WAEC SSCE - Economics - 1991
Question 2 Report
A government treasury bill is a form of debt instrument which falls due for repayment after
Answer Details
A government treasury bill is a short-term debt instrument issued by the government to raise funds from the public. It is usually issued for a period of 91 days, which means it falls due for repayment after three months. The government uses these funds to finance its short-term expenditures such as infrastructure development, education, healthcare, etc. Treasury bills are considered to be one of the safest forms of investment because they are backed by the government and are considered to have very low risk.
Question 3 Report
The monetary system that requires a double coincidence of wants is known as the
Answer Details
The monetary system that requires a double coincidence of wants is known as the barter system. In a barter system, goods or services are directly exchanged without the use of money. In order for a trade to occur, both parties must have what the other wants, creating a double coincidence of wants. For example, if you have a cow and want some wheat, you would need to find someone who has wheat and wants a cow. This can be difficult and time-consuming, which is why barter systems are not commonly used in modern economies.
Question 4 Report
in the event of a limited liability company going into liquidation, each shareholder
Answer Details
In the event of a limited liability company going into liquidation, each shareholder may lose a maximum of the amount he has invested. This means that if a shareholder invested $10,000 in the company, the maximum he can lose if the company goes into liquidation is $10,000. The shareholder is not personally responsible for any debts or liabilities incurred by the company beyond the amount of his investment. This is the main advantage of investing in a limited liability company, as it protects the personal assets of the shareholders in the event of the company's failure.
Question 5 Report
Which of the following statements is not true in an inflationary period?
Answer Details
The statement that is not true in an inflationary period is: "Wages rise simultaneously with prices." Inflation is a period when the general price level of goods and services increases continuously, resulting in a decline in the purchasing power of money. During this period, wages may increase due to increased labor demand or negotiations by labor unions, but they may not necessarily rise simultaneously with prices. Inflation is caused by various factors, such as an increase in the money supply, cost-push factors, demand-pull factors, and supply shocks. As the general price level rises, the purchasing power of money diminishes, leading to a reduction in real income for fixed income earners. Inflation also creates a situation where more money is chasing a limited quantity of goods, which results in an excess demand for goods and services over the available supply.
Question 6 Report
Which of the following is the approximate working agent in Nigeria?
Answer Details
The approximate working age range in Nigeria is which is between 15 and 65 years old. This is because the legal age for employment in Nigeria is 15 years old, and the retirement age is 65 years old. However, it's important to note that this range may vary depending on the industry or occupation. Some jobs may have lower or higher age requirements, and some people may choose to retire earlier or later than the official retirement age.
Question 7 Report
Agriculture plays a dominant role in West African economies because
Answer Details
Agriculture plays a dominant role in West African economies because it employs more than 50% of the total labour force in the region. In other words, a significant portion of the population in West African countries depend on agriculture for their livelihood. Additionally, there are large plantations of crops such as cocoa, groundnut, and oil palm in the region, which provide a major source of revenue for these countries. The abundance of arable land and favorable weather conditions in West Africa also make agriculture a viable and important economic activity.
Question 8 Report
Which of the following is a function of money? It is
Answer Details
The function of money is to serve as a medium of exchange, a unit of account, and a store of value. Among the options given, the function of money that is described is "a standard of deferred payment". This means that money can be used to make payments that will be settled at a future date. For example, if you take out a loan from a bank, you are using money as a standard of deferred payment, as you will be paying back the loan with money in the future.
Question 9 Report
A movement along the demand curve for some goods may be caused by a change in
Answer Details
A movement along the demand curve for some goods is caused by a change in the price of that particular good. When the price of a good changes, it directly affects the quantity of that good that consumers are willing and able to buy. If the price of a good decreases, consumers will typically demand more of it, whereas if the price of a good increases, consumers will typically demand less of it. Changes in consumer income, tastes, the price of other goods, and population can also affect the demand for a good, but they do not cause a movement along the demand curve. Instead, they cause a shift in the demand curve itself, which represents a change in the amount of a good that consumers are willing and able to buy at any given price level.
Question 10 Report
The value of money is determined by the
Answer Details
The value of money is determined by the general price level. In other words, the purchasing power of money is determined by the amount of goods and services it can buy. If the general price level of goods and services in an economy is high, the value of money will be low and vice versa. The rate of interest, quantity of money in circulation, level of economic development, and weight of the currency notes and coins are not direct determinants of the value of money, but they can affect it indirectly.
