JAMB UTME - Economics - 2003

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Utility refers to the level of satisfaction or happiness that an individual derives from consuming a particular good or service. In other words, it is the value or benefit that a consumer obtains from using a product or service. The more a product or service satisfies the needs or desires of the consumer, the higher the utility that the consumer derives from it. Therefore, utility is related to consumption, and it measures the extent to which a good or service meets the needs and wants of the consumer.

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In a planned economy, the emphasis is on public ownership and control. A planned economy is an economic system in which the government or a central planning authority makes all decisions about what goods and services should be produced, how they should be produced, and how they should be distributed. In this system, the government or central planning authority owns and controls the means of production, such as factories, land, and resources. The aim of a planned economy is to promote social welfare and ensure that everyone's basic needs are met. Therefore, the emphasis in a planned economy is on public ownership and control. The government or central planning authority is responsible for making all decisions about what goods and services should be produced, how they should be produced, and how they should be distributed. This is in contrast to a market economy, where these decisions are made by individuals and private businesses based on prices and competition. In summary, in a planned economy, the emphasis is on public ownership and control. The government or central planning authority makes all decisions about what goods and services should be produced, how they should be produced, and how they should be distributed.

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To compare the standard of living among nations, the most widely used economic indicator is the real per capita income. Real per capita income is a measure of a country's economic output that accounts for inflation and population. It represents the average income per person in a country after adjusting for the cost of living. Real per capita income provides a better indication of the actual purchasing power of individuals in a country, as it takes into account the effects of inflation on the cost of living. This makes it a more accurate measure of the standard of living in different countries, as it reflects how much people can actually buy with their income. In summary, real per capita income is the most widely used economic indicator to compare the standard of living among nations because it provides a measure of the average income per person in a country, adjusted for inflation and population. This allows for a more accurate comparison of the purchasing power of individuals in different countries.

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When a union is composed of workers with the same skill, it is termed a craft union. A craft union is a type of labor union that represents workers who have a specific skill or trade, such as electricians, plumbers, or carpenters. The union is made up of workers who share a common interest in their craft or trade and who work in a specific industry or sector. The primary purpose of a craft union is to protect the interests of its members, such as negotiating better wages, benefits, and working conditions with their employers. Members of a craft union may also receive training and support to improve their skills and stay up-to-date with industry standards. Overall, a craft union helps to ensure that its members are fairly compensated and treated in the workplace, while also maintaining high standards of quality and professionalism within their respective trades.

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The inflation that is usually associated with periods of trade boom is called "demand-pull inflation." This type of inflation occurs when there is a high demand for goods and services in the economy, which leads to an increase in the general price level. During trade booms, businesses are producing more goods and services to meet the high demand, leading to an increase in the price of inputs such as labor and raw materials. This increase in input prices is passed on to the consumers in the form of higher prices, leading to demand-pull inflation.

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A country is said to be overpopulated when the resources available are inadequate to cater for the population. In other words, the population of the country exceeds the carrying capacity of the available resources such as food, water, land, and other essential resources. When a country is overpopulated, the resources become scarce and insufficient to meet the needs of the people. This can result in problems such as poverty, hunger, and environmental degradation. The population growth rate of a country is a key factor in determining whether a country is overpopulated or not. In summary, overpopulation occurs when the number of people in a country exceeds the capacity of the available resources to support them. It is important for countries to carefully manage their population growth rate to avoid overpopulation and ensure a sustainable future for all.

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Fixing the prices of agricultural products can be a problem because of the unpredictable output of farmers. Agricultural production is affected by factors such as weather conditions, pests and diseases, and availability of inputs, which are beyond the control of farmers. When prices are fixed, it does not take into account the unpredictability of the output of farmers, which can lead to surpluses or shortages of products. Surpluses may result in wastage and financial losses for the farmers, while shortages may lead to higher prices and shortages for consumers. Additionally, farmers may be discouraged from investing in new technologies and methods of production if they are not rewarded for their efforts. Therefore, fixing prices of agricultural products can lead to market distortions and inefficiencies.

