JAMB UTME - Economics - 2024

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The combination of two goods which a consumer derives equal satisfaction from is plotted on a graph known as an indifference curve. This graph represents all the different combinations of two goods that provide the consumer with the same level of utility or satisfaction.

For instance, if a consumer is equally happy with either 3 bananas and 2 apples or 2 bananas and 3 apples, both points will lie on the same indifference curve.

The reason it's called an indifference curve is because the consumer is indifferent between any two points on this curve, meaning they have no preference for one combination over the other since both provide the same level of satisfaction.

Unlike a demand curve which shows the quantity of a good that consumers are willing and able to purchase at various prices, the indifference curve focuses solely on the level of satisfaction from different combinations of goods, without considering their prices directly. It is an essential concept in the study of consumer behavior and helps understand how consumers make choices between different goods.

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When the price of a product decreases, consumers are generally willing to buy more of it. As a result, the quantity demanded increases. However, since each unit is sold at a lower price, the decline in price outweighs the increase in quantity, leading to a decrease in total revenue (total revenue = price x quantity). This is why a downward sloping demand curve indicates that the total revenue declines as the price is lowered.

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The market situation you are referring to is called an oligopoly.

To put it simply, an oligopoly is a market structure where there are only a few sellers, or producers, who dominate the market, while there are many buyers. This creates a situation where the few sellers have significant control over the prices and market dynamics.

This structure is different from a perfect competition, where there are many sellers and buyers, with no single seller having significant market power. It is also different from a duopoly, which specifically refers to exactly two sellers.

The presence of a small number of sellers in an oligopoly leads to competitive strategies where the actions of one seller can influence the actions of others. This often results in strategic collaboration or competition, which affects prices and product offerings.

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The equilibrium price in economics is a fundamental concept where the market operates most efficiently. To understand it fully, consider the following explanation:

When demand equates supply, it indicates the price at which the quantity of goods consumers are willing to buy (demand) is exactly equal to the quantity of goods producers are willing to sell (supply). This is the point where the market reaches equilibrium. At this price, there is no excess supply or demand, meaning that resources are being used most effectively, and there is no pressure on the price to change.

In contrast:

• If the price equals demand only, this would imply a scenario that doesn't exist in standard economic terms because equilibrium involves both supply and demand.
• When demand is less than supply, it suggests a surplus in the market, leading to downward pressure on price as sellers attempt to clear excess stock.
• If demand is greater than supply, it leads to a shortage, resulting in upward pressure on prices as consumers compete to buy the limited available goods.

Thus, at equilibrium price, demand equates supply, ensuring the market operates smoothly without surplus or shortage.

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The **variance** of a set of numbers is a measure of how much the numbers in the set differ from the mean (average) of the set. It is calculated as the average of the squared differences from the mean.

The **standard deviation** is simply the square root of the variance. It gives a measure of how spread out the numbers in the set are, using the same units as the original numbers.

Given that the standard deviation of a set of numbers is **3.6**, you can find the variance by squaring the standard deviation. This is because the variance is the square of the standard deviation.

So you calculate the variance as follows:

Variance = (Standard Deviation)² = **3.6** x **3.6** = **12.96**

So the **variance** is **12.96**.

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In any economy, the problem of "how to produce" is essentially about deciding the best way to combine resources to produce goods and services. This challenge can be effectively addressed by adopting the least cost method of production.

Here’s why:

• Objective: The key objective for any economy is to produce goods and services efficiently, using the least amount of resources possible, while maximizing output. This ensures that the resources, which are often limited, are utilized in the most productive way.


• Resource Allocation: By focusing on the least cost method, producers aim to determine the proportion of capital (like machines, tools, and buildings) and labor (human effort) that should be used to minimize costs and maximize profits. This can involve a mix of both capital and labor-intensive methods depending on which combination minimizes production costs.
• Flexibility: The least cost method is iterative and allows for adjustments based on changes in resource availability, technological advancements, and shifts in market conditions, ensuring the production process remains cost-effective and competitive.