Question 11 Report
A major function of the middlemen in Nigeria is the distribution of
Question 12 Report
Which of the following are direct taxes?
Answer Details
Direct taxes are taxes that are imposed directly on individuals or organizations and cannot be passed on to others. Therefore, the direct taxes from the given options are income and company taxes. These taxes are paid by individuals and companies directly to the government based on their income or profit. On the other hand, sales taxes, excise duties, tariff duties, and commodity taxes are indirect taxes as they are imposed on the sale of goods and services and can be passed on to the final consumer.
Question 13 Report
A shift of the demand curve to the right when the supply curve remains constant , implies that
Answer Details
In economics, the demand curve shows the relationship between the price of a product and the quantity that consumers are willing to buy at that price. When there is a shift of the demand curve to the right while the supply curve remains constant, it means that at every price point, consumers are willing to buy more of the product. This could be due to factors such as an increase in consumer income, a change in tastes and preferences, or an increase in the availability of credit. As a result, both the price and quantity demanded will increase. Therefore, the correct answer is: "both price and quantity demanded will increase."
Question 14 Report
Palm oil industry in located in Bendel State because the state
Answer Details
The palm oil industry is located in Bendel State because the state is a palm-tree growing area. The climate and soil conditions in Bendel State are suitable for growing palm trees, which are the main source of palm oil. Therefore, the state has a comparative advantage in palm oil production.
Question 15 Report
Which of the following is not a reason why people migrate from one place to another ?
Answer Details
The reason that is not a typical reason why people migrate from one place to another is "To buy foreign goods for sale in their country." People may travel for trade, but migration implies moving from one place to another with the intention of living there permanently or for an extended period. People usually migrate to find jobs and improve their standard of living, to live in a more suitable climate, for the sake of change and adventure, or to escape from a religious, political, or social situation in a country. These reasons are driven by the desire for better opportunities, safety, and a better quality of life.
Question 16 Report
In a sole proprietorship decisions are made by the
Answer Details
In a sole proprietorship, decisions are made by the owner. This is because a sole proprietorship is a type of business organization in which an individual owns and operates the business alone, and therefore has complete control over all decisions related to the business. The owner is responsible for making all major decisions, such as setting business goals, determining strategies, hiring employees, and managing finances. Since there are no other shareholders, directors or partners involved, the owner has full autonomy over the business and can make decisions without needing to consult or seek approval from anyone else.
Question 17 Report
A tax is said to be good when
Answer Details
A tax is considered good when its payment causes minimum inconvenience to the taxpayer. In other words, a good tax is one that does not burden the taxpayers too much while still generating revenue for the government to finance public services and infrastructure. A good tax system aims to be fair, efficient, and simple, taking into consideration the ability of taxpayers to pay and the impact of taxation on the economy. So, a good tax system balances the needs of the state to collect revenue and the taxpayers' ability to pay.
Question 18 Report
The productivity of labour does not depend only o its own effort and efficiency, but also on I the level of technical knowledge II. the quality of other factors III. racial qualities which allow persons from certain races to have good physique and be very active . Which of the above statements is /are correct?
Answer Details
Question 19 Report
which of the following item is not included in measuring national income by the income approach?
Answer Details
The income approach is one of the methods used to measure the national income of a country. It calculates the total income earned by all factors of production in the country during a given period of time. Out of the options given, student's grants and scholarships are not included in measuring national income by the income approach. This is because grants and scholarships are considered transfers of income, which means they are not earned through the production of goods or services. Therefore, student's grants and scholarships are not included in the calculation of national income by the income approach, while wages and salaries of public servants, profits of companies, income earned by self-employed persons such as lawyers, and rents on property are included.
Question 20 Report
open market operation are the process by which
Answer Details
Open market operations refer to the process by which the Central Bank of a country buys or sells securities in the open market in order to influence the money supply, interest rates, and ultimately, the overall economy. This involves the Central Bank purchasing or selling government securities, such as bonds or treasury bills, from or to commercial banks or other financial institutions. By doing so, the Central Bank can increase or decrease the amount of money in circulation, affecting the interest rates at which banks lend and borrow money from each other, and ultimately impacting the broader economy. Open market operations are one of the primary tools used by Central Banks to control inflation, stabilize the currency, and promote economic growth.
