JAMB Economics 2002

A: rotate outwards away from the origin

The maximum affordable amount of P rises because income buys more P, while the intercept for Q is unchanged. The budget line therefore pivots outward around the Q intercept instead of shifting outward in parallel.

D: Expectation of a future change in price

If people interpret a current price rise as a signal of further increases, they may buy more now to avoid higher future prices. These changing expectations can produce an observed exceptional price-demand pattern; they alter the usual other-things-equal setting.

B: 144°

A complete circle contains 360°. Children's 40% share therefore occupies 40/100 × 360° = 144°. The remaining shares account for 126° and 90°, and all three angles add to 360°.

A: state command

A centrally planned economy assigns major production decisions to the state planning authority. The plan specifies output priorities and resources, whereas relative market prices principally guide decentralised choices in a market economy.

B: derived demand

Factors such as labour and machinery are demanded because they help produce goods or services that buyers want. Their demand is therefore derived from demand for the output rather than being final consumer demand.

A: Poverty, low literacy and low income

Low income, widespread poverty and limited literacy are commonly used indicators of low development. They concern material resources and human capabilities. Development assessment uses several indicators because no single measure captures every aspect of wellbeing.

B: public finance

Public finance studies government revenue, expenditure and financing, including taxation and borrowing. Public revenue and public expenditure each cover only one side, while a budget is a particular plan for those finances.

B: structural unemployment

When a locality depends heavily on one industry, a lasting decline in that industry's demand or technology can leave workers with skills unsuited to available jobs. This concentration increases exposure to structural unemployment.

D: decrease steadily

As development proceeds, rising productivity in agriculture and expanding industry and services commonly reduce agriculture's share of total employment. Agricultural output can still grow even while its percentage of the labour force declines.

A: supply curve

A competitive firm chooses output where price equals marginal cost, provided price covers average variable cost. The rising marginal-cost section above minimum average variable cost therefore traces its short-run supply curve.

C: external economies of scale

External economies of scale are benefits a firm receives from improvements outside itself, such as industry-wide training, shared suppliers or infrastructure. Internal economies instead arise from the firm's own expansion and organisation.

A: Tends to decrease continuously

Average fixed cost equals total fixed cost divided by output. With fixed cost unchanged, spreading it over more units continuously lowers cost per unit. For positive fixed cost it approaches zero as output grows but does not become zero at finite output.

A: a competitive market structure

Deregulation removes or relaxes restrictions on market activity, often aiming to facilitate entry and competition. Whether it actually increases competition depends on the industry and remaining market power, but competition is the stated economic objective in this comparison.

B: raise the price of the commodity and affect the quantity in an indeterminate way

An increase in demand pushes equilibrium price upward, and a decrease in supply also pushes price upward. Their quantity effects oppose each other, so the net quantity change depends on the sizes of the two shifts.

D: marginal cost curve

For a competitive firm, the relevant rising section of marginal cost above minimum average variable cost determines short-run supply. At each viable market price the firm chooses the quantity for which marginal cost equals that price.

A: intersection of the marginal cost and marginal revenue curves

A monopolist's interior profit-maximising output is found where marginal revenue equals marginal cost, with marginal cost crossing from below. The price is then read from demand at that output; maximising revenue alone does not generally maximise profit.

A: Supply of and demand for labour

In the competitive labour-market model, equilibrium wage occurs where labour supplied equals labour demanded. Unions and government policies can influence actual wages, but the market equilibrium itself is defined by the intersection of supply and demand.

A: wholesalers and retailers

Wholesalers buy goods in bulk and supply retailers, who sell smaller quantities to final consumers. Both therefore act as intermediaries between producers and consumers.

C: an increase in output-input ratio

Labour productivity is output divided by labour input. More output from each unit of labour raises the output-input ratio, indicating improved efficiency.

D: gentle and persistent increase in the general price level.

Creeping inflation is a slow, continuing rise in the general price level. Its defining features are a modest pace and persistence, rather than a rapid rise or a temporary price movement.

D: 2.5

In the simple closed-economy expenditure model, the multiplier is 1/(1 - MPC). With MPC = 0.6, it equals 1/0.4 = 2.5. Average propensity to consume does not enter this formula.

C: contractionary fiscal policy

Contractionary fiscal policy reduces aggregate demand through lower government spending or higher taxes. This helps restrain inflation caused by spending exceeding the economy's productive capacity.

C: give protection to bank depositors

Deposit insurance protects depositors against loss when an insured institution cannot repay deposits, subject to the scheme's coverage. Protecting bank depositors is therefore the relevant objective.

C: demand to hold money as assets rather than as stocks

Liquidity preference is the desire to hold wealth in money rather than less liquid financial assets. Precautionary needs are one motive, but the broader demand to hold money is the best definition.

A: complementary

For direct barter to work, each trader must want what the other is offering. Their wants must therefore complement each other, creating the double coincidence needed for the exchange.

A: existing shares

The stock exchange provides a secondary market where investors buy and sell already-issued shares. Issuing new shares to raise capital belongs to the primary market.