• Consumer Benefits: When producers focus on minimizing costs, they can offer products at lower prices, making goods and services more affordable for consumers, which can increase demand and boost the overall economy.

In summary, while other methods and managerial skills are important, addressing how to produce in the most efficient and effective way often boils down to using the least cost method of production, thereby ensuring optimal resource use and economic stability.

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The satisfaction derived from the consumption of a commodity is referred to as utility. To explain this concept further, let's break it down:

Utility is an economic term that describes the pleasure, happiness, or satisfaction a consumer gets from consuming goods and services.

Here’s why it is the correct term:

• When you purchase or consume something, like a snack or a service, the positive feelings or fulfillment you get is called its utility.
• The concept of utility is used in economics to understand consumer behavior, such as how much of a product consumers might be willing to buy at different prices, based on the satisfaction they expect to gain.
• Increasing or maximizing one's utility often drives decisions, as individuals usually aim to derive the most satisfaction from their choices.

In summary, whenever we talk about the satisfaction from using or consuming goods, we are discussing the concept of utility.

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In the context of production, the Total Product (TP) refers to the total quantity of output produced by a firm. The Marginal Product (MP) is the additional output obtained by employing one more unit of a specific input, while keeping all other inputs constant.

When the Total Product starts to fall, it indicates that each additional unit of input is contributing less and less to the total output, to the extent that the output is actually decreasing. This means that any added input is no longer producing additional output but instead reducing it. Therefore, the Marginal Product in this situation is actually negative.

Here is why:

• Consider the scenario where adding extra workers or resources does not increase output, and might even disrupt production.
• At this point, the contribution of added input becomes detrimental, causing a decline in the total output.
• Thus, the Marginal Product turns negative, because the next unit of input is not just unproductive, it makes the overall production lower than before.

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The formula (N + 1)/2 is used to determine the median position in a dataset that is arranged in ascending or descending order. Understanding how to find the median is important because the median is a measure of central tendency that represents the middle value of a dataset. Here's a clear explanation of this concept:

When you have a set of numbers, the median is the number that falls in the middle when the numbers are arranged in either increasing or decreasing order. To find this middle value, you can use the formula (N + 1)/2, where N represents the total number of observations in the dataset.

For example, let's say you have a dataset with an odd number of observations: 3, 5, 7. Here, N is 3, so you apply the formula:

Median position = (3 + 1)/2 = 2

This calculation indicates that the second number in this ordered list is the median, which is 5.

If you have an even number of observations, such as 2, 4, 6, 8, you would calculate the median position as follows:

Median position = (4 + 1)/2 = 2.5

In this case, because 2.5 isn't an integer, the median is the average of the second and third numbers, which are 4 and 6. Therefore, the median is (4 + 6)/2 = 5.

In summary, the formula (N + 1)/2 is used to identify the position of the median in a list of numbers that are ordered, allowing us to understand where the middle point of the data lies.

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A price floor is a **minimum price** set by the government for a particular good or service. It is designed to ensure that the price is not too low, often supporting producers by maintaining their income at a viable level.

For a price floor to be effective, it is usually fixed **above the equilibrium price.** Here's why:

• **Equilibrium Price** is where the supply of a product equals the demand for that product. It is the point at which the market is said to be in balance.
• When a price floor is set **above the equilibrium**, it means that the price consumers are willing to pay is less than the price producers are willing to accept. This leads to a decrease in quantity demanded by consumers since the price is too high for them.
• Thus, producers end up with **more goods available than what consumers are buying**, creating a **surplus**. This surplus occurs because the set price is prohibiting the market from reaching its natural balance or equilibrium.

Therefore, a price floor is usually fixed **above the equilibrium and causes surpluses.** This allows it to serve its purpose of protecting producer revenues while potentially benefiting certain industry stakeholders.

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In a perfectly competitive market, an industry or firm will maximize its profit when its Marginal Cost (MC) equals Marginal Revenue (MR). This is a fundamental principle of microeconomics that ensures the firm's resources are being used most efficiently.

Here's why:

• Marginal Cost (MC) is the additional cost incurred from producing one more unit of a good or service.
• Marginal Revenue (MR) is the additional revenue generated from selling one more unit of a good or service.

