JAMB UTME - Economics - 2022
Question 1 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 2 Report
The mining sector of an economy contributes 60% to the Gross Domestic Product(GDP). If the GDP is $540, what is the contribution of the mining sector?
Answer Details
If the mining sector contributes 60% to the Gross Domestic Product (GDP), then its contribution can be calculated by multiplying the GDP by 60% (or 0.60, which is the decimal equivalent of 60%).
So, the contribution of the mining sector to the GDP is:
Contribution of mining sector = GDP x 60%
= $540 x 0.60
= $324
Therefore, the contribution of the mining sector to the GDP is $324.
Question 4 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 5 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 6 Report
A firm that closes down will still incur
Answer Details
Even if a firm closes down, it will still incur some fixed costs. Fixed costs are expenses that must be paid regardless of the level of production or whether the business is operating or not. These costs include things like rent, insurance, salaries of employees on long-term contracts, and equipment leases. Variable costs, on the other hand, are expenses that vary depending on the level of production or business activity. For example, the cost of materials or labor directly related to producing goods or services. If the firm closes down, it will not incur variable costs because it will not be producing any goods or services. Total cost is the sum of fixed and variable costs, so if the firm is not producing anything, the total cost will be equal to the fixed cost. Marginal cost is the cost of producing one additional unit of a good or service. If the firm is closed down, there is no production, so there is no marginal cost.
Question 7 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 8 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 9 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 10 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 11 Report
An important factor hindering the rapid development of the industrial sector in Nigeria.
Answer Details
An important factor hindering the rapid development of the industrial sector in Nigeria is inadequate infrastructure facilities. This includes factors such as inadequate transportation systems, unreliable electricity supply, poor communication networks, and insufficient access to water and sanitation facilities. These factors can increase the cost of production, reduce productivity and efficiency, and make it difficult for industries to compete with other countries. The dominance of the oil sector has also been a significant factor, as it has led to a neglect of other sectors, including manufacturing and industry. Excessive demand for finished products and rural-urban migration may have some impact on industrial development but are not as significant as inadequate infrastructure and the dominance of the oil sector.
Question 12 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.
Question 13 Report
Wholesalers play an important in the distribution of goods and services because they
Answer Details
Wholesalers play an important role in the distribution of goods and services because they act as intermediaries between producers and retailers. Wholesalers buy goods in large quantities from producers and then sell them in smaller quantities to retailers. This enables producers to focus on their production process without worrying about marketing and distribution. On the other hand, retailers can buy smaller quantities of goods from wholesalers, which allows them to stock a variety of products without having to buy in bulk. Wholesalers also provide other important services, such as financing and logistics. They may provide credit to both producers and retailers, allowing them to manage their cash flow and invest in their businesses. Additionally, wholesalers can handle the transportation and storage of goods, which can be a complex and expensive task for smaller businesses. Therefore, wholesalers play a crucial role in the distribution process, providing valuable services and enabling the smooth flow of goods and services from producers to retailers, and ultimately to consumers.
Question 14 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 15 Report
Which of the following is not emphasized in a product possibility curve?
Answer Details
The concept of unemployment of labor is not emphasized in a product possibility curve. A product possibility curve is a graphical representation of the trade-off between two goods that an economy can produce, given its limited resources and technology. The curve shows the maximum combinations of the two goods that can be produced with the available resources, taking into account that some resources are better suited for producing one good over the other. The emphasis is on the scarcity of resources and the efficiency with which they are being used, not on the employment of labor.
Question 16 Report
The figure above shows change in demand for commodity x which is a normal good. Use it to answer the questions that follows
Which of the following caused the change in demand from D0 D0 to D2 D2?
Answer Details
Question 17 Report
An important factor hindering the rapid development of the industrial sector in Nigeria.
Answer Details
Question 18 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 19 Report
Palm oil and palm kernel are in
Answer Details
Palm oil and palm kernel are in joint supply. Joint supply refers to a situation in which two or more products are produced together as a result of a single production process. In the case of palm oil and palm kernel, both products are obtained from the same fruit of the oil palm tree. When the fruit is processed, it produces two distinct products: palm oil and palm kernel. Palm oil is obtained from the fleshy outer part of the fruit, while palm kernel is obtained from the inner seed or kernel. Since both products are obtained from the same production process, the quantity of one product that is produced is directly related to the quantity of the other product that is produced. As a result of being in joint supply, the prices of palm oil and palm kernel are interdependent. If the demand for one product increases, this will increase the supply of the other product, which can lower its price. For example, if the demand for palm oil increases, more oil palm fruit will be processed, leading to an increase in the supply of palm kernel and a potential decrease in its price. To summarize, palm oil and palm kernel are in joint supply because they are both obtained from the same production process and the quantity of one product produced is directly related to the quantity of the other product produced. The prices of both products are interdependent, and a change in demand for one product can affect the supply and price of the other product.
