JAMB UTME - Economics - 2022
Question 1 Report
Gross National Product (GNP) less the provision for the wear and tear of assets is the
Answer Details
The term "Gross National Product (GNP) less the provision for the wear and tear of assets" refers to the Net National Product (NNP). The Net National Product (NNP) is a measure of the total economic output of a country, which takes into account the depreciation or wear and tear of the country's capital assets. Capital assets are things like buildings, machinery, and other long-term investments that contribute to a country's economic output. When we subtract the depreciation from the Gross National Product (GNP), which is the total value of goods and services produced by a country's residents, we arrive at the Net National Product (NNP). The reason we need to subtract depreciation from the GNP is that capital assets, such as buildings and machinery, wear out over time and lose value. If we didn't account for this loss of value, we would overestimate the country's economic output. For example, suppose the GNP of a country is $1 trillion, and the depreciation or wear and tear on its capital assets is $100 billion. In that case, the NNP of the country would be $900 billion ($1 trillion - $100 billion). In summary, the Net National Product (NNP) is the Gross National Product (GNP) minus the provision for the wear and tear of assets or depreciation. It gives us a more accurate measure of a country's economic output by accounting for the loss of value in capital assets over time.
Question 2 Report
If a demand curve that intersects a perfectly inelastic supply shifts rightward, then
Answer Details
If a demand curve that intersects a perfectly inelastic supply shifts rightward, the equilibrium price will increase, but the quantity supplied will remain the same. In this scenario, a shift in the demand curve to the right indicates that there is an increase in demand for the product at every price level, leading to a new equilibrium price and quantity. However, the supply is perfectly inelastic, meaning that the quantity supplied cannot increase to meet the new demand. Therefore, the equilibrium quantity remains the same, while the equilibrium price increases. So, only the price will increase in this scenario.
Question 3 Report
If workers at the school canteen cannot sell during the holidays, this is example of
Answer Details
If workers at the school canteen cannot sell during the holidays, this is an example of seasonal unemployment. This means that the workers are temporarily out of work due to changes in demand for their labor, in this case because the school is not in session. Seasonal unemployment is a common occurrence in industries that are heavily influenced by the time of year, such as agriculture, tourism, and retail. While the workers may have other employment options, they are currently without work due to the seasonality of the school canteen.
Question 4 Report
A greater burden of the taxes on essential goods is borne by the
Answer Details
A greater burden of the taxes on essential goods is typically borne by the lower income group. This is because essential goods such as food, clothing, and shelter make up a larger proportion of the budget of low-income households than they do for high-income households. When taxes are applied to these goods, the cost of living increases proportionally for low-income households, putting a greater burden on their limited resources. In contrast, high-income households can more easily absorb the higher costs without significantly affecting their standard of living.
Question 5 Report
Answer Details
The concept described in the given scenario is called "double coincidence of wants." It refers to the situation where two parties have goods or services that the other party desires and are willing to exchange, and both parties are able to meet each other's wants at the same time. In the example, the housewife wants tomatoes, and she has meat that she can offer in exchange. However, she can only trade with someone who has tomatoes and also wants meat. The double coincidence of wants occurs when both parties have what the other wants, and both are willing and able to trade. This concept is important in understanding how bartering works, which is an exchange of goods and services without the use of money.
Question 6 Report
In order to increase revenue, government should tax commodities for which demand is
Answer Details
When the demand for a commodity is perfectly price inelastic, it means that people will buy the same amount of the commodity no matter how much it costs. Therefore, if the government increases the tax on this commodity, people will still buy the same amount of it, and the tax revenue will increase. When the demand for a commodity is price inelastic, it means that people will buy a relatively small amount less of the commodity if the price increases. Therefore, if the government increases the tax on this commodity, people will still buy it, but they will pay more for it, and the tax revenue will increase. When the demand for a commodity is price elastic, it means that people will significantly reduce the amount they buy if the price increases. Therefore, if the government increases the tax on this commodity, people will buy less of it, and the tax revenue may not increase as much as expected. When the demand for a commodity is unitary elastic, it means that the change in quantity demanded is exactly proportional to the change in price. Therefore, if the government increases the tax on this commodity, the tax revenue will increase, but the increase in price may cause people to buy slightly less of it. Overall, if the demand for a commodity is relatively inelastic, the government may be able to increase revenue by increasing taxes on it. However, if the demand for a commodity is relatively elastic, the government may not be able to significantly increase revenue by increasing taxes on it, as people may switch to other alternatives or reduce their consumption of the commodity.