If MC = MR, the cost of producing an additional unit is exactly equal to the revenue it generates, meaning any increase or decrease in production would not improve profitability. At this point, the firm is efficiently allocating its resources.

If MC < MR; it means that the cost of producing an extra unit is less than the revenue it brings. The firm can increase its profit by producing and selling more units.

Conversely, if MC > MR; the cost of producing an extra unit exceeds the revenue it brings, and the firm should reduce production to avoid losses.

Therefore, to achieve maximum profit, a firm in a perfectly competitive market should continue adjusting its output until the cost of the last unit produced is exactly equal to the revenue it produces, which occurs at MC = MR.

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Holding money to take care of contingencies is known as the precautionary motive.

Let me explain this further in a simple way:

• Imagine you keep aside some money for unexpected events, such as medical emergencies, car repairs, or other sudden expenses that might occur. This act of saving money for unforeseen needs is called the precautionary motive.
• The main purpose here is to have money on hand to tackle emergencies or any sudden need without having to struggle or sell other assets quickly.
• This behavior is different from having money for regular expenses, which is known as the transactions motive, where the money is kept for day-to-day spending like groceries and bills.
• It is also different from speculative motive, where money is held to take advantage of future investment opportunities.
• Lastly, expansionary motive typically relates to policy measures encouraging broader economic growth and isn't directly about individual money-holding behavior for emergencies.

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The level of consumption generally refers to the amount of goods and services that households are willing and able to purchase. This can be influenced by several factors:

Level of Income: The more income people earn, the more they can spend on goods and services, which directly affects consumption levels. With higher income, households typically increase their consumption.

The Rate of Taxes Paid: Taxes directly impact disposable income, which is the income available after tax deductions. Higher taxes reduce disposable income and may lead to lower consumption, while lower taxes increase disposable income and can potentially boost consumption.

Savings: When households allocate a portion of their income to savings, this reduces the immediate level of consumption. Therefore, high levels of savings can indicate lower levels of consumption.

The Political Climate: Although the political climate can affect the economy in various ways, it is generally not a direct and immediate determinant of consumption levels. The political climate can influence factors like economic stability and government policies, but it is not a direct factor in determining how much households consume.

Based on these explanations, the factor that determines the level of consumption the least is the political climate, because its effects are indirect and less immediate compared to the direct effects of income, taxes, and savings on consumption.

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An economy in which decisions about what to produce are taken partly by private individuals and partly by the state is referred to as a Mixed Economy.

In a Mixed Economy, there is a combination of both private sector and public sector involvement. This structure allows private individuals to own businesses and make decisions about what to produce based on market demands and profitability. At the same time, the government also plays a significant role in economic decision-making, often by regulating certain industries or directly providing goods and services. The balance between these two forces aims to combine the benefits of both market dynamism and government oversight.

Here's a brief explanation of other economic systems to provide contrast:

• Communist Economy: In a communist economy, the state owns and controls all means of production. Private ownership is minimal or nonexistent, and the government makes all decisions about what to produce and how to distribute resources.


• Socialist Economy: A socialist economy also involves significant government control, but there can be some level of private ownership. The government typically focuses on wealth distribution and providing basic services, aiming for social welfare and equality.


• Capitalist Economy: In a capitalist economy, private individuals and corporations own and manage all businesses. Decisions about production and distribution are made based on market forces and competition, with minimal government intervention.

In summary, a Mixed Economy represents a blend that includes elements of both market-driven and government-directed decisions, which sets it apart from other economic types.