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The demand for labour is an example of derived demand. This is because labour is not demanded for its own sake but for the output it produces. In other words, the demand for labour is derived from the demand for the goods and services that labour helps to produce. As the demand for goods and services increases, the demand for labour increases as well. Conversely, if the demand for goods and services decreases, the demand for labour decreases as well.

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The major role of multi-national companies in the petroleum industry in Nigeria is oil prospecting, which involves the exploration and discovery of oil reserves. Multinational companies play a significant role in the petroleum industry in Nigeria, with their involvement dating back to the discovery of oil in the 1950s. These companies use their expertise, technology, and financial resources to explore and develop oil reserves in Nigeria, which has led to the country becoming a major oil-producing nation. Oil prospecting involves the search for oil deposits in the ground and the evaluation of their commercial viability. Multinational companies invest heavily in this process, using advanced technology and techniques to identify potential reserves and assess their size and quality. Once a reserve is discovered and confirmed to be commercially viable, multinational companies may also be involved in oil marketing, which involves the sale and distribution of crude oil and refined petroleum products. In summary, the major role of multinational companies in the petroleum industry in Nigeria is oil prospecting, with their involvement also extending to oil marketing in some cases.

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The IBRD, which stands for International Bank for Reconstruction and Development, is an international monetary institution that is concerned with the development of infrastructure in member nations. It was established after the Second World War with the aim of promoting economic growth and reducing poverty in member nations through the provision of loans, technical assistance, and other forms of support. The IBRD focuses on financing long-term development projects in areas such as transportation, energy, and water supply, which are essential for economic growth and poverty reduction. While the IBRD does not directly address balance of payments problems or finance private businesses, its efforts to develop infrastructure and promote economic growth can indirectly help address these issues.

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An adverse environmental impact of the petroleum industry on the economy is oil spillage. Oil spillage refers to the accidental or intentional release of petroleum products into the environment, such as oceans, rivers, or land. Oil spillage can cause significant damage to the environment, as it harms wildlife, plants, and aquatic life. This can also affect human health and the economy, especially if it affects fishing or tourism industries. Clean-up and restoration efforts after an oil spill can be very costly and time-consuming, which can impact the economy negatively. Additionally, the negative impact of an oil spill can lead to a decline in the petroleum industry's reputation and lead to a decrease in investment and exploration. Therefore, the correct answer is option C: oil spillage.

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An improvement in technology will enable the country to produce at a point outside of its current production possibility curve (PPC). This is because an improvement in technology would allow the country to produce more output with the same amount of inputs or the same output with fewer inputs. In the diagram, the current production possibility curve represents the maximum amount of two goods that a country can produce given its current level of technology and resources. If technology improves, the country can produce more of both goods than it could before, allowing it to reach a point outside of the original PPC. Therefore, the answer to this question is that an improvement in technology will enable the country to produce at a point beyond Z, which represents its original PPC. The new production point will depend on the magnitude of the technology improvement and the specific production possibilities of the two goods. It could be anywhere on a new PPC that lies outside the original one.

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The effectiveness of devaluation as a solution to a balance of payments problem depends on the relative elasticities of demand and supply of imports and exports. When a country devalues its currency, it makes its exports cheaper and its imports more expensive. This should lead to an increase in demand for exports and a decrease in demand for imports. However, the actual effect on the balance of payments depends on the responsiveness of consumers and producers to changes in prices. If the demand for exports and imports is inelastic, meaning that consumers and producers are not very responsive to changes in prices, then devaluation may not have much effect on the balance of payments. On the other hand, if the demand for exports and imports is elastic, meaning that consumers and producers are very responsive to changes in prices, then devaluation can lead to a significant improvement in the balance of payments. Overall, the effectiveness of devaluation as a solution to a balance of payments problem depends on the relative elasticities of demand and supply of imports and exports. If demand is elastic, devaluation can lead to a significant improvement in the balance of payments. If demand is inelastic, devaluation may not have much effect on the balance of payments.