Question 22 Report
Choice is necessary because resources
Answer Details
Choice is necessary because resources are scarce. This means that there are not enough resources available to satisfy all the wants and needs of people. As a result, people have to make choices about how to allocate the resources they have in order to best meet their needs and wants. These choices involve trade-offs, where the decision to use a resource for one purpose means that it cannot be used for another purpose. Therefore, choice is necessary in order to make the best use of the limited resources available.
Question 24 Report
Which of the following functions do retailers perform in an economy?
Answer Details
Retailers perform the function of distribution in an economy. They buy goods from manufacturers or wholesalers and sell them to consumers at a markup price. This involves the physical movement of goods from the producers to the consumers through the distribution channels, which may include intermediaries such as wholesalers, agents, and retailers. Retailers may also provide storage facilities for the goods they sell, but this is not the primary function. Retailers do not engage in production, investment or hoarding of goods.
Question 25 Report
if over a period of time there is more money in the economy than the available goods and services , the economy is likely to experience
Answer Details
If over a period of time there is more money in the economy than the available goods and services, the economy is likely to experience inflation. This is because when there is too much money chasing too few goods, the prices of goods and services will rise. This can lead to a decrease in purchasing power of the currency, as it requires more money to buy the same amount of goods and services. Inflation can have negative effects on an economy, such as reducing the value of savings, decreasing investment, and causing social and political unrest.
Question 27 Report
Dumping in Economics means the selling of goods in a foreign market
Answer Details
Dumping in economics refers to the practice of selling goods in a foreign market at a price below that received in the home market. This is done in order to gain a competitive advantage in the foreign market and increase market share. The purpose of dumping is to drive competitors out of the market and establish a monopoly. Dumping is generally considered an unfair trade practice, as it can cause harm to domestic producers in the foreign market. It can also lead to a race to the bottom in terms of pricing, which can be detrimental to all producers involved.
Question 28 Report
Devaluation means
Answer Details
Devaluation means a reduction in the value of the national currency relative to foreign currencies. This usually occurs when a government intentionally lowers the value of its currency in relation to other currencies, usually by reducing the exchange rate. Devaluation can lead to a decrease in the purchasing power of the domestic currency, making imports more expensive and exports more competitive.
Question 29 Report
if an economy is growing at an annual rate of 7% and 4% of it is known to be due to the improvement in labour ans capital combined, the balance of 3% is usually attributed to
Answer Details
Question 30 Report
Which of the following is not an argument for locating industries in rural areas?
Answer Details
The argument that "capital is easily available in rural areas" is not a reason for locating industries in rural areas. Explanation: Capital refers to the money needed to start or invest in a business. Generally, it is easier to access capital in urban areas where there are more financial institutions, investors, and a larger economy. Rural areas may have less access to capital, which can be a challenge for starting businesses. Therefore, this argument does not support the idea of locating industries in rural areas.
Question 31 Report
Which of the following is a public corporation?
Answer Details
The public corporation among the options listed is the National Electric Power Authority (NEPA). A public corporation is a legal entity established by the government to carry out specific public functions. NEPA was a government-owned utility company responsible for generating, transmitting, and distributing electricity across Nigeria before it was restructured and privatized into various successor companies. The other options listed are private corporations or limited liability companies that are owned and operated by private individuals or organizations for profit-making purposes.
Question 32 Report
Complete the following cost schedules and answer the questions that follow.
| Output | Total Cost TC | Average cost AC | Marginal Cost |
| 1 | 18 | 8 | - |
| 2 | 14 | ? | - |
| 3 | ? | 6 | - |
| 4 | 20 | ? | - |
| 5 | ? | 6 | - |
| 6 | 46 | ? | - |
(a) At what output is AC at the minimum?
(b)At what output is MC at the minimum
(c) At what output does AC start increasing?
(d) At what output does MC start to be greater than AC
(e) What is the maximum output?
Average cost is found from \(AC=\dfrac{TC}{Q}\) and marginal cost from \(MC=TC_n-TC_{n-1}\). At an output of 1 the average cost is 8, so the total cost there must be 8 (the value 18 is an error); the rest of the schedule then follows consistently:
| Output | Total Cost (TC) | Average Cost (AC) | Marginal Cost (MC) |
|---|---|---|---|
| 1 | 8 | 8 | - |
| 2 | 14 | 7 | 6 |
| 3 | 18 | 6 | 4 |
| 4 | 20 | 5 | 2 |
| 5 | 30 | 6 | 10 |
| 6 | 46 | 7.67 | 16 |
(a) AC is at its minimum at an output of 4 units, where \(AC=\dfrac{20}{4}=5\).