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The concept we are discussing here is the Price Elasticity of Demand (PED). It measures how much the quantity demanded of a commodity changes with a change in its price. The formula for calculating the price elasticity of demand is:

PED = (% Change in Quantity Demanded) / (% Change in Price)

First, we calculate the percentage change in quantity demanded:

• Initial quantity demanded = 100 units
• New quantity demanded = 80 units
• Change in quantity demanded = New quantity demanded - Initial quantity demanded = 80 - 100 = -20 units

Percentage change in quantity demanded:

= (Change in quantity demanded / Initial quantity demanded) × 100

= (-20 / 100) × 100 = -20%

Next, calculate the percentage change in price:

• Initial price = N8.00
• New price = N10.00
• Change in price = New price - Initial price = N10.00 - N8.00 = N2.00

Percentage change in price:

= (Change in price / Initial price) × 100

= (2 / 8) × 100 = 25%

Now, we can substitute these values into the formula for PED:

PED = (% Change in Quantity Demanded) / (% Change in Price)

= (-20%) / (25%)

= -0.8

The price elasticity of demand is -0.8. The negative sign indicates that there is an inverse relationship between price and quantity demanded, which is normal for most goods. This value rounded to the nearest value provided in your options is 0.8. This implies it is inelastic demand, meaning the quantity demanded is not very responsive to price changes.

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In a free market economy, multiple producers are allowed to enter the market and compete with each other. This competition creates incentives for producers to become more efficient in order to gain a competitive advantage. When producers compete, they strive to offer better quality products, lower prices, and improved customer service. To achieve these goals, they need to find ways to reduce costs, increase productivity, and innovate. The pressure of competition encourages producers to constantly improve their efficiency to attract customers and maximize profits

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Localization of industries, also known as industrial clustering or agglomeration, refers to the concentration of similar industries or related businesses in a specific geographic area. While there are various advantages associated with localization, such as promoting knowledge spillovers, fostering collaboration, and enhancing economies of scale, it can also have disadvantages.
One of the disadvantages is the creation of structural unemployment. When industries concentrate in a particular region job opportunities may become limited to that specific area. As a result, workers in other regions or industries may face challenges in finding employment, leading to structural unemployment. This can be particularly problematic if the localized industry experiences a decline or faces disruptions, resulting in job losses for a significant portion of the workforce.

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The middle value of an array of figures arranged in descending order is referred to as the median.

To understand this concept, imagine you have a collection of numbers, and you want to find the one that sits right in the middle when all numbers are lined up from the largest to the smallest (or even from smallest to largest, as the median remains the same).

• If there is an odd number of values in your dataset, the median is the number that is directly in the middle. For example, in the dataset {9, 7, 5}, the median is 7, as it is the middle number.


• If there is an even number of values, the median is calculated by taking the average of the two middle numbers. For instance, in the dataset {10, 8, 6, 4}, the two middle numbers are 8 and 6, and their average is (8 + 6) / 2 = 7. Therefore, 7 is the median.

The median is very useful as a measure of central tendency because it is not affected by extremely large or small values in the dataset, which could skew other measurements like the mean. Thus, it provides a better representation of a typical value within the dataset, especially when dealing with outliers.

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To determine how many students are in SSS, we first need to figure out how many students are in JSS. According to the problem, 60% of the school's population is in JSS.

Here's a simple breakdown:

• The total population of the school is 600.
• 60% of 600 is calculated by multiplying 600 by 0.60. Mathematically, this is:
• 600 x 0.60 = 360. So, there are 360 students in JSS.

Since the whole school has 600 students, and 360 of those are in JSS, we can find out how many are in SSS by subtracting the JSS students from the total number of students:

600 - 360 = 240

Hence, there are 240 students in SSS.

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The relationship shown in the diagram is most likely related to the **wage rate and unemployment.** Let me explain this relationship clearly:

The **wage rate** refers to the payment workers receive for their labor, typically expressed on an hourly, daily, or yearly basis. The **unemployment rate** is the percentage of the labor force that is jobless and actively looking for work.

When the **wage rate** offered in the market is above the equilibrium wage (where the supply of labor equals the demand for labor), firms may choose to hire fewer workers as it becomes more expensive to employ labor. This can lead to an **increase in unemployment**. Conversely, if the wage rate is lower, firms are more likely to hire additional workers, possibly decreasing unemployment.

Understanding this relationship is crucial in comprehending how wage policies can influence employment levels. Wage increases that are not aligned with productivity may result in higher costs for employers, potentially resulting in a reduction of jobs available, hence increasing unemployment. Therefore, there is a delicate balance between setting wage levels and maintaining employment levels in the economy.