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If the demand curve facing a firm is sharply downward-sloping, the firm is likely to be a monopolist as it can have a great influence on price. A firm that faces a sharply downward-sloping demand curve has a relatively large market share or market power in the industry, meaning it has the ability to influence the market price. A monopolist is the only supplier of a good or service in the market, giving it the most control over the market price. The more elastic the demand curve facing the firm, the less control it has over the price, and the closer it becomes to a perfect competitor. Therefore, a sharply downward-sloping demand curve is a characteristic of a monopolist, not a monopolistic competitor, perfect competitor, or oligopolist.

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The privatization and commercialization of public enterprises in Nigeria is necessitated by their operational inefficiency. This means that these public enterprises are not functioning effectively and efficiently, which results in poor service delivery, financial losses, and a drain on the country's resources. The government has realized that it cannot continue to bear the burden of funding these inefficient public enterprises, and it has decided to transfer ownership and management to private entities through privatization and commercialization. This process is intended to improve the efficiency and effectiveness of these enterprises by injecting private sector expertise and resources, promoting competition, and reducing the government's financial burden. While international organizations such as the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) may have played a role in shaping Nigeria's privatization and commercialization policies, the main driver of these policies is the need to improve the performance of public enterprises and reduce the government's financial burden.

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In economic analysis, a statement is said to be normative if it relates to value judgement. Normative statements are subjective statements that express an opinion or a preference, and they often involve moral, ethical, or political considerations. They are not based on empirical evidence or facts that can be tested scientifically. For example, a statement such as "the government should provide free healthcare to all citizens" is normative because it expresses a value judgement about what the government should do, rather than a statement about what is currently happening in the economy. In contrast, positive statements are objective statements that describe the world as it is, and they can be tested using empirical evidence. For example, a statement such as "the unemployment rate in the country is 5%" is a positive statement because it describes the current state of the economy based on empirical evidence. Therefore, a normative statement in economic analysis is one that expresses a value judgement, not one that is incorrect, can be tested scientifically, or is contradictory.

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The long-run average cost curve is called a planning curve because it shows what happens to costs when different sizes of plants are built. In the long run, all inputs are variable, and the firm has the flexibility to adjust its plant size. The long-run average cost curve illustrates the lowest possible average cost for each level of output, given the choice of plant size. Therefore, it is a useful tool for firms in planning their production in the long run, as it shows how costs will change when the scale of production is varied.

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Statutory organisations that are usually established by Acts of Parliament are called public corporations. Public corporations are entities that are created by the government through legislation to carry out specific functions or provide certain services to the public. These corporations can be established at the federal, state, or local government level, and they operate independently of the government. Some examples of public corporations include national oil companies, public utilities, and transportation authorities. These entities are often established to provide essential services to the public, such as electricity, water, or transportation. The legislation that establishes a public corporation typically defines its purpose, powers, and organizational structure. The corporation may be overseen by a board of directors or a management team, and it may have the authority to generate revenue through fees or charges for its services. Therefore, the correct answer is option A, public corporations.

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The short-run period in production is a period that is too short for a firm to be able to change its scale of operation. In other words, during the short-run period, a firm is unable to adjust its plant size or capacity. The short-run period is characterized by the presence of both fixed inputs and variable inputs. Fixed inputs are those that cannot be easily changed in the short-run period, such as the size of the factory, while variable inputs can be changed more easily, such as labor and raw materials. Since a firm cannot change its fixed inputs during the short-run period, it is unable to change its scale of operation. This means that the firm is limited in its ability to increase its total outputs. However, the firm can adjust its use of variable inputs to increase its total outputs to a certain extent. Overall, the short-run period in production is a period during which a firm is unable to change its scale of operation due to the presence of fixed inputs. The firm can only adjust its use of variable inputs to increase its total outputs to a certain extent.

