JAMB Economics 2012

D: positive reasoning

This statement makes a claim about the consequences of privatization that could be tested against evidence. It is positive reasoning even if the claim later turns out to be false; it does not state what ought to happen.

B: shows the relationship between variables

The sign of a slope shows the direction of the relationship: a positive slope means the variables move together, while a negative slope means they move in opposite directions.

B: N13.3 billion

Manufacturing occupies 360 - 160 - 90 - 30 = 80 degrees. Oil exceeds it by 80 degrees, so the contribution difference is 80/360 × N60 billion = N13.33 billion, approximately N13.3 billion.

D: quantity demanded

A change in the good's own price causes a movement along its demand curve, described as a change in quantity demanded. A change in demand instead means a shift of the whole curve.

D: 0.5

Using the initial values, quantity falls by 100/500 = 20% and price rises by 20/50 = 40%. The magnitude of price elasticity is 20%/40% = 0.5.

B: inelastic

Quantity falls by 8 out of 1,500 units, about 0.533%. Dividing this by the 8% price rise gives an elasticity magnitude of about 0.067, below one, so demand is inelastic.

C: utility is subjectively determined

Utility reflects each person's subjective satisfaction. Without a common interpersonal scale, one person's level of satisfaction cannot be directly compared numerically with another's.

B: reduces the quantity consumed

Marginal utility is the slope of the total utility curve. If that slope declines as consumption rises, moving back to a smaller consumed quantity gives a higher marginal utility.

D: perfectly inelastic

If quantity supplied never changes when price changes, the percentage quantity response is zero. Supply elasticity is therefore zero, which is called perfectly inelastic supply.

B: society

The invisible-hand idea describes how self-interested decisions can, under suitable competitive conditions, promote wider social interests. It is a claim about benefits to society rather than one group alone.

B: an increase in quantity supplied

With an upward-sloping supply curve, setting a price above equilibrium encourages producers to offer a larger quantity. This is movement along the supply curve, not an outward shift in supply.

C: allocate resources to most productive uses

Relative prices signal scarcity and the value of alternative uses. These signals guide resources toward uses where they are more highly valued, without guaranteeing full employment or high profits for every producer.

C: tangent to the isocost

For the standard interior least-cost choice, an isoquant is tangent to an isocost line. The marginal rate of technical substitution then equals the input-price ratio.

D: decreasing returns to scale

Returns to scale compare the percentage change in output with the percentage change in all inputs. If all inputs double but output grows by less than 100%, returns to scale are decreasing.

D: restrict entry of new firms

Exclusive rights can prevent rival firms from legally copying the protected invention or work without permission. This creates an entry barrier for the protected product rather than directly setting product quality.

D: depreciation from GNP

Net National Product is Gross National Product after allowing for consumption of fixed capital, commonly called depreciation. Subtracting depreciation turns a gross measure into a net measure.

D: N8.0m

The simple expenditure multiplier is 1/(1 - 0.75) = 4. An investment increase of N2 million therefore raises equilibrium income by 4 × N2 million = N8 million.

B: 4

With marginal propensity to consume 0.75, marginal propensity to save is 0.25. The simple multiplier equals 1/0.25 = 4.

B: 200

The price index is current basket cost divided by base-year basket cost, multiplied by 100. Here 240/120 × 100 = 200, showing that the basket now costs twice as much.

B: cash reserve ratio

The cash reserve ratio specifies the proportion of banks' deposit liabilities that must be held as cash balances with the central bank. It is distinct from the broader liquidity-asset requirement.

B: provide funds for short-term financing

The money market provides short-term borrowing and lending through instruments such as treasury bills and commercial paper. Long-term finance is principally provided through the capital market.

D: the value of a commodity

An ad valorem tax is calculated as a percentage of the value of the taxable item. A specific tax instead charges a fixed amount per physical unit.

D: capital market

The capital market supplies long-term finance through instruments such as shares and long-term bonds. This makes it the appropriate market for funding long-lived investment projects.

C: population growth rate and natural resources

Malthus compared population growth with the capacity of resources, especially food production, to support it. His concern was that unchecked population could grow faster than subsistence.

C: 30

Starting from 50 people, add 10 immigrants and subtract 25 deaths and 5 emigrants. With no births stated, the resulting total is 50 + 10 - 25 - 5 = 30 people.

A: provide funds for infrastructural development

ECOWAS supports regional development, including infrastructure finance through its development bank, EBID. Transport, energy and telecommunications projects are among the activities it finances.

B: interest

In the standard classification of factor rewards, machinery and equipment are capital, whose return is interest. Wages reward labour, rent rewards land and profit rewards entrepreneurship.