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In the given equation Q = a - bp + e, we need to understand the roles of the variables Q and P.

In any equation where we are trying to establish a relationship between two variables, one of the variables is usually controlled or changed deliberately, while the other one is observed as it changes in response. In such equations:

• The **independent variable** is the one that you control or change to see how it affects another variable. It is like the **cause** or **input**.
• The **dependent variable** is the one that changes as a result of the changes in the independent variable. It is like the **effect** or **output**.

In the equation Q = a - bp + e, **Q** is the outcome or result that we observe, and it depends on the value of **P**. Thus, **Q is the dependent variable** because it changes depending on the values of **P**. Conversely, **P** is the one that we can change or manipulate in the context of this equation, so **P is the independent variable**.

Therefore, the correct description for **Q** and **P** is that Q is the **dependent** variable, and P is the **independent** variable.

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The balance of payments is a record of all financial transactions made between consumers, businesses, and the government in one country with others. It includes trade in goods and services, investments, and money transfers. To improve a country's balance of payments, particularly the trade balance, countries may implement certain policies.

Anti-dumping policies are used to prevent foreign companies from selling goods at a price lower than their market value to gain an unfair advantage. By implementing anti-dumping policies, a country can protect its domestic industries from unfair competition, which can help improve the balance of payments by reducing imports or encouraging domestic consumption.

Granting subsidies to export producers can help improve the balance of payments by making domestic products cheaper and more competitive in international markets. By lowering production costs, subsidies can help increase exports, leading to an improvement in the balance of payments.

Increasing import duties is another way to improve the balance of payments. By imposing higher taxes on imported goods, a country can discourage imports and encourage consumers to purchase domestically produced goods. This can improve the trade balance by reducing the outflow of money used to purchase foreign products.

On the other hand, decreasing taxation on personal income doesn't directly affect the balance of payments. Reducing personal income tax may increase disposable income for consumers, which could lead to more consumption. However, this increased consumption might not necessarily focus on domestic goods, and could instead lead to higher imports. Therefore, among the options listed, decreasing taxation on personal income is the one least likely to directly improve a country's balance of payments.

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The system of farming that involves the use of a large hectare of land planted with economic crops is known as plantation farming.

Explanation: Plantation farming is an agricultural system where a single crop is grown extensively over a large area. This system is specifically designed for the cultivation of high-demand crops, often termed as "economic crops," because they are produced for their commercial value rather than for direct consumption by the farmers. Such crops include coffee, tea, rubber, sugarcane, cotton, and palm oil.

Key Characteristics of Plantation Farming:

• Large-scale production: Plantation farms occupy vast expanses of land to maximize the output of a single type of crop.
• Monoculture: Typically, a single crop is cultivated, allowing specialization and efficiency in farming practices.
• Commercial orientation: The primary goal is to produce crops for sale, often aiming at international markets.
• Use of advanced techniques: Plantation farming often employs modern agricultural techniques, such as mechanization, irrigation, and the use of fertilizers and pesticides, to enhance productivity.
• Capital intensive: There is a significant investment in both infrastructure and labor to manage the large scale of operations.

In contrast, smaller or subsistence farmers often engage in diverse cropping systems with multiple types of plants cultivated for personal or local consumption. Plantation farming, on the other hand, is designed to produce large quantities of a specific, economically valuable crop to meet regional or global demands.

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Nigeria's agricultural policies are fundamentally designed to enhance and support the agricultural sector for the overall benefit of its economy and citizens. Let's analyze the objectives given:

• Provision of food: This is a core objective of agricultural policies. Ensuring food security by making food consistently available and affordable is a primary aim to combat hunger and malnutrition.
• Provision of agricultural raw materials to industrial sectors: Agricultural policies seek to supply raw materials such as cotton, cocoa, and rubber to industries, supporting the economy's industrial sectors.
• Creation of rural employment: Job creation in rural areas is a crucial focus. By developing agriculture, more employment opportunities can be generated, reducing rural poverty and discouraging rural-urban migration.
• Increasing prices of agricultural Inputs: Contrary to the other objectives, raising the prices of agricultural inputs is generally not an aim of agricultural policies. Instead, policies often aim to reduce costs or provide subsidies for inputs to support farmers, make farming more profitable, and enhance overall productivity.