(b) MC is at its minimum at an output of 4 units, where \(MC=2\).
(c) AC starts to increase at an output of 5 units (it falls to 5 at output 4, then rises to 6 at output 5).
(d) MC first becomes greater than AC at an output of 5 units (there \(MC=10\) while \(AC=6\)).
(e) The maximum output shown in the schedule is 6 units.
Answer Details
Average cost is found from \(AC=\dfrac{TC}{Q}\) and marginal cost from \(MC=TC_n-TC_{n-1}\). At an output of 1 the average cost is 8, so the total cost there must be 8 (the value 18 is an error); the rest of the schedule then follows consistently:
| Output | Total Cost (TC) | Average Cost (AC) | Marginal Cost (MC) |
|---|---|---|---|
| 1 | 8 | 8 | - |
| 2 | 14 | 7 | 6 |
| 3 | 18 | 6 | 4 |
| 4 | 20 | 5 | 2 |
| 5 | 30 | 6 | 10 |
| 6 | 46 | 7.67 | 16 |
(a) AC is at its minimum at an output of 4 units, where \(AC=\dfrac{20}{4}=5\).
(b) MC is at its minimum at an output of 4 units, where \(MC=2\).
(c) AC starts to increase at an output of 5 units (it falls to 5 at output 4, then rises to 6 at output 5).
(d) MC first becomes greater than AC at an output of 5 units (there \(MC=10\) while \(AC=6\)).
(e) The maximum output shown in the schedule is 6 units.
Question 33 Report
With the aid of diagrams, explain what is meant by a change in:
(a) the quantity demanded;
(b) demand.
The key is to distinguish a movement along a demand curve from a shift of the whole curve. Draw both on axes with price on the vertical axis and quantity demanded on the horizontal axis.
(a) Change in quantity demanded. This is a change in the amount buyers wish to buy caused only by a change in the price of the good itself, all other factors remaining constant. It is shown as a movement along the same demand curve \( DD \): a fall in price causes a downward movement to a larger quantity (an extension of demand), while a rise in price causes an upward movement to a smaller quantity (a contraction of demand). The curve does not move.
(b) Change in demand. This is a change in the amount demanded at every price, caused by a change in a factor other than the good's own price, for example income, tastes, the price of related goods, population or expectations. It is shown as a shift of the entire demand curve: an increase in demand shifts the curve rightward from \( DD \) to \( D_1D_1 \) (more bought at each price), while a decrease shifts it leftward to \( D_2D_2 \) (less bought at each price).
Examination reminder: if the good's own price changes, it is a change in quantity demanded (movement along); if any other factor changes, it is a change in demand (shift of the curve). Confusing the two is the commonest error on this topic.
Answer Details
The key is to distinguish a movement along a demand curve from a shift of the whole curve. Draw both on axes with price on the vertical axis and quantity demanded on the horizontal axis.
(a) Change in quantity demanded. This is a change in the amount buyers wish to buy caused only by a change in the price of the good itself, all other factors remaining constant. It is shown as a movement along the same demand curve \( DD \): a fall in price causes a downward movement to a larger quantity (an extension of demand), while a rise in price causes an upward movement to a smaller quantity (a contraction of demand). The curve does not move.
(b) Change in demand. This is a change in the amount demanded at every price, caused by a change in a factor other than the good's own price, for example income, tastes, the price of related goods, population or expectations. It is shown as a shift of the entire demand curve: an increase in demand shifts the curve rightward from \( DD \) to \( D_1D_1 \) (more bought at each price), while a decrease shifts it leftward to \( D_2D_2 \) (less bought at each price).
Examination reminder: if the good's own price changes, it is a change in quantity demanded (movement along); if any other factor changes, it is a change in demand (shift of the curve). Confusing the two is the commonest error on this topic.
Question 34 Report
This is a pie-chart showing the age distribution of population. The total population is 120 million. The official school-leaving age is 18 years while the official retiring age is 55 years.
(a) From the above information, calculate the:
(i) Population of children between 0 and 17 years.
(ii) population of old people (55 + years);
(iii) work-ing population (18 - 54 years) .
(b) what is the economic implication of the above population structure?
