JAMB Economics 2018

28 reviewed questions with answers and explanations.

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Question 2

The reward for capital is

  1. interest
  2. rent
  3. risk
  4. premium.
Answer and explanation

A: interest

In the standard classification of factor rewards, capital earns interest. Land earns rent and labour earns wages; risk is not itself a payment category.

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Question 4

Mortgage banks give loans to investors on a long- term basis to

  1. finance agriculture
  2. establish banks
  3. acquire machinery
  4. build houses.
Answer and explanation

D: build houses.

Mortgage lending provides long-term finance secured against property. House construction and purchase are therefore the relevant uses among the options.

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Question 6

The establishment of industries in rural areas will help to reduce

  1. urban-rural migration
  2. rural-urban migration
  3. rural-rural migration
  4. urban-urban migration.
Answer and explanation

B: rural-urban migration

Rural industry creates local employment opportunities, reducing the incentive for residents to move to towns for work. It can therefore reduce rural-to-urban migration.

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Question 7

International trade is an application of the principle of

  1. industrial production
  2. mass production
  3. regional production
  4. comparative cost advantage
Answer and explanation

D: comparative cost advantage

Comparative advantage explains gains from specializing in goods with lower opportunity costs and trading. Countries need not be absolutely more productive in every good to benefit.

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Question 12

In which of the following business units are the owners mostly the customers?

  1. co-operatives
  2. limited liability companies
  3. partnership
  4. public corporations.
Answer and explanation

A: co-operatives

Cooperatives are owned by members who use their services. A consumer cooperative illustrates this directly: the customers join together to own and operate the business.

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Question 13

The formula (index of export prices / index of import prices) x 100 measures the

  1. volume of trade between countries
  2. direction of international trade
  3. commodity terms of trade
  4. volume of imports
Answer and explanation

C: commodity terms of trade

Commodity terms of trade compare export prices with import prices. Dividing the export price index by the import price index and multiplying by 100 measures that relative price relationship.

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Question 14

The production table is: Product | Ghana | Sierra Leone Coffee | 8 tonnes | 2 tonnes Cocoa | 7 tonnes | 9 tonnes If specialization should take place, then

  1. Ghana should produce coffee and cocoa
  2. Ghana would benefit by producing cocoa only
  3. Sierra Leone should not produce any of the products
  4. Sierra Leone should produce cocoa and Ghana coffee
Answer and explanation

D: Sierra Leone should produce cocoa and Ghana coffee

Ghana gives up 7/8 tonne of cocoa per tonne of coffee, compared with 9/2 in Sierra Leone. Sierra Leone gives up less coffee per tonne of cocoa, so it specializes in cocoa and Ghana in coffee.

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Question 16

The full meaning of OPEC is

  1. Oil and Petroleum Exporting Countries
  2. Original Petroleum Exporting Countries
  3. Organisation of Petrol Exporting Countries
  4. Organisation of Petroleum Exporting Countries.
Answer and explanation

D: Organisation of Petroleum Exporting Countries.

OPEC stands for Organization of the Petroleum Exporting Countries. The name identifies a group of petroleum-exporting member countries, rather than a category of petrol products.

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Question 17

The main concern of economists is to

  1. control the growth of population
  2. redistribute income between the rich and the poor
  3. satisfy all human wants
  4. allocate scarce resources to satisfy human wants.
Answer and explanation

D: allocate scarce resources to satisfy human wants.

Economics studies choices about allocating scarce resources among competing uses. Since resources are limited relative to wants, allocation and its trade-offs are central.

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Question 18

Productive resources can also be called

  1. principles of production
  2. factors of production
  3. items of production
  4. labour and materials resources.
Answer and explanation

B: factors of production

Factors of production are the productive resources used to make goods and services. They are commonly grouped as land, labour, capital and entrepreneurship.

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Question 19

The study of Economics becomes necessary because of the

  1. large population size of the world
  2. scarcity of resources
  3. opportunity cost of goods and services
  4. need to satisfy every desire of man.
Answer and explanation

B: scarcity of resources

Scarcity means available resources cannot satisfy every competing want. Economics is needed to study the choices and opportunity costs that this limitation creates.

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Question 20

The type of demand that exists between torchlight and battery is

  1. competitive demand
  2. complementary demand
  3. composite demand
  4. independent demand.
Answer and explanation

B: complementary demand

A battery-powered torch and its battery are used together. Demand for one is linked to use of the other, making them complementary goods.

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Question 22

Value X | Frequency F 2 | 2 3 | 5 4 | 2 5 | 1 What is the mean?

  1. 2.2
  2. 2.5
  3. 3.2
  4. 4.5
Answer and explanation

C: 3.2

The weighted sum is 2x2 + 3x5 + 4x2 + 5x1 = 32. There are 10 observations, so the mean is 32/10 = 3.2.

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Question 23

Value X | Frequency F 2 | 2 3 | 5 4 | 2 5 | 1 What is the median?

