JAMB Economics 1999

C: N4,670

Total pay is 3 × N5,500 + 4 × N3,300 + 2 × N5,000 + N7,000 = N46,700. There are 3 + 4 + 2 + 1 = 10 employees, so the mean is N46,700/10 = N4,670 per employee.

C: the house

Opportunity cost is the next-best alternative forgone. Because Abubakar chooses the car instead of the house, the house is what he gives up. The purchase price and running cost are money costs, which are distinct from identifying the forgone alternative.

A: increasing relative costs

The usual bowed-out production possibility frontier reflects increasing opportunity cost: producing more of one good requires giving up progressively more of the other. This occurs when resources differ in suitability for the two activities; constant opportunity cost would give a straight frontier.

D: value judgements

Normative economics makes value judgements about what ought to happen, such as which policy is fair or desirable. Positive economics instead describes or explains what happens and develops claims that can be tested against evidence.

B: Government decisions

In a planned economy, the central planning authority makes the main decisions about which goods and services to produce. Consumer preferences may inform planning, but they do not allocate resources primarily through decentralised market prices.

D: increasing returns to scale.

When output can increase more than proportionately as all inputs expand, unit costs can fall. This is associated with increasing returns to scale and the downward part of long-run average cost. Diminishing returns to one variable input is a short-run concept.

A: allocate scarce resources among competing uses

Relative prices signal scarcity and help coordinate buyers' and sellers' decisions. They guide resources among competing uses. This allocation role does not guarantee equal incomes or remove every technological and resource constraint.

B: 6,250,000

Tertiary production consists of services. Add transport and communication 2,000,000, distribution 3,000,000 and administration 1,250,000 to obtain 6,250,000 people. Agriculture and mining are primary activities, while manufacturing and construction are secondary.

D: heterogeneity of products.

Product differentiation means sellers offer goods that buyers regard as different, giving firms some influence over their own prices. This is one source of imperfect competition. Perfect competition instead assumes a homogeneous product among sellers.

B: Taker

An individual perfectly competitive firm is too small to influence the market price. It accepts that price and chooses its output accordingly, so it is a price taker rather than a price maker.

C: N35

Total cost equals fixed cost plus variable cost: N1,000 + N2,500 = N3,500. Dividing by 100 units gives average total cost of N35 per unit. Both types of cost must be included.

C: It limits opportunities for large-scale agricultural production

Scattered small plots can make mechanisation and coordinated large-scale operations difficult. Fragmentation can therefore limit economies of scale in farming. This explains a possible effect of that tenure arrangement rather than attributing every agricultural difficulty to land ownership.

B: encourage the production and processing of export commodities

An export processing zone is intended to encourage production and processing for external markets, often through infrastructure and special operating arrangements. Being near a port or handling imported inputs can support that purpose but is not its primary objective.

D: Shell-BP

Shell's Nigerian operation drilled the successful Oloibiri well in 1956. Its historical timeline records the name Shell D'Arcy at the January discovery and the change to Shell-BP in April 1956. Shell-BP is therefore the company represented among these options.

A: external economies

External economies arise from an industry's or locality's wider development, such as a shared skilled labour pool, specialised suppliers and transport links. These benefits can reach several nearby firms, unlike internal economies arising from a single firm's own expansion.

C: a situation in which local industries are set up to produce goods formerly imported

Import-substitution industrialisation develops domestic industries to make goods previously imported. Its defining feature is replacing foreign production with local production, not merely banning imports or distributing industry evenly among regions.

A: per capita output is maximized

Optimum population is the population size that maximises output per person for given resources and technology. It is not necessarily the size at which total output is highest, and it does not require zero population growth.

B: an economic rent

Economic rent is the part of a factor's payment above its transfer earnings, the minimum required to keep it in its present employment. The worker's excess above that minimum is therefore economic rent.

B: N19,000 million

Add income earned from current production: wages 9,000 + salaries 7,000 + rent and interest 1,500 + profits 1,500 = N19,000 million. Pensions and unemployment or social benefits are transfers and are excluded from this factor-income total.

C: accept demand deposits

In the standard bank/non-bank distinction, non-bank intermediaries can provide finance or sell investment products but do not operate ordinary demand-deposit current accounts used for payments. Some accept other forms of savings, so excluding all deposits would be too broad.

A: Cost-push inflation

Higher input prices raise firms' production costs and can reduce aggregate supply, putting upward pressure on output prices. Inflation originating from that cost increase is cost-push inflation, rather than inflation initially caused by excessive aggregate demand.

D: inverse.

Money's value in terms of goods and services is its purchasing power. As the general price level rises, a fixed amount of money buys less; when prices fall it buys more. The relationship is therefore inverse.

B: revenue and expenditure of government

Fiscal policy changes government revenue and expenditure, especially taxation and public spending. Open-market operations and changes in money supply are monetary-policy instruments rather than the definition of fiscal policy.

D: demand is perfectly elastic.

Perfectly elastic demand is horizontal: buyers will not pay more than the given price. A tax therefore lowers the net price received by sellers rather than raising the buyers' price, with quantity adjusting. Sellers bear the tax in this limiting case.

A: comparative advantage

Comparative advantage means a lower opportunity cost of producing a good. Countries can gain by specialising according to relative opportunity costs and exchanging, even when one country has an absolute productivity advantage in every good.

C: economic prosperity for the country

More favourable terms of trade mean a country's exports can buy more imports per unit exported. This increases its trading purchasing power and can support national welfare, although overall prosperity also depends on production, trade volumes and distribution of the gains.