Question 8 Report
A downward sloping demand curve means that
Answer Details
A downward sloping demand curve means that as the price of a good decreases, the quantity demanded of that good increases. In other words, there is an inverse relationship between the price of a good and the quantity of that good demanded by consumers. This is the fundamental law of demand in economics.
As the price of a good decreases, consumers are more willing and able to purchase it, which leads to a higher quantity demanded. Conversely, as the price of a good increases, consumers are less willing and able to purchase it, which leads to a lower quantity demanded.
Therefore, the correct answer is - price must be lowered to sell more of the good. Total revenue may increase or decrease as the price changes depending on the magnitude of the change in price and quantity demanded.
Question 9 Report
Demand-pull inflation is likely to be caused by
Answer Details
Demand-pull inflation occurs when the overall demand for goods and services in an economy exceeds the supply of those goods and services, leading to an increase in the general price level. This increase in demand may be caused by a number of factors, such as an increase in consumer confidence, an increase in government spending, or an increase in exports. Out of the given options, an increasingly large budget deficit is the most likely cause of demand-pull inflation. When the government spends more money than it collects in taxes, it may finance the deficit by borrowing from the central bank, other banks or the public. This increases the overall amount of money in circulation in the economy, which in turn leads to an increase in demand for goods and services. This increased demand can then lead to higher prices for those goods and services, resulting in demand-pull inflation. An increase in the cost of factor inputs, such as labor or raw materials, may also contribute to inflation, but this is known as cost-push inflation, which occurs when the cost of producing goods and services increases, leading to higher prices. An increase in the income tax rate and an increase in the bank lending rate can reduce the overall demand for goods and services and lead to a decrease in inflation.
Question 10 Report
The sufficient condition for a firm to be in equilibrium is that the
Answer Details
Question 11 Report
The advantage which firms obtain directly from expanding their operations are referred to as
Answer Details
The advantage which firms obtain directly from expanding their operations are referred to as "internal economies of scale." Internal economies of scale occur when a firm's average cost of production decreases as it increases the scale of its operations. This can be due to a variety of factors, such as increased specialization of labor, greater use of capital equipment, or better purchasing power for inputs. Internal economies of scale enable a firm to become more efficient and competitive as it grows, which can result in higher profits and a stronger market position. The opposite of internal economies of scale is internal diseconomies of scale, which occur when the average cost of production increases as a firm becomes too large or complex to manage efficiently.
Question 12 Report
Positive check as envisaged by Thomas Malthus can be prevented if
Answer Details
Thomas Malthus proposed the concept of a positive check, which refers to a population control mechanism in which natural disasters, disease, and famine limit the population growth. However, positive checks are not desirable as they lead to high levels of human suffering. To prevent positive checks, it is necessary to implement measures that help to control population growth while maintaining the well-being of individuals. One way to achieve this is by reducing the death rate through improved healthcare, better nutrition, and access to safe water and sanitation. Another approach is to promote moral restraint, which involves encouraging individuals to delay marriage and childbearing until they are economically stable and can provide for their children. Additionally, building more hospitals can help to improve access to healthcare, which can contribute to reducing the death rate and improving overall health outcomes. Natural calamities, on the other hand, can lead to positive checks, and as such, they are not a desirable solution for preventing population growth. Instead, efforts should focus on implementing sustainable population control measures that promote economic development, education, and access to healthcare, while also protecting the environment.
Question 13 Report
Which of the following factors may not affect the efficiency of labour?