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A normal supply curve is usually positively sloped because the relationship between price and supply is positive. This means that as the price of a good or service increases, producers are willing to supply more of it to the market, since they can make more profit. On the other hand, as the price of a good or service decreases, producers are willing to supply less of it, since they may not be able to cover their costs or make a reasonable profit. As a result, the relationship between price and supply is positive, and the supply curve slopes upward to the right.

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The monetary control instrument that is most effectively used by the Central Bank of Nigeria is the Open Market Operations (OMO). Open market operations refer to the buying and selling of government securities by the central bank in the open market. By doing this, the central bank is able to influence the supply of money in the economy, which affects the level of interest rates. When the central bank wants to reduce the money supply and increase interest rates, it sells government securities in the open market, thus reducing the amount of money available to banks to lend. Conversely, when the central bank wants to increase the money supply and lower interest rates, it buys government securities, thereby injecting money into the economy. Compared to other monetary control instruments like margin requirement, reserve ratio, and discount rate, open market operations are more effective and flexible in controlling the money supply in the economy.

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If there is an increase in demand without a corresponding increase in supply, there will be a rise in price. Demand and supply are the two most important factors that determine the price of a good or service in the market. When there is an increase in demand for a particular product but the supply remains the same, the market is said to be in a state of excess demand. In this situation, consumers are willing to buy more of the product at the current price, but the producers are unable to meet the increased demand. Due to the shortage of the product, the producers have the advantage of setting higher prices for their products, which would result in a rise in the price of the product. This is because, as demand increases, the consumers are willing to pay more for the same product, and the producers have the power to charge a higher price due to the limited supply. As a result, the increase in demand without a corresponding increase in supply would lead to a rise in price of the product. Therefore, the correct answer is option A, rise in price.

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Price elasticity of supply is a ratio of the change in quantity supplied to the change in price. Price elasticity of supply (PES) measures the responsiveness of the quantity supplied of a good or service to a change in its price. In other words, it measures how much the quantity supplied changes when the price changes. The formula for PES is: PES = Percentage change in quantity supplied / Percentage change in price PES is a positive value, and its magnitude indicates how responsive the quantity supplied is to changes in price. If PES is greater than 1, the quantity supplied is elastic, meaning that it is highly responsive to changes in price. If PES is less than 1, the quantity supplied is inelastic, meaning that it is not very responsive to changes in price. Overall, PES is an important concept in economics, as it helps us to understand how suppliers will react to changes in price, and how this will affect the market equilibrium.

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When two variables are positively related, the graph of the relationship is an upward-sloping curve. This means that as the value of one variable increases, the value of the other variable also increases. For example, if we consider the relationship between the amount of money spent on advertising and the sales of a product, we would expect to see an upward-sloping curve. As the amount spent on advertising increases, we would expect to see an increase in sales. Conversely, when two variables are negatively related, the graph of the relationship is a downward-sloping curve. This means that as the value of one variable increases, the value of the other variable decreases. A straight line on a graph usually represents a constant relationship between two variables, where the value of one variable remains constant as the value of the other variable changes. Therefore, for a positive relationship, the graph is an upward-sloping curve, not a downward-sloping curve or a straight line.

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For a firm, value added can be defined as the difference between the value of its output and the value of inputs purchased from other firms. In other words, it represents the contribution that the firm has made to the value of its final product through its own production processes. The value of output is the total revenue generated by the firm from the sale of its goods or services. The value of inputs purchased from other firms includes the cost of raw materials, intermediate goods, and services that the firm has purchased from other firms to produce its final product. By subtracting the value of inputs purchased from other firms from the value of output, the firm can calculate its value added. This reflects the value that the firm has created through its own production processes, such as labor, capital, and technology. Value added is an important measure of a firm's contribution to the economy, as it represents the amount of wealth that the firm has generated for itself and the economy as a whole. Overall, value added is a key concept in measuring a firm's economic performance and contribution to the economy. It is calculated as the difference between the value of output and the value of inputs purchased from other firms.