Therefore, the statement that does not align with the typical objectives of agricultural policies in Nigeria is the increasing prices of agricultural Inputs. Instead, policies are often geared towards making inputs more affordable to support agricultural growth.

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Under perfect competition, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor (MRP) is equal to the wage rate. MRP represents the additional revenue generated by adding one more unit of labor.
Since the firm aims to maximize profits, it will continue hiring labor until the MRP is greater than or equal to the wage rate. At this point, the last unit of labor hired contributes more to total revenue than to total cost, resulting in increased profits for the firm.

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To find the median of a set of numbers, the first step is to arrange the numbers in ascending order (from smallest to largest).

The given numbers are: 14, 13, 29, 15, 13, 17, 12.

Arrange them in ascending order: 12, 13, 13, 14, 15, 17, 29.

The median is the number that appears in the middle of this ordered list. Since there are 7 numbers in this list, the middle number is the fourth one.

In the ordered sequence 12, 13, 13, 14, 15, 17, 29, the median is 14.

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The International Monetary Fund (IMF) is an international organization that primarily focuses on ensuring the stability of the international monetary system. Here are some of its core functions:

• Providing financial aid to members experiencing balance of payment difficulties: The IMF provides financial assistance to countries facing balance of payment problems. This helps stabilize their economies and restore growth.
• Promoting international monetary cooperation: The IMF encourages international collaboration in monetary policies to sustain financial stability and growth across nations.
• Exchange rate stabilization: The IMF works with countries to help stabilize their exchange rates by providing policy advice and financial assistance, aiming to avoid competitive devaluations and maintain global economic equilibrium.

The statement that is NOT a function of the IMF is "assisting member countries in printing and issuing their currency." The IMF does not assist countries in printing or issuing their currency. This activity is typically managed by each country's own central bank or monetary authority. Thus, this function does not fall under the responsibilities of the IMF.

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To determine which option will NOT bring about an increase in the labor force, let's examine the impact of each one:

1. **Decrease in death rate:** When the death rate decreases, more people are living longer, which means that they remain available to be a part of the workforce. Thus, this can contribute to an increase in the labor force.

2. **Better medical services:** Improved medical services often lead to healthier individuals who can participate in work for longer durations. Good health can increase the number of individuals who can work and potentially extend their working life, thus leading to an increase in the labor force.

3. **Immigration:** Immigration allows people from other countries to enter and work in a new country. This directly increases the number of people who are available to work in that country, thereby increasing the labor force.

4. **Emigration:** Emigration is when people leave a country to work or live elsewhere. When individuals emigrate, they reduce the number of people available to work in the original country. Thus, **emigration** will NOT bring about an increase in the labor force; instead, it can contribute to a decrease.

In summary, the option that will NOT bring about an increase in the labor force is **Emigration**.

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In a capitalist economic system, several features define its characteristics. To understand which of the given options is NOT a feature of capitalism, let's examine each one:

Free Enterprise: This is a fundamental aspect of capitalism. It refers to the freedom of businesses to operate competitively for profit with minimal government intervention. Under free enterprise, individuals and businesses have the right to sell goods and services, decide on investments, and set prices.

Private Ownership of Property: Another core feature of capitalism is the ownership of property by individuals or corporations rather than by the government. In this system, individuals have the right to own assets, resources, and production facilities. They can use, rent, or sell property as they see fit.

Competition: Competition is a driving force in capitalism. It encourages businesses to improve their products and services, enhance efficiency, lower prices, and innovate. Healthy competition is believed to lead to better choices and quality for consumers.

Detailed Economic Planning: This is NOT a feature of capitalism. Detailed economic planning is more characteristic of socialist or centrally planned economies where government agencies set production targets, control resources, and address distribution centrally. Capitalism relies more on market forces and price mechanisms to guide economic decisions rather than detailed and centralized planning.