Answer Details
Among the given options, the factor that may not affect the efficiency of labor is the race and color of the workforce. The efficiency of labor refers to the amount of output that a worker can produce within a given time frame. Education and training can enhance workers' skills and knowledge, improving their ability to perform their jobs efficiently. Providing welfare services such as healthcare, childcare, and paid time off can also increase worker satisfaction and well-being, which can positively impact their productivity. The quality of other factor inputs, such as machinery, raw materials, and technology, can also have a significant impact on labor efficiency. High-quality inputs can facilitate and enhance workers' ability to produce more output in less time, increasing their efficiency. However, the race and color of the workforce do not inherently affect the efficiency of labor. A worker's productivity is determined by their individual skills, knowledge, and work ethic, regardless of their race or color. Discrimination based on race or color can negatively impact worker morale, job satisfaction, and opportunities, which can indirectly affect labor efficiency. Still, race or color itself is not a direct determinant of worker efficiency.
Question 14 Report
Economic goods are termed scarce when they are?
Answer Details
Economic goods are termed scarce when they are "not available in sufficient quantities to satisfy all wants for them." Scarce resources are those that have a limited supply relative to the demand for them. This scarcity means that choices must be made about how the resources are allocated, and that not all wants or needs can be fully satisfied. The concept of scarcity is fundamental to the study of economics, as it is the basis for understanding the concepts of opportunity cost, trade-offs, and efficiency.
Question 15 Report
Economics problems arise in all societies because
Answer Details
Economics problems arise in all societies because of the fundamental concept of scarcity. Scarcity means that the resources available to society are limited, while the wants and needs of individuals are virtually unlimited. This leads to a situation where individuals, businesses, and governments have to make choices about how to allocate scarce resources in the most efficient and effective way possible. For example, a society may want to provide free healthcare to all its citizens, but it may not have the resources to do so. Alternatively, a business may want to produce more products, but it may not have the resources to expand its production line. These are just two examples of the countless economic choices that are made every day. Mismanagement of resources by leaders, lack of planning, inadequate supply of resources, and underutilization of economists are some of the factors that can exacerbate economic problems in a society. However, the underlying cause of economic problems is the scarcity of resources, which requires individuals and institutions to make difficult choices about how to allocate those resources.
Question 16 Report
The demand for labour is an example of
Answer Details
The demand for labour is an example of derived demand. Derived demand refers to the demand for a good or service that arises from the demand for another good or service. In the case of labour, the demand for it is derived from the demand for the goods and services that labour produces. For example, a factory may demand more labour to increase production of a particular product to meet customer demand. The demand for labour is not a direct demand, but rather a demand that is derived from the demand for the final product.
Question 17 Report
A firm's average cost decreases in the long-run because of
Answer Details
A firm's average cost can decrease in the long-run due to increasing returns to scale. This means that as the firm increases its production, it experiences a decrease in its average cost. This can be due to various factors such as specialization, economies of scale, and better utilization of resources. For example, a firm that produces 100 units of a product might have an average cost of $10 per unit. However, if it increases its production to 200 units, it might be able to reduce its average cost to $8 per unit. This could be due to the fact that the firm can take advantage of bulk discounts on raw materials, use more efficient production methods, and spread its fixed costs over a larger number of units. Therefore, when a firm experiences increasing returns to scale, it can reduce its average cost in the long-run, which can lead to higher profits and a competitive advantage in the market.
Question 18 Report
The pie chart above represent the total population of a school of 1,200. The shaded area of 60∘ shows the population of the underaged pupils.
What is the population of the matured students?
Answer Details
Since the entire pie chart represents the total population of the school, and the shaded area of 60∘ represents the underaged pupils, then the remaining unshaded area of the pie chart must represent the population of matured students. To find the measure of the unshaded area, we can subtract the measure of the shaded area from the total measure of the pie chart, which is 360∘ (since a circle has 360 degrees). So the unshaded area is: 360∘ - 60∘ = 300∘ The unshaded area of 300∘ represents the population of the matured students. To find the actual population of the matured students, we need to convert the 300∘ into a proportion of the total population. The proportion of the matured students is: 300∘ / 360∘ = 5/6 This means that the population of the matured students is 5/6 of the total population of the school, which is: (5/6) x 1200 = 1000 Therefore, the population of the matured students is 1000.
Question 19 Report
What happens when the central bank increases the bank rate in an economy
Answer Details
When the central bank increases the bank rate, it becomes more expensive for banks to borrow money from the central bank. This, in turn, leads banks to charge higher interest rates on loans they give to their customers. As a result, borrowing becomes more expensive for customers, so they might choose to borrow less money or pay off existing loans. This discourages borrowing and slows down the overall spending in the economy. On the other hand, since banks have to pay a higher interest rate to the central bank, they might be able to increase the interest they charge on loans, which would increase their profits. The increase in the bank rate does not directly impact the money supply in the economy. The central bank can use other tools, such as open market operations, to influence the money supply.
