JAMB Economics 2014

16 reviewed questions with answers and explanations.

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Question 2

The choice of how to produce in a command economy is determined by

  1. government
  2. consumer
  3. industrialists
  4. labour unions
Answer and explanation

A: government

In a command economy, central planning authorities decide production methods and resource allocation. The government therefore makes the central choice about how to produce.

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Question 5

A national-income pie chart shows agriculture at 72 degrees, mining at 126 degrees, manufacturing at 108 degrees, and services occupying the remaining angle. What percentage of national income comes from services?

  1. 15%
  2. 10%
  3. 54%
  4. 24%
Answer and explanation

A: 15%

The known angles total 72 + 126 + 108 = 306 degrees, leaving 54 degrees for services. Its share is 54/360 × 100 = 15%.

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Question 13

Given the supply function P = 1/4(Qs+10) when P = N10, what is Qs?

  1. 20
  2. 15
  3. 50
  4. 30
Answer and explanation

D: 30

Multiplying P = (Qs + 10)/4 by 4 gives 4P = Qs + 10. At P = 10, quantity supplied is 40 - 10 = 30.

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Question 14

A supply schedule gives price N8 with quantity 20, then price N10 with quantity 24. Using initial values as percentage bases, calculate price elasticity of supply.

  1. 0.50
  2. 0.80
  3. 2.00
  4. 1.25
Answer and explanation

B: 0.80

Using initial values, supply rises by 4/20 = 20% while price rises by 2/8 = 25%. Supply elasticity is 20%/25% = 0.8.

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Question 15

When price is set below equilibrium, this will lead to

  1. an increase in the quantity supplied
  2. a new equilibrium
  3. a decrease in the quantity supplied
  4. a fall in price
Answer and explanation

C: a decrease in the quantity supplied

On the usual upward-sloping supply curve, a price below equilibrium induces producers to offer a smaller quantity than at equilibrium. This is a decrease in quantity supplied.

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Question 17

The production table is: Labour | Total product | Average product | Marginal product 1 | 8 | 8 | -- 2 | 20 | 10 | 12 3 | E | 9 | 7 4 | 28 | 7 | F 5 | 40 | 8 | 12 Find E and F respectively.

  1. 27 and 1
  2. 68 and 12
  3. 28 and 5
  4. 12 and 19
Answer and explanation

A: 27 and 1

With three workers, total product is 3 × 9 = 27, consistent with 20 + 7. The fourth worker adds 28 - 27 = 1, so E = 27 and F = 1.

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Question 19

Division of labour requires that, the tasks in a production line be performed

  1. by specialists
  2. in stages
  3. by all workers
  4. by unskilled labourers
Answer and explanation

A: by specialists

Division of labour assigns separate tasks to workers who specialize in them. Specialization, rather than every worker performing the whole process, is its distinguishing feature.

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Question 20

Given that FC = ₦500, VC = ₦1,500, and Q = 50 units. Find the average cost of the product.

  1. ₦30
  2. ₦40
  3. ₦10
  4. ₦20
Answer and explanation

B: ₦40

Total cost is fixed plus variable cost: N500 + N1,500 = N2,000. Dividing by 50 units gives average cost N40 per unit.

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Question 21

Rent and administrative expenses are examples of

  1. average fixed costs
  2. average variable costs
  3. fixed costs
  4. variable costs
Answer and explanation

C: fixed costs

In the standard short-run cost classification, rent and regular administrative overhead do not vary directly with output. They are fixed costs rather than per-unit average costs.

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Question 28

An inflation that co-exists with high rate of unemployment is

  1. hyperinflation
  2. stagflation
  3. demand-pull inflation
  4. cost-push inflation
Answer and explanation

B: stagflation

Stagflation describes inflation occurring alongside economic stagnation and high unemployment. It combines weak labour-market conditions with a rising general price level.

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Question 30

Short-term loans for investment are usually obtained through the

  1. stock market
  2. development banks
  3. money market
  4. capital market
Answer and explanation

C: money market

The money market specializes in short-term funds and instruments. Firms seeking short-term financing can use it, whereas capital markets mainly supply longer-term finance.

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Question 32

Wage freeze is a policy measure aimed at

  1. encouraging investors
  2. curbing inflation
  3. regulating standard of living
  4. curbing deflation
Answer and explanation

B: curbing inflation

A wage freeze limits wage increases as an incomes-policy measure intended to restrain wage-cost and demand pressures on prices. Its stated aim is to curb inflation, though effectiveness depends on conditions.

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Question 35

An important role of agriculture in Nigeria's economic development is the

  1. processing of raw materials for industries
  2. regulation of price system
  3. provision of infrastructure
  4. provision of employment
Answer and explanation

D: provision of employment

Agriculture directly employs people in crop and livestock production and related activities. Providing employment is a direct economic contribution of the sector.

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Question 41

The short-run average variable cost of a firm will rise owing to

  1. the expansion of factory space
  2. the building of new warehouse
  3. an increase in the cost of labour
  4. an increase in the salaries of directors
Answer and explanation

C: an increase in the cost of labour

Labour used in production is normally a variable input in the short run. A higher labour cost at unchanged productivity raises variable cost per unit; buildings and regular directors' salaries are usually fixed costs.

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Question 47

If the importation of a commodity is limited to a definite quantity, the trade control measure imposed is

  1. excise duties
  2. import duties
  3. quotas
  4. tariff
Answer and explanation

C: quotas

An import quota sets a numerical limit on the quantity of a product that may enter a country. Duties and tariffs instead impose charges on imports.

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Question 48

The main objective of WTO is to

  1. ensure adequate protection of infant industries
  2. provide a mechanism for tariff reduction
  3. assist countries with chronic balance of payments problem
  4. assist developing countries to execute developmental projects
Answer and explanation

B: provide a mechanism for tariff reduction

The WTO provides a framework for negotiations on trade rules and barriers, including tariffs. Balance-of-payments lending and development-project finance belong to other institutions.

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