JAMB Economics 2003

A: fairly inelastic

Using initial values, quantity falls by 10/200 = 5%, while price rises by 3/5 = 60%. Elasticity magnitude is 0.05/0.60, about 0.083, below one. Demand changes but is relatively inelastic.

B: relates to value judgment

A normative statement expresses a value judgement about what ought to happen. A positive statement instead describes a claim that can, in principle, be tested against evidence.

C: consumption

Utility means the satisfaction a consumer obtains from consuming a good or service. Production and distribution make goods available, but consumption is the activity from which this satisfaction is derived.

B: a rise in price

An outward shift of demand with an unchanged upward-sloping supply curve creates excess demand at the old price. Buyers' competition raises the equilibrium price.

C: is an upward-sloping curve

A positive relationship means that higher values of one variable are associated with higher values of the other. Its graph slopes upward; it need not be a straight line.

A: an outward shift of the demand curve

An inferior good has negative income elasticity: demand increases when real income falls, other things equal. This is an outward shift of the demand curve rather than a movement caused by its own price.

B: public ownership and control

In a centrally planned economy, public authorities direct resource allocation and production. Public ownership and control therefore provide the defining emphasis among these choices.

C: different sizes of plants are built

The long-run average cost curve compares the lowest average costs achievable at different output levels when plant size can change. It helps a firm choose among different scales of production.

D: value of its output and inputs purchased from other firms

Value added is the value of a firm's output minus the value of intermediate goods and services bought from other firms. Subtracting all production costs instead would give a profit measure.

D: Traded on a recognized stock market

A listed security has been admitted to a recognized stock exchange under that market's listing rules. Listing concerns eligibility for exchange trading, not whether the instrument is short-term debt.

B: a financial instrument that is readily convertible to cash

Near money consists of liquid financial assets that can be converted into money readily but are not themselves the ordinary means of payment. Ready convertibility distinguishes the best definition here.

C: debt instruments provided are long-term or short-term

Money markets deal primarily in short-term financial instruments, while capital markets provide longer-term finance. The maturity of the instruments is the relevant distinction.

C: share revenue between the different tiers of government

A revenue allocation formula distributes public revenue among levels of government, such as federal, state and local authorities. It determines their shares rather than dividing revenue between private firms and government.

A: relative elasticities of demand

The trade-balance response to devaluation depends on how strongly export and import quantities respond to price changes. Demand elasticities determine whether those volume changes outweigh the price effects.

C: development of infrastucture in member nations

IBRD finances development through loans and other support to member-country governments, including infrastructure projects. Short-term balance-of-payments support is principally associated with the IMF.

D: the possibility of conflict in management is virtually non-existent

A sole proprietor makes the ownership decisions alone, avoiding disagreements between partners over management. This does not remove business risk or give the proprietor limited liability.

C: nature of the goods and services to be provided

Capital expenditure acquires or improves assets that provide benefits over time; recurrent expenditure funds ongoing operations. The nature of what is purchased is the key distinction.

D: real per capita income

Real income per person adjusts national income for both population size and price changes. It is therefore more useful than total or nominal income for comparing average material living standards.

B: public corporations

A public corporation is a statutory body created by legislation to carry out specified public or commercial functions. The founding Act defines its powers and responsibilities.

C: opportunity cost is least

Comparative advantage means producing a good at a lower opportunity cost: fewer units of other output must be sacrificed. It differs from absolute advantage, which concerns input productivity.

D: reduce the disposable income

Disposable income is income remaining after direct personal taxes. Holding gross income constant, an increase in personal income tax leaves households with less income available to spend or save.

B: derived demand

Firms hire workers because labour helps produce goods and services demanded by customers. Demand for labour is therefore derived from demand for the output it helps create.

C: a craft union

A craft union organizes workers who share a particular trade or skill, potentially across different employers. An industrial union instead groups workers across occupations within an industry.