Question 20 Report
The largest component of national income in developing countries consist of
Answer Details
In developing countries, the largest component of national income is typically wages and salaries. This means that the majority of the income earned in these countries comes from the money that people make from their jobs or employment. Wages and salaries are paid to workers in exchange for their labor, and they are typically the main source of income for most people in developing countries. This income can come from a variety of sources, including working in factories, farming, providing services, or working in other industries. While profits and rent can also be important sources of income in some cases, they generally make up a smaller proportion of national income in developing countries. Profits are the earnings that businesses make after deducting their expenses, while rent is the income that comes from owning property or other assets. In summary, the largest component of national income in developing countries is typically wages and salaries, which are earned by workers in exchange for their labor.
Question 21 Report
An exceptional demand curve can result from
Answer Details
An exceptional demand curve can result from an expectation of future price increase. When people think that the price of a good or service is going to increase in the future, they may start buying more of it now in order to avoid paying the higher price later. This increase in demand can cause the price of the good or service to go up in the present, creating an exceptional demand curve that deviates from the typical downward-sloping demand curve. The other factors, such as an increase in the price of raw materials, increase in the size of the population, or change in taste of consumers, can also impact the demand for a good or service, but an expectation of future price increase is a unique factor that can result in an exceptional demand curve.
Question 22 Report
Budget deficit is the amount by which
Answer Details
Budget deficit is the amount by which total expenditure exceeds revenue. A budget deficit occurs when a government or organization spends more money than it takes in through revenue, such as taxes or other sources of income. This can result in the accumulation of debt over time, which can have long-term implications for the financial health of the government or organization. While recurrent expenditure and capital expenditure are both types of expenditures that can contribute to a budget deficit, neither of these terms captures the full picture of a budget deficit. Recurrent expenditure refers to ongoing or routine expenses such as salaries, utilities, and other operating costs, while capital expenditure refers to spending on assets such as buildings, equipment, and infrastructure. A budget deficit can result from either type of expenditure, as well as from other sources of spending such as debt servicing or unexpected events that require emergency spending.
Question 23 Report
An example of commodity money is
Answer Details
An example of commodity money is silver. Commodity money is a physical object that has intrinsic value in addition to its value as a medium of exchange. Historically, commodities such as gold and silver have been used as a form of money because they are scarce and have inherent value. For example, silver is used not only as money, but also for jewelry, silverware, and other industrial applications. In this way, its value is based on its usefulness in addition to its value as a medium of exchange. In contrast, modern forms of money, such as currency notes, mobile money, and cheques, are not commodities in and of themselves but represent a claim on goods and services.
Question 24 Report
Marginal cost is?
Answer Details
Marginal cost refers to the cost of producing one additional unit of a good or service. It is the cost of producing the last or extra unit of output. This cost includes the variable costs of producing the additional unit, such as the cost of materials and labor, but it does not include fixed costs like rent or salaries, which do not change with the level of production. The concept of marginal cost is important in economics because it helps businesses and policymakers make decisions about how much to produce, what price to set for their goods or services, and whether to enter or exit a market. By analyzing their marginal costs, businesses can determine whether producing an additional unit of a good will be profitable or not.
Question 25 Report
Which of the following factors is not a cause of diminishing returns?
Answer Details
The factor that is not a cause of diminishing returns is "Technological innovations". Diminishing returns refers to the decrease in marginal output or production as more units of a variable input (such as labor or capital) are added to a fixed amount of other inputs (such as land or machinery). This occurs because the fixed inputs become increasingly scarce relative to the variable inputs, which can lead to inefficiencies and reduced productivity. The other three factors listed - an increase in variable inputs, land fragmentation, and constant technology - can all contribute to diminishing returns. For example, adding more workers to a fixed amount of land may lead to overcrowding and reduced productivity (land fragmentation). Similarly, if technology remains constant while more inputs are added, the additional inputs may not be fully utilized and may even become redundant. In contrast, technological innovations can actually help to overcome diminishing returns by allowing for more efficient use of inputs and increasing productivity. New technologies can improve the efficiency of production processes, reduce waste, and create new products or services, all of which can lead to increased output and economic growth.