Reading the chart. The three sectors of a pie chart must total \(360^\circ\). The \(18\text{-}54\) sector carries a right-angle mark, so it is \(90^\circ\), and the \(55+\) sector is \(108^\circ\). The remaining \(0\text{-}17\) sector is therefore \(360^\circ - 90^\circ - 108^\circ = 162^\circ\). (The figure printed near it, \(182^\circ\), cannot be right because \(182+90+108 = 380^\circ\), which is more than a full circle.)
Each group \(= \dfrac{\text{sector angle}}{360^\circ}\times 120\text{ million}.\)
(a)(i) Children, 0-17 years
\[\dfrac{162}{360}\times 120 = 54\text{ million}\]
(a)(ii) Old people, 55+ years
\[\dfrac{108}{360}\times 120 = 36\text{ million}\]
(a)(iii) Working population, 18-54 years
\[\dfrac{90}{360}\times 120 = 30\text{ million}\]
Check: \(54 + 36 + 30 = 120\) million.
(b) Economic implication
Only 30 million people, a quarter of the nation, are of working age, yet they must support 90 million dependants (54 million children and 36 million elderly). The dependency ratio is \(\dfrac{90}{30} = 3:1\), which is extremely high. The consequences are:
- A very heavy dependency burden on each worker, so the average standard of living is low.
- High consumption but low savings and investment, which slows capital formation and growth.
- Large public spending on education for the many children and on pensions and health care for the aged.
- A small effective labour force relative to the whole population, which limits total national output.
Answer Details
Reading the chart. The three sectors of a pie chart must total \(360^\circ\). The \(18\text{-}54\) sector carries a right-angle mark, so it is \(90^\circ\), and the \(55+\) sector is \(108^\circ\). The remaining \(0\text{-}17\) sector is therefore \(360^\circ - 90^\circ - 108^\circ = 162^\circ\). (The figure printed near it, \(182^\circ\), cannot be right because \(182+90+108 = 380^\circ\), which is more than a full circle.)
Each group \(= \dfrac{\text{sector angle}}{360^\circ}\times 120\text{ million}.\)
(a)(i) Children, 0-17 years
\[\dfrac{162}{360}\times 120 = 54\text{ million}\]
(a)(ii) Old people, 55+ years
\[\dfrac{108}{360}\times 120 = 36\text{ million}\]
(a)(iii) Working population, 18-54 years
\[\dfrac{90}{360}\times 120 = 30\text{ million}\]
Check: \(54 + 36 + 30 = 120\) million.
(b) Economic implication
Only 30 million people, a quarter of the nation, are of working age, yet they must support 90 million dependants (54 million children and 36 million elderly). The dependency ratio is \(\dfrac{90}{30} = 3:1\), which is extremely high. The consequences are:
- A very heavy dependency burden on each worker, so the average standard of living is low.
- High consumption but low savings and investment, which slows capital formation and growth.
- Large public spending on education for the many children and on pensions and health care for the aged.
- A small effective labour force relative to the whole population, which limits total national output.
Question 35 Report
Discuss five contributions made by agriculture to the industrial development of Nigeria.
Agriculture is closely linked to industry, and in Nigeria it has aided industrial development in several concrete ways. Five contributions are:
- Supply of raw materials. Agriculture provides the primary inputs that manufacturing industries process, for example cotton for textile mills, cocoa for beverage and confectionery plants, palm produce for oil and soap factories, and groundnut for oil mills. Without these, agro-based industries could not operate.
- Provision of food for the industrial workforce. A steady, cheap food supply feeds urban factory workers, keeps wages and production costs down and makes industrial labour available and productive.
- Provision of a market for industrial goods. Farmers buy manufactured inputs such as fertilisers, tractors, pesticides, cutlasses and processing machinery, creating demand that stimulates industrial output.
- Source of capital and foreign exchange. Earnings from the export of cash crops provide savings and foreign exchange used to import industrial machinery and to finance industrial investment; agricultural taxes and marketing-board surpluses have also funded industry.
- Supply of labour. As farming becomes more productive, surplus labour is released from the land to work in the growing industrial sector.
Examination reminder: organise the answer around the four classic linkages - raw materials, food, market and capital/labour - and give a Nigerian example for each to gain the illustration marks.
Answer Details
Agriculture is closely linked to industry, and in Nigeria it has aided industrial development in several concrete ways. Five contributions are:
- Supply of raw materials. Agriculture provides the primary inputs that manufacturing industries process, for example cotton for textile mills, cocoa for beverage and confectionery plants, palm produce for oil and soap factories, and groundnut for oil mills. Without these, agro-based industries could not operate.