  1. 5
  2. 4
  3. 3
  4. 2
Answer and explanation

C: 3

There are 10 observations. In order, positions 3 through 7 all contain 3, so both the fifth and sixth values are 3. Their average, the median, is 3.

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Question 24

Human wants are insatiable because wants are

  1. limited while means are scarce
  2. unlimited and means are also unlimited
  3. limited and means are also limited
  4. unlimited while means are scarce
Answer and explanation

D: unlimited while means are scarce

Human wants are described as unlimited because satisfying some leads to further wants. The means available to satisfy them remain scarce, requiring choices.

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Question 25

A budget pie chart has these sector angles: education 120 degrees, health 60 degrees, agriculture 80 degrees, and government administration the remaining 100 degrees. If the total budget is $7,200, how much is allocated to education?

  1. $2,400.00
  2. $2,000.00
  3. $ 200.00
  4. $ 1,000.00
Answer and explanation

A: $2,400.00

Education occupies 120 out of the full 360 degrees, or one-third of the budget. One-third of $7,200 is $2,400.

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Question 26

A budget pie chart has these sector angles: education 120 degrees, health 60 degrees, agriculture 80 degrees, and government administration the remaining 100 degrees. What is the ratio of expenditure on health to agriculture?

  1. 2:3
  2. 3:4
  3. 4:3
  4. 5:4
Answer and explanation

B: 3:4

Sector spending is proportional to the angle in the pie chart. Health to agriculture is 60:80; dividing both by 20 gives 3:4.

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Question 27

Which of the following items is not an example of circulating capital?

  1. Raw material
  2. Money
  3. Fuel
  4. Machinery
Answer and explanation

D: Machinery

Machinery is fixed capital: it can be used repeatedly over several production cycles. Circulating capital is used up or turned over during production.

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Question 28

The principle of comparative cost advantage was propounded by

  1. David Ricardo
  2. Alfred Marshal
  3. J.S. Mill
  4. Adam Smith
Answer and explanation

A: David Ricardo

David Ricardo developed the theory of comparative advantage. Its central insight is that trade can benefit countries when they specialize according to relative opportunity costs.

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Question 29

The rate at which a country's exports is exchanged for her imports is

  1. trade balance
  2. balance of payments
  3. terms of trade
  4. balance of currency account.
Answer and explanation

C: terms of trade

Terms of trade express the price of exports relative to imports. They indicate how much can be obtained in imports for a given amount of exports.

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Question 30

Efficiency of labour in a country is determined by the following except the

  1. social attitude to work
  2. education and training
  3. total population
  4. working conditions of workers.
Answer and explanation

C: total population

Labour efficiency concerns output per worker, influenced by skills, working conditions and attitudes. Total population is a headcount and does not itself measure worker efficiency.

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Question 32

Taxes and government expenditures are instruments of

  1. monetary policy
  2. tax policy
  3. economic policy
  4. fiscal policy
Answer and explanation

D: fiscal policy

Fiscal policy uses government spending and taxation to influence the economy. Monetary policy instead operates through money, credit and interest-rate conditions.

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Question 35

The Economic Commission for Africa was set up by the

  1. UNO
  2. ECOWAS
  3. OAU
  4. IMF
Answer and explanation

A: UNO

The United Nations Economic and Social Council established the Economic Commission for Africa in 1958. It is a UN regional commission, so UNO is the correct organization.

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Question 36

The score chart gives these recorded groups and numbers of students: Score group | Students 0-19 | 40 20-39 | 80 40-49 | 100 60-69 | 40 70-100 | 20 If the pass mark is 40, how many students passed?

  1. 100
  2. 120
  3. 160
  4. 200
Answer and explanation

C: 160

The groups at or above the pass mark of 40 contain 100, 40 and 20 students. Adding these frequencies gives 160 students who passed.

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Question 37

The score chart gives these recorded groups and numbers of students: Score group | Students 0-19 | 40 20-39 | 80 40-49 | 100 60-69 | 40 70-100 | 20 How many students took the examination?

  1. 280
  2. 240
  3. 200
  4. 80
Answer and explanation

A: 280

Add the frequencies of all five recorded groups: 40 + 80 + 100 + 40 + 20 = 280. This gives the total number of students in the chart.

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Question 38

Utility is the satisfaction derived from

  1. production
  2. distribution
  3. consumption
  4. demand.
Answer and explanation

C: consumption

Utility is the satisfaction a person obtains from consuming a good or service. It describes the benefit to the consumer rather than the act of production or distribution.

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Question 39

When a union is composed of workers with the same skill it is called

  1. an industrial union
  2. a workers' union
  3. a craft union
  4. a technical union.
Answer and explanation

C: a craft union

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

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Question 40

The major objective, of a revenue allocation formula in a country is to

  1. share revenue between the public and private sectors
  2. ensure the financial viability of the country
  3. share revenue between the different tiers of government
  4. divert revenue from areas of surplus to areas of need
Answer and explanation

C: share revenue between the different tiers of government

A revenue allocation formula specifies how public revenue is distributed among tiers of government. It determines their shares rather than dividing revenue between public and private businesses.

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