JAMB UTME - Economics - 2022
Question 1 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 2 Report
A consumer of a single commodity is in equilibrium when
Answer Details
A consumer of a single commodity is in equilibrium when they have reached a point where they are satisfied with the amount of the commodity they have purchased and consumed, and do not feel the need to buy any more or any less of it. This equilibrium can be achieved in different ways, but one common way is when the marginal utility, or the additional satisfaction gained from consuming one more unit of the commodity, is equal to the price paid for that unit. In other words, the consumer is willing to pay the price because they feel they are getting enough satisfaction from the additional unit. At this point, the consumer has no incentive to buy more of the commodity, because the marginal utility would be lower than the price, and they would feel like they are overpaying for the satisfaction gained. Conversely, if the price were to decrease, the marginal utility would be higher than the price, and the consumer may feel like they are getting a good deal and may want to purchase more of the commodity. Ultimately, the consumer is in equilibrium when they have found a balance between the satisfaction gained from the commodity and the price paid for it.
Question 3 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 4 Report
Under flexible exchange rates, a deficit could be corrected by
Answer Details
Under flexible exchange rates, a deficit could be corrected by the appreciation of other currencies. Flexible exchange rates are determined by market forces of supply and demand, without any government intervention. This means that the value of a country's currency can fluctuate based on changes in economic conditions and market expectations. In the case of a deficit, the demand for a country's currency will decrease, causing its value to fall relative to other currencies. This depreciation can make the country's exports cheaper and more competitive, while making imports more expensive, which can help correct the deficit. On the other hand, the appreciation of other currencies can make a country's exports more expensive and reduce demand for them, which can worsen the deficit.
Question 5 Report
In the long run, all production factors are
Answer Details
In the long run, all production factors are "variable." This means that in the long run, a firm can adjust all of its production inputs, including labor, capital, and technology, to change the scale of its operations. In the short run, some inputs may be fixed, such as the size of the factory, which can only be changed in the long run. But in the long run, all inputs can be varied to optimize production and increase efficiency. The ability to adjust all inputs in the long run is what distinguishes the long run from the short run in the theory of production.
Question 6 Report
The type of unemployment found among workers who leave their jobs in search of other jobs is termed
Answer Details
The type of unemployment found among workers who leave their jobs in search of other jobs is called frictional unemployment. This occurs when individuals are between jobs and are actively searching for new employment opportunities. Frictional unemployment is typically short-term and is a natural part of the job search process. It can occur due to various reasons such as workers seeking better job opportunities, moving to a new location, or recently graduating from school. Although frictional unemployment may be a temporary situation for individuals, it can have an impact on the economy if the time taken to find a new job is prolonged. However, it is generally seen as a less problematic form of unemployment than other types, such as structural or cyclical unemployment, which can have more severe and long-lasting effects on the economy.
Question 8 Report
An example of transfer payments in national income accounting is
Answer Details
Transfer payments refer to payments made by the government or other institutions to individuals or other entities, without receiving any goods or services in return. These payments are typically made for social welfare purposes or to redistribute income. An example of a transfer payment in national income accounting is unemployment allowance paid to citizens who are unemployed. The government pays these allowances to support individuals who are currently out of work and seeking employment. This payment is considered a transfer payment because the government is not receiving any goods or services in return for the funds provided. Transfer payments are not included in the calculation of GDP because they do not represent the production of goods or services. However, they are important in measuring the overall economic well-being of a society, particularly in terms of income distribution and social welfare.
Question 9 Report
The stock exchange is an example of the
Answer Details
The stock exchange is an example of a capital market. A capital market is a market where individuals and institutions trade financial securities, such as stocks and bonds, with the goal of raising capital. In other words, the capital market is where businesses can go to raise money by selling ownership in the company (stocks) or borrowing money (bonds) from investors. The stock exchange is a specific type of capital market where publicly-traded companies can sell ownership in the form of stocks to the public. Investors can buy and sell these stocks on the exchange, and the value of the stocks can rise or fall based on various factors, such as the company's financial performance, overall market conditions, and investor sentiment. Overall, the stock exchange and other capital markets play an important role in facilitating the flow of capital and resources throughout the economy, helping businesses raise funds to invest in growth and development, and providing investors with opportunities to earn a return on their investment.
Question 10 Report
Which of the following forms of economic integration is a member nation free to impose duty against non-members
Answer Details
A free trade area is a form of economic integration where member nations agree to eliminate tariffs and trade barriers on goods and services traded among themselves. However, each member nation is still free to impose duties against non-member nations. In other words, members have a free trade agreement with each other, but they can still have their own trade policies towards non-members. In contrast, a customs union is an advanced form of a free trade area where member nations not only eliminate tariffs among themselves, but they also agree to have a common external tariff towards non-member nations. This means that all goods entering the customs union must pay the same tariffs, regardless of which member nation they are entering. A common market is a further step towards integration, where not only goods, but also factors of production such as capital and labor can freely move among member nations. This allows for a more integrated and efficient market, but it also means that member nations have less control over their trade policies. An economic community is a broader form of integration, where member nations agree to coordinate and harmonize their economic policies in a wide range of areas, including trade, monetary policy, and fiscal policy. This is the most advanced form of integration, as it involves a high degree of cooperation and coordination among member nations.