- Provision of food for the industrial workforce. A steady, cheap food supply feeds urban factory workers, keeps wages and production costs down and makes industrial labour available and productive.
- Provision of a market for industrial goods. Farmers buy manufactured inputs such as fertilisers, tractors, pesticides, cutlasses and processing machinery, creating demand that stimulates industrial output.
- Source of capital and foreign exchange. Earnings from the export of cash crops provide savings and foreign exchange used to import industrial machinery and to finance industrial investment; agricultural taxes and marketing-board surpluses have also funded industry.
- Supply of labour. As farming becomes more productive, surplus labour is released from the land to work in the growing industrial sector.
Examination reminder: organise the answer around the four classic linkages - raw materials, food, market and capital/labour - and give a Nigerian example for each to gain the illustration marks.
Question 36 Report
Describe the factors that can affect the size of a country's population.
The size of a country's population at any time depends on the balance among three forces: births, deaths and migration. Population grows when births plus immigration exceed deaths plus emigration, and falls when the reverse holds.
- Birth rate (fertility). The number of live births per \( 1{,}000 \) people per year. A high birth rate, encouraged by early marriage, large-family cultures, low use of family planning and high infant mortality that prompts more births, raises population size.
- Death rate (mortality). The number of deaths per \( 1{,}000 \) people per year. It is influenced by medical facilities, nutrition, sanitation, standard of living, war, famine and epidemics. Falling death rates enlarge the population.
- Migration. Immigration (movement into the country) increases the population, while emigration (movement out) decreases it; net migration is the difference between the two.
- Natural increase. The excess of births over deaths; a wide gap means rapid natural growth.
- Government policy. Policies that promote or discourage childbearing, control immigration, or improve health care alter the size of the population.
- Age and sex structure and marriage patterns. A large proportion of people in the reproductive age group, and a balanced sex ratio, raise the potential number of births.
Examination reminder: reduce the whole answer to one identity: \[ \text{Population change} = (\text{Births} - \text{Deaths}) + (\text{Immigration} - \text{Emigration}) \] then explain what drives each term.
Answer Details
The size of a country's population at any time depends on the balance among three forces: births, deaths and migration. Population grows when births plus immigration exceed deaths plus emigration, and falls when the reverse holds.
- Birth rate (fertility). The number of live births per \( 1{,}000 \) people per year. A high birth rate, encouraged by early marriage, large-family cultures, low use of family planning and high infant mortality that prompts more births, raises population size.
- Death rate (mortality). The number of deaths per \( 1{,}000 \) people per year. It is influenced by medical facilities, nutrition, sanitation, standard of living, war, famine and epidemics. Falling death rates enlarge the population.
- Migration. Immigration (movement into the country) increases the population, while emigration (movement out) decreases it; net migration is the difference between the two.
- Natural increase. The excess of births over deaths; a wide gap means rapid natural growth.
- Government policy. Policies that promote or discourage childbearing, control immigration, or improve health care alter the size of the population.
- Age and sex structure and marriage patterns. A large proportion of people in the reproductive age group, and a balanced sex ratio, raise the potential number of births.
Examination reminder: reduce the whole answer to one identity: \[ \text{Population change} = (\text{Births} - \text{Deaths}) + (\text{Immigration} - \text{Emigration}) \] then explain what drives each term.
Question 37 Report
(a) Define a market.
(b) Explain four characteristics of a perfect market.
(a) A market. In economics a market is not necessarily a physical place. It is any arrangement or system by which buyers and sellers of a particular good or service are brought into contact to exchange it at an agreed price. It exists wherever such contact and exchange can take place, whether face to face, by telephone or over the internet.
(b) Four characteristics of a perfect market.
- Large number of buyers and sellers. There are so many that no single buyer or seller can influence the market price; each is a price taker.
- Homogeneous (identical) product. All sellers offer exactly the same, uniform product, so buyers have no reason to prefer one seller to another.
- Perfect knowledge of the market. All buyers and sellers have full and up-to-date information about prices and conditions, so the same good sells at one uniform price throughout the market.
- Free entry and exit. There are no barriers preventing firms from entering the market when profitable or leaving when unprofitable.
Other features include perfect mobility of factors and goods, absence of transport cost, and no government or collusive interference, all of which help establish a single ruling price.