Therefore, detailed economic planning is the correct answer as it is NOT a feature of capitalism.

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Deflationary policies refer to economic strategies aimed at reducing inflation and stabilizing prices. However, these policies can also have several disadvantages that can negatively impact an economy.

One major disadvantage of deflationary policies is unemployment in the country. These policies often involve reducing the money supply or increasing interest rates. When the money supply is reduced, businesses may have less access to credit and may experience decreased consumer spending. This can lead to lower production and, consequently, job cuts, increasing unemployment.

Deflationary policies may also lead to a decrease in investments, as higher interest rates make borrowing more expensive. Companies might delay or reduce their investment plans, creating a ripple effect that dampens economic growth and job creation. As more people are unemployed, there is less consumer spending, which can further exacerbate economic stagnation.

On the other hand, while these policies could potentially lead to an improved standard of living in the long run by stabilizing prices, the immediate term is often marked by challenges. These policies are designed to control costs; however, the path to reaching that stability can be quite turbulent.

In summary, the main disadvantage of deflationary policies is their potential to increase unemployment and dampen economic growth, despite their goal of stabilizing the economy.

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Market trade unions are not typically associated with the problem of internal trade. Trade unions are typically formed b workers or employees to protect their rights, negotiate better working conditions, and advocate for their interests. While trade unions can have an impact on labor markets and industrial relations, they are not directly linked to the challenges or problems specifically related to internal trade.

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Factors of production are the inputs used to produce goods and services in an economy. The main factors of production include land, labor, capital, and entrepreneurship. Each of these factors receives a specific reward or return:

• Land: The reward for using land as a factor of production is rent. Rent is the payment made for the use of land or real estate resources.
• Labor: The reward for labor is typically in the form of wages or salaries. It represents the compensation paid to workers for their productive efforts.
• Capital: The reward for capital, which includes machinery, tools, or financial capital used in production, is interest. It is the return on investment for using capital resources.
• Entrepreneurship: The reward for entrepreneurship, which involves the risk-taking and organization of other factors of production, is profit. Profit is the financial gain realized by entrepreneurs for their ventures.

The term subsidy is generally not a reward for factors of production. A subsidy is a financial assistance granted by the government to individuals or businesses to support activities, promote economic growth, or reduce the cost of certain goods and services. It is not directly linked to any of the classical factors of production.

In conclusion, while profit, rent, and interest are returns directly associated with factors of production, a subsidy is not. It serves a different purpose in economic policy.

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The expenditure approach is a common method used to calculate the national income, specifically the Gross Domestic Product (GDP) of a country. This approach sums up all expenditures or spending in the economy.

The correct formula for the expenditure approach is: Y = C + I + G + (X - M), where:

• C stands for Consumption: This is the total value of all goods and services consumed by households within the economy. It includes expenditures on items such as food, clothing, housing, and other personal expenses.
• I stands for Investment: This includes spending on capital goods that will be used to produce other goods and services in the future, such as machinery, buildings, and inventory.
• G stands for Government Spending: This is the total expenditure by the government on goods and services, including public sector salaries, defense, education, and infrastructure projects.
• (X - M) stands for Net Exports: This is calculated as total exports (X) minus total imports (M). Exports are goods and services sold to other countries, while imports are those bought from other countries. By subtracting imports from exports, we determine the net trade effect on the economy.

Putting it all together, this formula helps to calculate the total economic activity within a country by summing up consumption, investment, government spending, and net exports, giving a comprehensive picture of the national income.

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The **economic problem** arises due to the fundamental concept of **scarcity**. In simple terms, scarcity means that the resources available to us are **limited**, while our desires and needs are **unlimited**. This situation forces us to make decisions about how best to allocate our resources efficiently.

Because of scarcity, every choice we make involves a **trade-off**. For instance, if you choose to spend your time studying economics instead of mathematics, you sacrifice the benefits you would have gained from studying mathematics. The concept associated with this scenario is called **opportunity cost**, which is essentially the value of the next best alternative forgone when making a decision.