Question 11 Report
A made obstacle to economic development is
Answer Details
A major obstacle to economic development is low farm productivity. Agriculture is a significant sector in many developing countries, and low farm productivity can have a significant impact on economic growth and development. Low productivity in agriculture can result from a range of factors, including inadequate access to credit, poor infrastructure, low-quality inputs, and limited knowledge of modern farming techniques. This can limit the production of food and raw materials for industrial processes, resulting in higher prices, reduced exports, and lower economic growth. Increasing farm productivity is often a key focus of development programs and policies aimed at promoting economic development in developing countries.
Question 12 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 13 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 14 Report
If inflation is anticipated, people may
Answer Details
If inflation is anticipated, people may choose to spend less money. This is because inflation reduces the purchasing power of money, meaning that the same amount of money can buy fewer goods and services. In response, people may decide to be more frugal with their spending, save more money, or look for ways to reduce their expenses. By spending less, they can try to maintain their purchasing power and avoid the negative effects of inflation.
Question 15 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 16 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 17 Report
Developments outside a given firm that reduce the firm’s costs are called
Answer Details
Developments outside a given firm that reduce the firm's costs are called "external economies." External economies refer to the benefits that firms receive from positive externalities generated by other firms or industries in the same geographic area. For example, if a new technology park is established nearby, the firms in the area may benefit from lower input costs, better transportation links, or access to skilled workers. These benefits can result in lower production costs, higher productivity, and improved competitiveness for the firms in the area. The opposite of external economies is external diseconomies, which occur when external factors increase the costs of production for firms in a particular area.
Question 18 Report
Fixing the prices of agricultural products can be a problem because of the
Answer Details
Fixing the prices of agricultural products can be a problem because of the unpredictable output of farmers. Agricultural output can vary due to a variety of factors including weather, pests, disease, and other unpredictable factors. This variability can make it difficult to accurately predict the supply of agricultural products and set prices accordingly. While the instability of government policies, activities of marketing boards, and the size of agricultural exports can also have an impact on the pricing of agricultural products, the unpredictable output of farmers is a primary factor that can create challenges in setting prices. Instability of government policies can create uncertainty in the market, while the activities of marketing boards can sometimes lead to distortions in supply and demand. The size of agricultural exports can also influence prices by affecting the balance of supply and demand in domestic and international markets.
Question 19 Report
An important factor hindering the rapid development of the industrial sector in Nigeria.
Answer Details
Question 20 Report
A major disadvantage of a capitalist economy is that it
Answer Details
The major disadvantage of a capitalist economy is that it worsens income inequality among the citizens. In a capitalist system, the means of production and distribution of goods and services are privately owned and operated for profit, leading to a concentration of wealth and power in the hands of a small group of people who own the most productive resources. This results in a situation where the rich get richer, while the poor get poorer, and there is a growing gap between the incomes and living standards of the wealthy and the less well-off members of society. This can create social unrest and political instability, as well as limit opportunities for social mobility and economic growth.
Question 21 Report
In a country with large population of full-time house wives, national income
Question 22 Report
What type of price elasticity of demand is the diagram above representing?
Question 23 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 24 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 25 Report
The effect of changes in the condition of demand on a demand schedule with the price constant is a
Answer Details
The effect of changes in the condition of demand on a demand schedule with the price constant is a shift of the demand curve. When there is a change in any factor that affects the quantity demanded at each price level, such as income, tastes and preferences, prices of related goods, or population, the entire demand curve shifts to a new position. This means that at each price level, the quantity demanded changes, leading to a new demand schedule. A movement along the demand curve occurs when there is a change in price, leading to a change in quantity demanded, while the other factors remain constant. Deflation or hyperbola formation are not terms typically used to describe changes in demand.
Question 26 Report
If at 10K per kg, 1000kg of yam were purchased, the resultant point elasticity of demand is
Answer Details
Question 27 Report
Economic goods are termed scarce goods when they are
Answer Details
Economic goods are termed scarce goods when they are not available in sufficient quantity to satisfy all wants for them. In other words, when there is a limited supply of a good or resource, but a potentially unlimited demand for it, that good is considered to be scarce. This concept is fundamental to economics because it helps to explain why goods have value and why individuals and societies must make choices about how to allocate scarce resources.
Question 28 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 29 Report
Cooperative societies are formed mainly to
Answer Details
Cooperative societies are primarily formed to promote and maintain the welfare of their members. This means that the members of a cooperative society come together to work towards achieving common goals that benefit everyone in the society. Cooperative societies are usually formed by a group of individuals who share a common interest, such as farming, housing, or credit. By working together, members can access resources that they may not have been able to on their own, such as bulk purchasing of materials, access to credit, or sharing of knowledge and skills. In a cooperative society, the focus is not on maximizing profits for individual members, but rather on achieving benefits that are shared by the entire group. By working together, members can create a sustainable and mutually beneficial organization that can help to address the needs of the community. Therefore, the main purpose of cooperative societies is to promote the welfare of members by providing a platform for collective action and collaboration.