Question 26 Report
A major characteristic of natural resources is they
Answer Details
A major characteristic of natural resources is that they are free gifts of nature. This means that they are not produced by humans, but are found naturally in the environment. Examples of natural resources include water, air, forests, minerals, and fossil fuels. However, although natural resources are free in the sense that they are not created by humans, their extraction, production, and transportation often involve costs. Additionally, some natural resources may become scarce over time due to overuse or depletion, leading to increased prices and a greater focus on sustainability and conservation efforts.
Question 27 Report
To compare the standard of living among nations, the most widely used economic indicator is the
Answer Details
To compare the standard of living among nations, the most widely used economic indicator is the real per capita income. This is a measure of the average income per person in a given country, adjusted for inflation to reflect the purchasing power of that income. It is calculated by dividing the real gross domestic product (GDP) of a country by its population, which gives a sense of the economic output per person. While per capita nominal income and real gross national income are also used as economic indicators, they do not take into account inflation or differences in the cost of living across countries, which can make them less useful for comparing living standards. Real domestic output is not as widely used as real per capita income as it does not take into account the size of the population, which is an important factor in determining the standard of living.
Question 28 Report
Which of the following factors is not a reason for farmers' unstable incomes?
Answer Details
Question 29 Report
There is unemployment of resources when production is
Answer Details
Unemployment of resources occurs when production is below the production possibility curve, which means that the economy is not using all of its available resources to produce goods and services. These unused resources can include labor, capital, land, and natural resources. When production is within the production possibility curve, it means that the economy is using all of its resources efficiently and producing as much as it can given its current level of resources. Along the production possibility curve, the economy is also producing efficiently, but it is not using all of its resources. If production is outside the production possibility curve, it means that the economy is not capable of producing that level of output given its current resources. Finally, if production is adequate to meet market demand, it means that the economy is producing enough goods and services to satisfy the needs and wants of consumers. In summary, unemployment of resources occurs when the economy is not using all of its available resources to produce goods and services, which results in an output level below the production possibility curve.
Question 30 Report
Which of the following situations can give rise to economic problems
Answer Details
Question 31 Report
In the long-run, a firm must shut down if its average revenue is
Answer Details
In the long-run, a firm should shut down if its average revenue is less than its average cost. This is because, in the long-run, all costs are considered variable, meaning the firm can adjust its production and input levels. If the firm continues to operate despite having average revenue less than average cost, it will continue to incur losses. To understand this concept, it's essential to know what the average revenue and average cost mean. Average revenue is the total revenue earned by a firm divided by the quantity of output produced. On the other hand, average cost is the total cost incurred by a firm divided by the quantity of output produced. The average cost can further be divided into two categories: average variable cost and average fixed cost. The average variable cost is the cost that varies with the level of output, such as labor and raw material costs. In contrast, the average fixed cost is the cost that remains constant regardless of the level of output, such as rent and salaries. So, in the long-run, a firm must shut down if its average revenue is less than its average cost because it means that the firm is not generating enough revenue to cover all its variable and fixed costs. By shutting down, the firm can avoid further losses and redirect its resources elsewhere. On the other hand, if the firm's average revenue is greater than its average cost, it can continue to operate and earn profits.
Question 32 Report
An effect of inflation is that it
Answer Details
An effect of inflation is that it "favors debtors at the expense of creditors." Inflation reduces the real value of money over time, which means that the value of debt also decreases. This can be an advantage for debtors, who are able to repay their debts with money that is worth less than when they borrowed it. In contrast, creditors are disadvantaged by inflation, as the value of the money they receive in repayment is worth less than the money they loaned out. Inflation can also have other effects, such as reducing the purchasing power of consumers, increasing uncertainty, and distorting economic decision-making.
Question 33 Report
A price floor is usually fixed
Answer Details
A price floor is typically set above the equilibrium price, and it creates a surplus of goods or services. When the price is set above the equilibrium level, it causes suppliers to offer more products than buyers are willing to purchase at that higher price. This leads to a surplus, where there are more goods available than there are buyers willing to buy them. Therefore, a price floor usually causes surpluses, and not shortages.
