income here. Purchasing power and distribution still matter for living-standard comparisons.

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Question 43

In the Keynesian model, a shortfall of aggregate demand from spending required at full-employment income is called the

  1. Inflationary gap
  2. Income gap
  3. Unemployment
  4. Deflationary gap
Answer and explanation

D: Deflationary gap

A deflationary gap is insufficient planned spending to sustain full-employment output. It represents demand deficiency in the standard Keynesian model.

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Question 44

Which are potential ECOWAS benefits for Nigeria? I: Comparative-cost trade opportunities. II: Larger markets for industries with decreasing costs. III: Competition for domestic monopoly firms.

  1. I and II only
  2. I and III only
  3. II and III only
  4. I, II and III
Answer and explanation

D: I, II and III

Integration can support comparative-advantage trade, larger markets for economies of scale and competition against domestic monopolies. All three are potential benefits.

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Question 49

Tariffs on imports are meant to

  1. Prevent a country from becoming a dumping ground for foreign goods
  2. Discourage exports
  3. Encourage exports
  4. Increase the level of external dependency
Answer and explanation

A: Prevent a country from becoming a dumping ground for foreign goods

An import tariff raises the domestic price of affected foreign goods and can protect domestic producers against import competition. Protection is one purpose of tariffs; tariffs may also raise revenue. They do not ordinarily encourage dependence on foreign goods.

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Question 50

The international Bank for Reconstruction and Development is important to developing countries because it

  1. Gives loans to member countries for legal proceedings
  2. Offers grants and aid for defence
  3. Offers loans to member countries for socioeconomic activities
  4. Offers grants and aid to finance luxury projects
Answer and explanation

C: Offers loans to member countries for socioeconomic activities

IBRD supports development through lending and related services for eligible member countries. Its financing can support infrastructure, public services and other economic and social investments, rather than having defence or luxury projects as its development purpose.

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