JAMB Economics 2001

C: to their best alternative uses

The price system guides resources towards alternative uses according to demand and relative scarcity. The standard efficient-allocation result assumes appropriate competitive conditions; a price system does not automatically eliminate poverty or deliver every welfare objective.

B: equal to the slope of the budget constraint line

At an interior optimum, the highest attainable indifference curve is tangent to the budget line. Their slopes are equal: the consumer's marginal rate of substitution matches the price ratio. Corner solutions require separate consideration.

D: an increase in the quantity supplied.

A rise in the good's own price causes movement along an ordinary upward-sloping supply curve, increasing quantity supplied. A change in supply means a shift of the entire curve due to another determinant, such as costs or technology.

C: Uses the scientific method in the study of human behaviour

Economics studies human choices and interactions and uses systematic models, observation and evidence to investigate them. That combination of social subject matter and scientific inquiry makes it a social science.

B: inductive reasoning

Inductive reasoning moves from particular observations towards a general conclusion or pattern. Deductive reasoning starts from general premises and derives a more specific conclusion that follows from them.

C: A decrease in long-run average cost

Internal economies of scale arise from expanding a firm's own operations, such as greater specialisation or spreading overhead costs. They lower long-run average cost as the firm increases its scale, rather than describing a movement along one fixed short-run plant curve.

B: marginal revenue

At an interior profit maximum, the monopolist chooses output where marginal cost equals marginal revenue, with the appropriate crossing condition. Because a monopolist faces downward-sloping demand, marginal revenue is generally below price.

B: varies all its inputs

The long run is a planning period in which all factors of production can be varied, including plant and equipment. It does not mean the firm must replace every input or source them all internally.

B: there is adequate knowledge of existing prices

Perfect competition assumes buyers and sellers have adequate information about relevant prices and market conditions. Individual firms are price takers, and entry, exit and resource movement are not restricted as part of the basic model.

C: Quantity demanded will increase.

The lower controlled price leads buyers to demand more along the existing demand curve. Sellers generally supply less, creating excess demand or a shortage. The increase in desired purchases is not necessarily an increase in the amount actually sold.

D: N80

Equilibrium occurs where quantity demanded equals quantity supplied. At N80 per dozen, both are 490 dozen, so the market clears at that price. Higher listed prices give excess supply and lower listed prices give excess demand.

C: Rent on a building

Rent on a building is typically fixed over the relevant short-run lease period: it must be paid even when output changes. Fuel and production-related transport generally vary with activity; electricity may include both fixed and variable elements.

D: not limited to the amount invesled.

A sole proprietor bears unlimited liability for business obligations. If business assets are insufficient, personal assets may also be at risk, so the possible financial loss is not limited to the original amount invested in the business.

B: group of firms producing related commodities

An industry is a group of firms producing the same or closely related goods or services. A single firm is one business within that group, while a collection of unrelated producers does not define one industry.

C: Long-term securities

Capital markets provide longer-term finance through instruments such as shares and long-term bonds. Treasury bills, commercial paper and bankers' acceptances are conventionally short-term money-market instruments.

D: Capital consumption

Net national product equals gross national product minus consumption of fixed capital, commonly called depreciation. Subtracting the wearing out or using up of productive capital converts the gross measure into a net measure.

D: a contractionary monetary policy.

A higher discount rate makes borrowing from the central bank more expensive. In the standard policy framework this tends to restrain bank borrowing and credit expansion, signalling contractionary monetary policy.

A: Continued training of workers

Training develops workers' skills and knowledge, helping them use equipment and methods more effectively. It can raise output per worker and improve quality. Nationality or routine retirement alone does not establish greater labour efficiency.

D: Federal, state and local governments

The distribution is among the three tiers of government: federal, state and local. These are territorial levels of government, unlike the executive, legislature and judiciary, which are branches exercising different governmental functions.

D: growth in population more sustainable

Reducing a high fertility rate can slow population growth and help it become more consistent with available resources and services. It does not aim to make one sex outnumber the other or to impose equality between male and female population totals.

A: deficit budget

A budget deficit arises when government spending exceeds its revenue. If the gap is financed by borrowing, it adds to public debt. A surplus provides resources that can instead be used to repay debt or build assets.

A: its value is unstable

A store of value should preserve purchasing power reasonably reliably over time. If money's value is unstable, people may prefer other assets for saving. Transferability and divisibility help its usefulness but do not by themselves undermine its role as a store of value.

B: social costs

National output measures can omit or fail to deduct social costs such as pollution and congestion caused by production. Output may rise while these costs reduce wellbeing, which is one reason GNP alone is an incomplete measure of social welfare.

C: nations are substantially different in their endowments of economic resources

Countries differ in resources, technology and production opportunities, leading to different opportunity costs. Trade allows them to benefit from those differences. Cross-border movement of production factors is not required for goods trade to create gains.