Question 20 Report
The theory of comparative advantage states that a commodity should be produced in that nation where the
Answer Details
The theory of comparative advantage states that a commodity should be produced in that nation where the opportunity cost is least. Opportunity cost is the cost of choosing one option over another, and in the context of comparative advantage, it refers to the cost of producing a particular good or service in terms of what has to be given up to produce it. A country should specialize in producing and exporting the goods and services for which it has a comparative advantage, which means that it can produce them at a lower opportunity cost than other countries. While the absolute cost and absolute money cost of production can be important factors in determining the competitiveness of a particular commodity, the theory of comparative advantage emphasizes the importance of considering opportunity cost. Furthermore, the production possibility curve, which shows the maximum combination of two goods that can be produced with a given set of resources, is not directly related to the theory of comparative advantage, although it can help illustrate some of the concepts involved in the theory.
Question 21 Report
The point x inside the ppc indicate?
Answer Details
The point x inside the PPC (Production Possibility Curve) indicates that some of the resources in the economy are currently idle or not being fully utilized. This means that the economy is not producing at its maximum potential, and there is room for further growth and development. The PPC represents the different combinations of goods and services that an economy can produce given its limited resources and technology. The curve shows the maximum output that can be produced with the available resources and technology at a given point in time. Any point inside the curve represents a level of production that is below the maximum potential output, indicating that some resources are not being used to their full capacity. Therefore, if the economy is currently operating at a point inside the PPC, it has the potential to increase its production of goods and services by putting its idle resources to work. This could be achieved through measures such as increasing investment, improving technology, or providing more education and training to the workforce.
Question 22 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 24 Report
Under a floating exchange rate regime, the determinant of the exchange rate is
Answer Details
Under a floating exchange rate regime, the determinant of the exchange rate is "demand for and supply of foreign goods." In a floating exchange rate system, the exchange rate between two currencies is determined by the market forces of supply and demand. Factors such as interest rates, inflation rates, and trade flows can influence the demand for and supply of currencies, which in turn can affect the exchange rate. Unlike fixed exchange rate systems, where the exchange rate is determined by government policy, in a floating exchange rate system, the exchange rate can fluctuate based on market conditions.
Question 25 Report
Nation engage in external trade because of difference in
Answer Details
Nations engage in external trade because of the differences in comparative cost, also known as comparative advantage. Comparative advantage is the ability of a country to produce goods or services at a lower opportunity cost than another country. Opportunity cost is the cost of one choice in terms of the best alternative that must be given up. In other words, it's the cost of producing one product in terms of the number of other products that could have been produced instead. For example, let's say that Country A can produce both cars and computers, but it can only produce one of them at a time. If Country A devotes all its resources to producing cars, it can produce 100,000 cars per year. If it devotes all its resources to producing computers, it can produce 50,000 computers per year. Meanwhile, Country B can produce 60,000 cars per year or 30,000 computers per year. In this case, Country A has a comparative advantage in producing cars because it has a lower opportunity cost of producing cars compared to computers. As a result, Country A can produce cars at a lower cost and sell them to Country B, which can in turn produce computers at a lower cost and sell them to Country A. This allows both countries to benefit from trade and improve their overall welfare. In summary, nations engage in external trade because of the differences in comparative cost, which allow countries to specialize in producing goods and services that they can produce more efficiently and trade with other countries for goods and services that they cannot produce efficiently. This creates mutual benefits for all countries involved.
Question 26 Report
An advantage of the sole proprietorship over the partnership form of business organization is that
Answer Details
An advantage of the sole proprietorship over the partnership form of business organization is that it relies on the decision of one individual and does not require the consent or involvement of others. This can make decision-making more efficient and effective, and reduce the possibility of conflicts between partners. In contrast, partnerships require consensus and agreement among multiple individuals, which can be time-consuming and challenging, especially when there are disagreements. However, it is important to note that a sole proprietorship does not enjoy limited liability for debt in the event of failure, and its existence is limited by the individual owner's life span.
Question 27 Report
If units of a variable factor are increasingly added to a fixed factor and the marginal physical product keeps increasing, production is said to be taking place under condition of
Answer Details
The production process described in the question, where the marginal physical product of the variable factor increases as more units of it are added to a fixed factor, is referred to as increasing returns to the variable factor. In this case, the variable factor is becoming increasingly productive as more units of it are added, which results in an increase in the marginal physical product. Increasing returns to scale, on the other hand, refer to the situation where an increase in all factors of production leads to a more than proportionate increase in output. Constant returns to the variable factor occur when increasing the variable factor by a certain percentage leads to a proportional increase in output. Finally, external economies of scale refer to the cost advantages that a firm experiences as a result of factors outside of its control, such as the growth of an industry or the development of infrastructure.