Furthermore, scarcity leads to the necessity of **choice**. Individuals, businesses, and governments must decide what to produce, how to produce, and for whom to produce. These choices are influenced by the limited resources and the alternatives available.

While **money cost** is often considered in decisions, it is not the root cause of the economic problem. It is a **monetary representation of value** and is used as a tool to navigate scarcity and opportunity cost.

In essence, the **economic problem exists** because we have to make choices about how to use our scarce resources most effectively, and every choice involves an opportunity cost. This continual need to prioritize options is at the very heart of economics.

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The correct order in the chain of distribution is: Producer → Wholesaler → Retailer → Consumer.

Let's take a closer look at each stage in this sequence:

Producer: This is the first stage where the initial product is manufactured or created. The producer could be a manufacturer or a farmer, or anyone who creates goods or services to be sold.

Wholesaler: After the producer creates the goods, they typically sell them in large quantities to a wholesaler. The wholesaler buys in bulk and often offers products at a lower price, allowing them to distribute to various retailers.

Retailer: The wholesaler then sells these products to retailers. Retailers have stores or online platforms where consumers can purchase products in smaller quantities. Retailers make these products accessible to the general public.

Consumer: Finally, the consumer is the person or entity that purchases and uses the product. This is the last step in the distribution chain, where the goods reach their intended end-users.

This sequence ensures that goods move efficiently from creation to the hands of consumers through different intermediaries, making the distribution process systematic and effective.

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The recent revolution of cassava from an ordinary food crop to an export crop is likely to lead to an increase in the price of cassava products.
When cassava transitions from being primarily used as a food crop to an export crop, its demand and value in the international market tend to increase. This increased demand can result in higher prices for cassava products such as cassava flour, starch, or other processed derivatives.

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A persistent fall in the general price level is known as deflation.

To understand this better, let's break it down:

• General Price Level: This refers to the average of current prices across the entire spectrum of goods and services produced in the economy. It is like taking a snapshot of what prices look like overall in the economy.


• Deflation: This is the term used when the general price level is consistently decreasing over time. In simpler terms, it means that prices of goods and services are falling, making them cheaper for consumers. This might sound beneficial to consumers initially, but prolonged deflation can lead to reduced consumer spending, as people may delay purchases in anticipation of even lower prices. This can subsequently slow down economic growth and potentially lead to an economic recession.

Hence, when we say "persistent fall in the general price level," we are accurately describing deflation.

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Economics problems arise in all societies primarily because resources are not in adequate supply. This is known as the fundamental economic problem of scarcity. In every society, there are limited resources but unlimited wants and needs. These resources include things like land, labor, and capital, which are necessary for producing goods and services. Since we do not have enough of these resources to satisfy everyone's desires, we face choices about how to allocate them efficiently.

The issue of scarcity leads to other economic problems such as deciding what to produce, how to produce it, and for whom it should be produced. These decisions are made by assessing opportunity costs and considering how to make the best possible use of the limited resources available.

While factors such as lack of proper planning or mismanagement by leaders can exacerbate economic problems, they are not the root cause. The core issue remains the limited availability of resources, compelling societies to prioritize and decide how best to meet the needs of their population.

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In Nigeria, marketing boards were established to regulate and promote agricultural products. Their primary functions include activities like grading farm produce to ensure quality standards and marketing farm produce by finding markets where these products can be sold. They are also responsible for fixing prices for farm produce to stabilize farmers' incomes and protect them from market fluctuations.

However, one activity that marketing boards do not typically perform is the importation of farm produce. Marketing boards are mainly concerned with the domestic production and distribution of local agricultural products, whereas the importation would fall under international trade domains and different regulatory agencies. Thus, the importation of farm produce is not a usual function of marketing boards in Nigeria.

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In this scenario, the price of rice has increased relative to the amount of money (N1,250) that could be used to purchase it. Initially, N1,250 could buy two bags of rice, but after two weeks, the same amount can only buy one bag.
This decrease in purchasing power demonstrates that the value of money has declined. In other words, the same amount of money can now buy fewer goods or services than before. This situation is often referred to as inflation, where the general price level of goods and services rises over time, reducing the purchasing power of money.