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The demand curve for the good in question is fairly inelastic. In economics, elasticity refers to the responsiveness of the quantity demanded or supplied of a good or service to changes in its price. When demand is elastic, a small change in price leads to a proportionally larger change in quantity demanded, whereas when demand is inelastic, a change in price leads to a proportionally smaller change in quantity demanded. In this case, the price of the good has increased by N3 (from N5 to N8) and as a result, the quantity demanded has fallen from 200 to 190 units. This represents a decrease of only 5% in quantity demanded in response to a 60% increase in price. Therefore, the demand for this good is considered fairly inelastic, meaning that changes in price have a relatively small effect on the quantity demanded. In other words, consumers are not very sensitive to changes in price for this particular good. In summary, the demand curve for the good in question is fairly inelastic, indicating that changes in price have a relatively small effect on the quantity demanded.

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To calculate the rate of inflation, we need to find the percentage increase in the composite price index from 1999 to 2000. If the composite price index in 1999 was 140.03%, and we want to find the rate of inflation in 2000, we need to subtract the composite price index for 1999 from that of 2000, and then divide the result by the composite price index of 1999. So, let's assume that the composite price index in 2000 was x%. Then, the rate of inflation would be: [(x% - 140.03%) / 140.03%] x 100% Simplifying the above expression: (x% - 140.03%) / 140.03% = rate of inflation / 100% Cross multiplying, we get: rate of inflation = [(x% - 140.03%) / 140.03%] x 100% Now, if we assume that the rate of inflation in 2000 is y%, we can set up an equation as follows: [(140.03% x (1 + y%)) - 140.03%] / 140.03% = y% Simplifying the above expression: [(1 + y%) - 1] = y% x (140.03% / 100%) 1 + y% - 1 = 1.4003y% y% = 1.4003y% y% / 1.4003 = y% y% = 0.0102945 Therefore, the rate of inflation in 2000 was approximately 1.03%. Hence, option D is the correct answer.

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An increase in personal income tax will reduce the disposable income of individuals. This is because the amount of money that individuals have to spend on goods and services will decrease due to the additional taxes they must pay. When disposable income is reduced, individuals may cut back on their spending, which can lead to a decrease in overall demand for goods and services. This reduction in demand can lead to lower production levels and potentially result in higher unemployment levels in the economy. Additionally, an increase in personal income tax can also distort the economy by creating disincentives for work and investment. When taxes increase, individuals may choose to work less or invest less, which can ultimately slow down economic growth. Therefore, overall, an increase in personal income tax can have negative effects on the economy, including reducing disposable income, distorting incentives for work and investment, and potentially leading to higher unemployment levels.

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Occupational mobility as applied to factors of production refers to the ease by which factors can be transferred from one form of use to another. This means that factors of production, such as labor, capital, and land, can be easily shifted from one industry or occupation to another, depending on the demand and supply of those factors. For example, a factory worker can easily move from one factory to another or from manufacturing to service sector, if there is a need or opportunity for it. This mobility helps to ensure that factors of production are used efficiently and effectively, and that the economy can adapt to changes in demand and supply.