Question 28 Report
A disadvantage of a jont-stock company is
Answer Details
A disadvantage of a joint-stock company is limited control in management by shareholders. In a joint-stock company, shareholders own a portion of the company and can make money by selling their shares for a profit or receiving dividends. However, shareholders do not typically have direct control over the day-to-day management of the company. Instead, a board of directors and executive management team make decisions on behalf of the company. This lack of control in management can be seen as a disadvantage for shareholders who may have different ideas about how the company should be run or who may not agree with the decisions made by the board or executive management team. Additionally, shareholders may not be able to influence the direction of the company as much as they would like. Overall, while joint-stock companies offer benefits such as limited liability for shareholders, this disadvantage in control over management may be a concern for some investors.
Question 29 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 31 Report
What type of price elasticity of demand is the diagram above representing?
Question 32 Report
Commercial banks are different from development banks in that the latter
Answer Details
Commercial banks and development banks serve different functions within the financial system. Commercial banks are focused on providing financial services to individuals and businesses, such as deposit accounts, loans, and credit cards. They generally lend on a short-term basis and deal in a variety of currencies, including foreign currencies. In contrast, development banks are focused on promoting economic development and supporting long-term projects that may not be attractive to commercial banks. They typically provide financing for large infrastructure projects, such as highways, railways, and power plants, as well as small and medium-sized enterprises. Development banks may be government-owned, private, or a combination of both, and their main goal is to support economic growth and development. Development banks may also offer technical assistance and advisory services to help businesses and governments develop the skills and expertise needed to manage large-scale projects effectively. Unlike commercial banks, development banks may not pay interest on current accounts and may have different lending terms and requirements based on the specific needs of the project or business being financed.
Question 33 Report
A major function of the retailer is to
Answer Details
A major function of the retailer is to break bulk and sell products in small units to consumers. This means that retailers purchase goods in large quantities from wholesalers or manufacturers and then sell them in smaller quantities to individuals or households. By doing so, retailers make it easier for consumers to access a wide range of products, as they do not have to buy in bulk or directly from the manufacturer. Additionally, retailers often play a key role in generating demand for products through advertising and marketing efforts. By showcasing products in stores and online, and through various forms of advertising, retailers can help to build brand awareness and encourage consumers to purchase products. While some retailers may offer credit to wholesalers or consumers, this is not a primary function of retailing. Similarly, while retailers can help to reduce the cost of distribution by consolidating products and shipping them in bulk, this is a secondary function of retailing that supports the primary function of breaking bulk and selling products in small units.
Question 34 Report
In a pie chart, the population of a city is represented by 45. If the country has a population of 10 million people, then the city's population is?
Answer Details
To solve this problem, we need to first understand what a pie chart is and how it works. A pie chart is a circular graph that is divided into sectors, with each sector representing a proportion of the whole. The size of each sector is proportional to the quantity it represents, so we can use it to determine the percentage or fraction of the whole that each quantity represents.
In this case, the city's population is represented by 45 degrees of the pie chart. If we assume that the pie chart represents the entire country's population, which is 10 million people, then the fraction of the country's population represented by the city is:
45 degrees / 360 degrees = 1/8
This means that the city's population is 1/8 of the entire country's population. To find out the actual population of the city, we can multiply the fraction by the total population:
(1/8) x 10 million = 1.25 million
Therefore, the correct answer is 1.25 million.
Question 35 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 36 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 37 Report
A country's budget allocation to various sectors of the economy is shown in the pie chart above...
Use it to answer this question.
If the budget of the country was $7,200, how much is allocated to Education?
Answer Details
Based on the pie chart, the Education sector is represented by 1/3 of the total budget allocation. To find out how much is allocated to Education, we can calculate 1/3 of the total budget: 1/3 x $7,200 = $2,400 Therefore, the answer is $2,400.00.
Question 38 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 39 Report
The major role of multi-national companies in the petroleum industry in Nigeria is
Answer Details
The major role of multinational companies in the petroleum industry in Nigeria is oil prospecting. Multinational companies, also known as International Oil Companies (IOCs), play a significant role in the exploration and production of oil and gas in Nigeria. These companies invest heavily in the exploration of new oil fields, as well as the development and production of existing fields. While some IOCs are also involved in oil marketing and refining, their primary role in Nigeria is oil prospecting. The IOCs in Nigeria include major companies such as Shell, ExxonMobil, Chevron, and Total.
Question 40 Report
One benefit a country can derive from the extraction of crude oil is increase in