Examination reminder: the whole point of these conditions is that together they produce one uniform price for the product throughout the market; link each characteristic to that result.
Answer Details
(a) A market. In economics a market is not necessarily a physical place. It is any arrangement or system by which buyers and sellers of a particular good or service are brought into contact to exchange it at an agreed price. It exists wherever such contact and exchange can take place, whether face to face, by telephone or over the internet.
(b) Four characteristics of a perfect market.
- Large number of buyers and sellers. There are so many that no single buyer or seller can influence the market price; each is a price taker.
- Homogeneous (identical) product. All sellers offer exactly the same, uniform product, so buyers have no reason to prefer one seller to another.
- Perfect knowledge of the market. All buyers and sellers have full and up-to-date information about prices and conditions, so the same good sells at one uniform price throughout the market.
- Free entry and exit. There are no barriers preventing firms from entering the market when profitable or leaving when unprofitable.
Other features include perfect mobility of factors and goods, absence of transport cost, and no government or collusive interference, all of which help establish a single ruling price.
Examination reminder: the whole point of these conditions is that together they produce one uniform price for the product throughout the market; link each characteristic to that result.
Question 38 Report
What is the median? State its merits and demerits.
The median. The median is a measure of central tendency: it is the value of the middle item when a set of observations is arranged in order of size (ascending or descending). It divides the distribution into two equal halves, so that one half of the items lie below it and the other half above it. For \( n \) arranged items, when \( n \) is odd the median is the \( \left(\frac{n+1}{2}\right)^{th} \) item; when \( n \) is even it is the average of the two middle items, the \( \left(\frac{n}{2}\right)^{th} \) and \( \left(\frac{n}{2}+1\right)^{th} \) items.
Merits.
- It is not affected by extreme values (very large or very small items), so it gives a good typical value for skewed data.
- It is easy to understand and compute, requiring only ordering of the data.
- It can be found even for open-ended classes, since only the middle position is needed.
- It can be determined graphically from an ogive (cumulative-frequency curve).
Demerits.
- It ignores the actual values of all items except the middle one, so it does not use all the data.
- It requires the data to be arranged in order first, which is tedious for large sets.
- It is not suitable for further algebraic treatment (unlike the mean).
- Where items cluster unevenly it may not truly represent the distribution, and for even \( n \) it may give a value that is not an actual item.
Examination reminder: its great strength is resistance to extreme values, which is exactly why the median is preferred to the mean for skewed data such as incomes.
Answer Details
The median. The median is a measure of central tendency: it is the value of the middle item when a set of observations is arranged in order of size (ascending or descending). It divides the distribution into two equal halves, so that one half of the items lie below it and the other half above it. For \( n \) arranged items, when \( n \) is odd the median is the \( \left(\frac{n+1}{2}\right)^{th} \) item; when \( n \) is even it is the average of the two middle items, the \( \left(\frac{n}{2}\right)^{th} \) and \( \left(\frac{n}{2}+1\right)^{th} \) items.
Merits.
- It is not affected by extreme values (very large or very small items), so it gives a good typical value for skewed data.
- It is easy to understand and compute, requiring only ordering of the data.
- It can be found even for open-ended classes, since only the middle position is needed.
- It can be determined graphically from an ogive (cumulative-frequency curve).
Demerits.
- It ignores the actual values of all items except the middle one, so it does not use all the data.
- It requires the data to be arranged in order first, which is tedious for large sets.
- It is not suitable for further algebraic treatment (unlike the mean).
- Where items cluster unevenly it may not truly represent the distribution, and for even \( n \) it may give a value that is not an actual item.
Examination reminder: its great strength is resistance to extreme values, which is exactly why the median is preferred to the mean for skewed data such as incomes.
Question 39 Report
Explain the factors that affect the supply of labour in Nigeria.
The supply of labour means the total number of hours of work (or number of workers) offered for employment in the economy at a given time. In Nigeria it is affected by the following factors:
- Size and structure of the population. A large population with a high proportion in the working-age bracket (18-64) provides a bigger potential labour force.
- The working population and age structure. The number actually able and willing to work, after removing children, students, the aged, the sick and the retired, determines effective supply.
- Level of wages and other rewards. Generally, higher real wages and better conditions attract more people into the labour market and encourage longer hours.
- Length of the working day, week and holidays. Legally fixed hours, leave and overtime rules affect how much labour each worker supplies.
- Education, training and skills. The availability of skilled, trained manpower influences the supply of effective (as opposed to mere numerical) labour.