Question 34 Report
Producers operating in a free market economy are more efficient as a result of
Answer Details
Producers operating in a free market economy are more efficient as a result of the existence of competition. In a free market, businesses compete with each other for customers by offering better quality products, lower prices, or both. This competition forces producers to be efficient and innovative in order to remain competitive and attract customers. As a result, businesses are motivated to increase productivity, reduce waste, and improve their products and services to meet customer needs. The competition also leads to more choices for consumers and lower prices, as businesses strive to provide the best value for money. In contrast, if there were no competition, businesses would have less incentive to improve their operations, resulting in lower efficiency and higher prices for consumers.
Question 36 Report
The price mechanism
Answer Details
The price mechanism is a system in an economy where the prices of goods and services are determined by the forces of supply and demand. This mechanism is responsible for regulating the balance between what consumers want to buy and what producers want to sell. As the demand for a particular item increases, the price of the item will rise, causing producers to increase supply to meet the demand. On the other hand, if the demand decreases, the price will fall, and producers will decrease their supply. In this way, the price mechanism helps allocate scarce resources by ensuring that the goods and services that are in high demand are produced and distributed more, while those that are not in high demand are produced and distributed less. In conclusion, the price mechanism does all of the above - regulates supply and demand, rations the consumers, rewards the producers, and allocates scarce resources - to ensure an efficient and effective allocation of resources in an economy.
Question 37 Report
A positive effect of a rapid population increase is
Answer Details
A positive effect of a rapid population increase is a wider market for goods and services. When there are more people in a country, there is a higher demand for goods and services, which can lead to economic growth and development. As more people are born and immigrate to a country, they will need housing, food, clothing, healthcare, and other goods and services, which can lead to an increase in jobs and businesses. This wider market for goods and services can stimulate economic growth, create job opportunities, and ultimately improve the standard of living for individuals in the country. However, it is important to note that rapid population growth can also bring challenges such as pressure on resources and infrastructure, which can lead to other negative effects.
Question 38 Report
A possible factor which limits the extent of growth of a firm is the
Answer Details
One possible factor that limits the extent of growth of a firm is the unwillingness to share ownership and control. When a firm is controlled by a single owner or a small group of owners who are not willing to share ownership or decision-making power, it can limit the firm's ability to raise capital, make strategic partnerships, or expand into new markets. In contrast, allowing outside investors or partners to have a stake in the company can provide the firm with access to more resources, expertise, and new opportunities for growth.
Question 39 Report
If the Central Bank increases its bank rate
Answer Details
If the Central Bank increases its bank rate, it means that it has increased the interest rate at which commercial banks can borrow money from the Central Bank. This, in turn, makes it more expensive for commercial banks to borrow money, which can have several effects on the economy. Firstly, since it is more expensive for banks to borrow money, they may become more cautious about lending money to their customers. This means that customers may find it more difficult to obtain loans or credit from banks, and the amount of borrowing may decrease. So, is not correct. Secondly, if banks find it more expensive to borrow money, they may also try to increase the interest rates they charge on loans and mortgages to maintain their profits. This could make borrowing more expensive for customers, and the interest charges by banks may rise rather than fall. So, is not correct. Thirdly, if the cost of borrowing money for commercial banks increases, they may not want to borrow as much money, which could reduce the supply of money in the economy. So, is correct. Lastly, an increase in the Central Bank's bank rate may not cause many banks to shut down their operations. However, some smaller banks or financial institutions that heavily rely on borrowing may struggle to stay afloat. So, is not correct. In conclusion, an increase in the Central Bank's bank rate can reduce the supply of money in the economy and increase the cost of borrowing for banks, which could result in higher interest rates for customers.
Question 40 Report
The demand for labour is an example of
Answer Details
The demand for labor is an example of "derived demand." Derived demand refers to the demand for a factor of production or a good that arises as a result of the demand for another good or service. In the case of labor, it is not demanded for its own sake but rather because it is needed to produce goods and services that consumers demand. The demand for labor is therefore derived from the demand for the goods and services that labor helps to produce.