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Variable cost = Total cost - Fixed cost
= 150 - 60
= 90

Average variable cost = Variable cost / produced per day (Units)
= 90 / 60
= #1.50

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A greater burden of the taxes on essential goods is borne by the lower income group. When taxes are imposed on essential goods such as food, clothing, and other basic necessities, it affects everyone who buys these goods. However, the impact of these taxes is greater on the lower income group because they spend a larger proportion of their income on these essential goods. For example, if a tax is imposed on a basic food item like bread, it will increase the price of bread for everyone. However, a person in the higher income group may be able to afford the increased price without changing their consumption behavior significantly. In contrast, a person in the lower income group, who has a smaller disposable income, may have to reduce their consumption of bread or switch to cheaper, lower-quality alternatives. Therefore, a greater burden of the taxes on essential goods is borne by the lower income group. The higher income group can afford to absorb the increased prices of these goods without significantly affecting their consumption behavior, while the lower income group has to adjust their consumption patterns and may even face difficulties in meeting their basic needs.

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Under a floating exchange rate regime, the determinant of the exchange rate is the demand for and supply of foreign goods. This means that the exchange rate between two currencies will fluctuate based on the relative supply and demand of each currency in the foreign exchange market. For example, if the demand for a certain currency increases, while the supply of that currency remains the same, the value of that currency will increase relative to other currencies. Conversely, if the supply of a currency increases while the demand for that currency remains the same, the value of that currency will decrease relative to other currencies. In summary, under a floating exchange rate regime, the exchange rate is determined by the market forces of supply and demand, which are influenced by factors such as economic growth, inflation, and interest rates.

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Securities are described as listed when they are traded on a recognized stock market. When a company or organization wants to raise funds, they can issue securities, such as stocks or bonds, to investors. These securities can then be bought and sold on a stock market, allowing investors to trade them with each other. A listed security is one that is traded on a recognized stock market, such as the New York Stock Exchange or the London Stock Exchange. By being listed, the security is made available to a larger pool of investors, increasing its liquidity and making it easier to buy and sell. Listing a security on a stock market requires the company to meet certain regulatory and reporting requirements, such as providing regular financial statements and disclosing any material changes to its business operations. This helps to ensure that investors have access to accurate and up-to-date information about the company and its securities. Overall, being listed on a stock market can provide companies with greater access to capital and investors with greater access to investment opportunities.

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The major objective of a revenue allocation formula in a country is to share revenue between the different tiers of government. Revenue allocation refers to the process of distributing revenue generated by the government among its different levels and units. This revenue may come from various sources, such as taxes, royalties, or other fees. The major objective of a revenue allocation formula is to ensure that revenue is distributed in a fair and equitable manner between the different tiers of government, such as the federal, state, and local governments. This is important because it helps to ensure that each level of government has the resources needed to carry out its responsibilities and provide essential services to its citizens. Revenue allocation formulas are often based on a range of factors, such as population, land area, or revenue-generating capacity. These formulas help to ensure that revenue is distributed in a way that reflects the needs and capacities of each region or unit. Therefore, option A, sharing revenue between the different tiers of government, is the correct answer.

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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 alternative over the other. In other words, it is the cost of forgoing the benefits of the next best alternative. So, a country should specialize in producing goods and services that it can produce at a lower opportunity cost than other countries. By doing so, it can trade with other countries and get access to goods and services that it cannot produce efficiently. Therefore, the theory of comparative advantage suggests that countries should focus on producing goods and services that they can produce most efficiently, rather than focusing on producing all goods and services themselves.

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Insurance companies, pension and provident funds, and unit trusts are all examples of non-bank financial institutions. Non-bank financial institutions are financial organizations that offer banking-like services, such as savings, loans, and investments, but are not technically classified as banks. These institutions are often specialized in a particular type of financial service or product, such as insurance or retirement savings. Insurance companies provide protection against financial losses due to unforeseen events, such as accidents, illnesses, or natural disasters. Pension and provident funds are retirement savings schemes that are set up to provide financial support to individuals after they retire from their jobs. Unit trusts are investment funds that allow individuals to pool their money together to invest in a diverse range of assets, such as stocks, bonds, and real estate. Overall, non-bank financial institutions play an important role in the economy by providing a variety of financial services and products to individuals and businesses. These institutions often have different regulations and requirements than traditional banks, and can offer unique benefits and advantages to their customers.