Question 30 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 31 Report
IBRD as an international monetary institution is concerned with the
Answer Details
The International Bank for Reconstruction and Development (IBRD) as an international monetary institution is concerned with the development of infrastructure in member nations. The IBRD, also known as the World Bank, was established to help finance the reconstruction and development of war-torn and developing countries after World War II. The bank provides loans, technical assistance, and other financial services to support projects in a variety of sectors, including infrastructure development, such as transportation, energy, and communication networks, among others. While the IBRD is concerned with the economic development of member nations, it is not primarily focused on financing private business or improving trade among member nations, although these may be outcomes of its operations. Additionally, the IBRD may also provide assistance to member nations facing balance of payments problems, but this is not its primary objective.
Question 32 Report
Holding money to take care of contingencies is
Answer Details
Holding money to take care of contingencies is a precautionary motive. This means that people keep money saved in case of unexpected events or emergencies, such as a sudden illness, job loss, or car repair. By having money set aside, they are better prepared to handle these situations and can avoid going into debt or facing financial hardship. In short, holding money for precautionary reasons is a way to protect one's financial security and peace of mind.
Question 33 Report
Privatization and commercialization of public enterprises in Nigeria is necessitated by
Answer Details
The privatization and commercialization of public enterprises in Nigeria is necessitated by their operational inefficiency. Public enterprises in Nigeria, like in many other countries, have often been criticized for poor management, corruption, and inefficiency, which have resulted in heavy financial losses for the government. Privatization and commercialization are seen as a way to introduce more competition, increase efficiency, and reduce the financial burden on the government. While the IMF and the World Bank have encouraged privatization in many countries as a condition for receiving loans, in Nigeria, the privatization and commercialization policies were largely driven by domestic factors, including the need to improve the performance of public enterprises.
Question 34 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 35 Report
A baker bought flour and other ingredients for S250.00, spent S52.00 on distribution, sold the bread for S320.00. The value added by the baker.
Answer Details
The value added by the baker is $90.00. To calculate the value added by the baker, we need to subtract the cost of goods sold (COGS) from the revenue. The COGS in this case includes the cost of flour and other ingredients, which is not given, but we know that the baker spent a total of $250.00 on these items. We also need to include the cost of distribution, which is $52.00. So the total COGS is $250.00 + $52.00 = $302.00. The revenue from selling the bread is $320.00. Therefore, the value added by the baker is $320.00 - $302.00 = $18.00. In other words, the baker added $18.00 of value to the raw materials and distribution costs to produce and sell the bread. This value added represents the baker's contribution to the economy and is a measure of the wealth created by the baker's business.
Question 36 Report
In a free market economy, the rationing of scarce goods is done principally by?
Answer Details
In a free market economy, the rationing of scarce goods is principally done by the price mechanism. The price of a good is determined by the forces of supply and demand in the market. When the supply of a good is limited and demand for it is high, the price of that good will increase. This higher price will serve as an incentive for producers to increase their supply of the good, and for consumers to reduce their demand for it. As a result, the scarce good will be rationed among consumers based on their willingness to pay the higher price. This process occurs naturally without the need for government intervention or control, and is a key feature of a free market economy.
Question 37 Report
The effect of an increase in the personal income tax is to
Answer Details
The effect of an increase in the personal income tax is to reduce the disposable income of taxpayers. When personal income taxes are increased, taxpayers have less money to spend on goods and services, as more of their income is going towards taxes. This reduction in disposable income can lead to a decrease in consumer spending, which can have a negative impact on businesses and the economy as a whole. Increasing personal income taxes may also have a distorting effect on the economy, as it can create disincentives for individuals to work, save, and invest. However, it is not likely to raise the absolute price level, as this is determined by a variety of factors including supply and demand in the economy. Furthermore, an increase in personal income taxes is not directly linked to a reduction in unemployment, as this is influenced by a wide range of factors such as economic growth, labour market policies, and the overall state of the economy.
Question 38 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 39 Report
Scale of preference shows
Answer Details
The scale of preference refers to a list of a consumer's wants or desires arranged in order of importance or priority. It shows the consumer's preferences or choices among different options. The scale of preference is subjective and varies from person to person. For instance, if a person is given the choice to buy a new smartphone, a new pair of shoes, or a ticket to a concert, they may rank these options in order of priority. If they value communication more than entertainment, they may choose the smartphone as their top priority. Conversely, if they value entertainment more than communication, they may choose the concert ticket. Thus, the scale of preference is a way to understand how consumers make choices based on their preferences and priorities, and it helps in predicting their behavior in the market.
Question 40 Report
Occupational mobility as applied to factors of production means the case by which
Answer Details