- Mobility of labour. The ease with which workers can move between jobs and regions affects how much labour reaches where it is needed.
- Social and cultural factors. Attitudes to certain jobs, the role of women in work, and early or delayed entry into employment affect participation.
- Migration. Immigration adds to and emigration (brain drain) subtracts from the labour force.
- Government policy and health. Retirement age, labour laws, and the general state of health and nutrition of the people affect availability and productivity of labour.
Examination reminder: distinguish the numerical supply of labour (how many people) from its quality (education and skills); a full answer covers both.
Answer Details
The supply of labour means the total number of hours of work (or number of workers) offered for employment in the economy at a given time. In Nigeria it is affected by the following factors:
- Size and structure of the population. A large population with a high proportion in the working-age bracket (18-64) provides a bigger potential labour force.
- The working population and age structure. The number actually able and willing to work, after removing children, students, the aged, the sick and the retired, determines effective supply.
- Level of wages and other rewards. Generally, higher real wages and better conditions attract more people into the labour market and encourage longer hours.
- Length of the working day, week and holidays. Legally fixed hours, leave and overtime rules affect how much labour each worker supplies.
- Education, training and skills. The availability of skilled, trained manpower influences the supply of effective (as opposed to mere numerical) labour.
- Mobility of labour. The ease with which workers can move between jobs and regions affects how much labour reaches where it is needed.
- Social and cultural factors. Attitudes to certain jobs, the role of women in work, and early or delayed entry into employment affect participation.
- Migration. Immigration adds to and emigration (brain drain) subtracts from the labour force.
- Government policy and health. Retirement age, labour laws, and the general state of health and nutrition of the people affect availability and productivity of labour.
Examination reminder: distinguish the numerical supply of labour (how many people) from its quality (education and skills); a full answer covers both.
Question 40 Report
(a) Explain the term mobility of labour.
(b) Why may labour as a mobile factor of production be unwilling to move?
(a) Mobility of labour. Mobility of labour is the ease with which workers can move from one job, occupation or place to another. It has two forms. Geographical (place) mobility is the movement of labour from one location or region to another in search of work. Occupational (vertical and horizontal) mobility is the movement of labour from one occupation, trade or grade to another. A factor is mobile when such movement is easy and immobile when it is difficult.
(b) Why labour may be unwilling to move.
- Family and social ties. Reluctance to leave family, friends, community and familiar cultural or religious surroundings.
- Cost and difficulty of housing. High cost of accommodation and the expense of moving to a new area.
- Ignorance of opportunities. Lack of information about jobs, wages and conditions available elsewhere.
- Lack of required skills or qualifications. A worker cannot move into an occupation for which he is not trained, and training is costly and slow (occupational immobility).
- Differences in language, climate or customs. Fear of an unfamiliar environment in the new area.
- Pension, promotion and seniority rights. Loss of accumulated benefits, seniority and prospects tied to the present job.
- Job security and uncertainty. Fear that the new job may be less secure than the present one.
Examination reminder: separate reasons that block geographical movement (family ties, housing, distance) from those that block occupational movement (lack of skill, cost of training), as the examiner looks for both dimensions.
Answer Details
(a) Mobility of labour. Mobility of labour is the ease with which workers can move from one job, occupation or place to another. It has two forms. Geographical (place) mobility is the movement of labour from one location or region to another in search of work. Occupational (vertical and horizontal) mobility is the movement of labour from one occupation, trade or grade to another. A factor is mobile when such movement is easy and immobile when it is difficult.
(b) Why labour may be unwilling to move.
- Family and social ties. Reluctance to leave family, friends, community and familiar cultural or religious surroundings.
- Cost and difficulty of housing. High cost of accommodation and the expense of moving to a new area.
- Ignorance of opportunities. Lack of information about jobs, wages and conditions available elsewhere.
- Lack of required skills or qualifications. A worker cannot move into an occupation for which he is not trained, and training is costly and slow (occupational immobility).
- Differences in language, climate or customs. Fear of an unfamiliar environment in the new area.
- Pension, promotion and seniority rights. Loss of accumulated benefits, seniority and prospects tied to the present job.
- Job security and uncertainty. Fear that the new job may be less secure than the present one.
Examination reminder: separate reasons that block geographical movement (family ties, housing, distance) from those that block occupational movement (lack of skill, cost of training), as the examiner looks for both dimensions.
