JAMB Economics 1995

D: Number of work force multiplied by the hours they work

Aggregate labour supply can be measured in labour-hours: the number of workers available multiplied by the hours each is willing to work. A headcount alone omits hours, so it does not fully measure the amount of labour available.

A: Internal economies of scale

Internal economies of scale arise within a firm as its own scale expands, such as specialisation or spreading overhead costs over more output. External economies arise from growth or improvements outside the individual firm, often across an industry.

C: economic rent

Economic rent is the payment a factor receives above its transfer earnings, the minimum needed to keep it in its present employment. For example, payment of N100 above transfer earnings of N70 contains N30 of economic rent.

B: 22 and 19

The second worker adds 46 minus 24 = 22 units to total output. Average product with five workers is total output divided by the number of workers: 95 divided by 5 = 19 units per worker. The required pair is therefore 22 and 19.

C: (AR × Q) − TC

Profit is total revenue minus total cost. Substituting TR = AR × Q gives profit = (AR × Q) − TC. Dividing total cost by output gives average cost, not profit.

B: an implicit cost

Implicit cost is the opportunity cost of using resources owned by the producer when no explicit cash payment is made. An owner using a building in the business gives up the rent that could have been earned by letting it to someone else.

D: shift of the demand curve

A change in a non-price determinant of demand, such as income or tastes, changes the quantity demanded at the same price. The whole demand curve shifts. A movement along a given demand curve instead results from a change in the good's own price.

D: price system

The price system coordinates decentralised decisions in a free market: relative prices signal scarcity and influence buyers and sellers. This identifies the allocation mechanism; efficient outcomes additionally require conditions such as competition and the absence of market failures.

A: 1.25

Quantity rises by 20/80 × 100 = 25%, while price falls by 5/25 × 100 = 20%. The magnitude of elasticity using the initial values is 25/20 = 1.25. Demand is elastic because this value is greater than one.

C: y > 200

Starting with 4 y − 300 > 500, add 300 to both sides to get 4 y > 800. Divide both sides by positive 4, keeping the inequality direction unchanged: y > 200. The boundary value y = 200 does not satisfy the strict inequality.

A: MC = MR

At an interior profit maximum, marginal revenue equals marginal cost, with marginal cost crossing marginal revenue from below. Below that output an extra unit adds more revenue than cost; above it the extra cost exceeds the extra revenue.

C: retailer

Retailers typically hold a variety of goods and sell them to final consumers in small quantities. Wholesalers mainly supply other businesses in larger quantities, while manufacturers make the goods.

B: A fixed rate of dividend and priority over ordinary shareholders in dividend payments

Preference shares ordinarily carry a specified dividend rate and priority over ordinary shares when dividends are distributed. This preference concerns shareholders' distributions; it does not give shareholders priority over the company's creditors.

C: their local services and longer hours of operation

Small shops can compete through convenient local access, personal service and flexible opening hours. These benefits give customers reasons to use them even where larger firms can obtain purchasing or other economies of scale.

B: they are expected to operate with the primary aim of making profits

Commercialisation requires a public enterprise to operate on commercial principles, aiming to cover its costs and earn a return. Ownership may remain public. Selling government ownership to private investors is privatisation, which is a different change.

C: The use of buffer stocks and stabilisation funds

A buffer-stock scheme buys produce during surplus periods and releases stocks during shortages. A stabilisation fund can finance these operations. Buying supports prices when supply is abundant, while selling can moderate sharp price rises during shortages.

B: are too young to compete in the world market

An infant industry is a newly developing industry that has not yet acquired the scale, skills or efficiency needed to compete with established foreign producers. The term describes its stage of development, not the age of its customers or the type of product it makes.

D: Machinery than workers

Capital intensity refers to a relatively high use of capital equipment per worker. A capital-intensive process therefore relies more heavily on machinery relative to labour than a labour-intensive process does; it is a ratio comparison, not a literal comparison of unlike unit counts.

B: Of economic depression accompanied by low capacity utilisation

During a depression with unused productive capacity, expansionary monetary policy can support borrowing, spending and investment. The objective is to help raise output and employment. Expansion during an inflationary boom can instead intensify price pressure.

A: Require increased special deposits

Requiring commercial banks to place more funds in special deposits at the central bank reduces funds available to support credit expansion. The other measures listed generally ease liquidity or borrowing conditions and are expansionary rather than restrictive.

B: Consumer price index

The consumer price index tracks changes in the prices of a representative basket bought by households. It is commonly used to indicate changes in the cost of living, although a fixed basket is not a perfect measure of every household's living costs.

A: totally by the consumer

With perfectly inelastic demand, consumers buy the same quantity even when price rises. The tax shifts supply upward by the tax per unit, and the price paid by consumers rises by that amount. Consumers therefore bear the entire tax burden in this model.

C: increase by N7 000

The student's allowance is a transfer rather than payment for current production, so it is not counted as newly earned national income. The N7,000 wage pays for productive work and is included. On the changes described, national income rises by N7,000, not by the difference between wage and allowance.

A: backward and forward linkages

Backward linkages connect a sector to suppliers of its inputs, while forward linkages connect it to industries using its output. Agriculture supplies raw materials to processing industries and buys industrial inputs such as tools and fertiliser, creating both types of linkage.

C: Demand and supply

In a freely floating foreign-exchange market, the exchange rate is determined by demand for and supply of currencies. Import payments, exports and capital flows affect those market forces. An administratively fixed exchange rate follows a different arrangement.

B: Promote international economic cooperation for the mutual benefit of all members

International economic organisations provide ways for their members to cooperate on shared economic issues. Their individual mandates differ, but the broad common purpose is mutual economic benefit through cooperation, rather than one particular lending programme or one-way trade flow.