JAMB UTME - Economics - 2011

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An indicator of growth in an economy over a period of time is the Gross Domestic Product (GDP) at market price. GDP is a measure of the total value of goods and services produced within a country's borders during a specific time period, usually a year. The GDP at market price includes the total value of all final goods and services produced in an economy, including those that are exported and those that are consumed domestically. An increase in the GDP over time indicates that the economy is growing, as it suggests that the country is producing more goods and services than it did in the previous period. This growth can be driven by various factors, such as increased investment, technological advancements, or improvements in productivity. The GDP at factor cost is another measure of the value of goods and services produced in an economy, but it does not include indirect taxes and subsidies, while the GDP deflator is an index that measures the level of prices of all goods and services included in the GDP. The GDP gap, on the other hand, is the difference between the actual GDP and the potential GDP of an economy, and it is used to measure the level of economic underutilization or overutilization of resources.

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If real income increases while nominal income remains the same, it means that the purchasing power of people's money has increased. This can only happen if the general prices of goods and services have fallen, meaning that the same amount of money can now buy more items than before. Therefore, - General prices have fallen - is the answer.

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Trade takes place because of comparative advantage. Comparative advantage is a term used in economics to describe a situation where one country or person can produce a good or service at a lower opportunity cost than another country or person. In other words, it is more efficient for one country or person to produce a specific good or service, while another country or person specializes in producing a different good or service. To understand this simply, consider a scenario where one country can produce cars more efficiently than another country, while the second country can produce computers more efficiently than the first country. If these two countries specialize in producing the goods that they are relatively more efficient at producing, and then trade with each other, both countries can benefit from the trade. This is because each country can obtain the goods they need at a lower cost than if they tried to produce everything themselves. Therefore, the correct answer is comparative advantage. It is not marginal utility, inefficiency in production, or opportunity cost.

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A country achieves economic development when there is a sustained increase in per capita income. Per capita income refers to the average income earned by each person in a country, and it is a widely used indicator of a country's economic development and standard of living. A sustained increase in per capita income means that people in the country are earning more money on average, and that the overall level of prosperity and well-being in the country is increasing over time. Economic development is a process of sustained economic growth and improvement in the standard of living of a country's citizens. When a country experiences a sustained increase in per capita income, it is a sign that the economy is growing and that people are becoming more prosperous. This can lead to improvements in areas such as health, education, and infrastructure, which can further support economic growth and development. In simple terms, a country achieves economic development when people are earning more money on average, and the overall level of prosperity in the country is increasing over time.

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When a consumer is at equilibrium, the Marginal Rate of Substitution (MRS) is equal to the ratio of the two prices. The MRS is the rate at which a consumer is willing to substitute one good for another while maintaining the same level of satisfaction. It represents the slope of the indifference curve, which shows the combinations of two goods that give the consumer the same level of satisfaction. At equilibrium, the consumer maximizes their satisfaction subject to their budget constraint, and the MRS equals the ratio of the two prices. This means that the consumer is willing to trade one unit of a good for a certain number of units of another good at a rate that is equal to the ratio of the prices of the two goods. For example, if the price of good X is ?5 and the price of good Y is ?10, then the consumer will be willing to trade one unit of good Y for two units of good X, because 2 units of X cost ?10, which is the same as the cost of one unit of Y. Therefore, at equilibrium, the consumer is willing to trade the goods at a rate that is equal to the ratio of the prices of the two goods. The other options (sum of the prices, product of the two prices, difference of the two prices) are not related to the concept of MRS or consumer equilibrium.

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One of the characteristics of oligopoly is the availability of few sellers. Oligopoly is a market structure in which a small number of large firms dominate the market and there is limited competition. In an oligopolistic market, there are only a few dominant firms, and they have a significant degree of control over the market and prices. The availability of few sellers in an oligopolistic market is one of its defining characteristics. This limited number of firms gives them significant market power, allowing them to influence prices and limit competition. This can result in higher prices for consumers and reduced incentives for innovation and efficiency. In simple terms, oligopoly is a market with only a few dominant firms and limited competition. The availability of few sellers is one of the key characteristics of this market structure.

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In modern economies, the Malthusian theory of population is ineffective because of technical progress and government policies. The Malthusian theory of population, developed by Thomas Malthus in the 18th century, states that population growth will eventually outstrip food supply, leading to famine and poverty. However, this theory has proven to be incorrect in modern economies due to advancements in agriculture and food production, as well as government policies that promote economic growth and development. In simpler terms, the Malthusian theory is no longer valid because technology has allowed us to produce more food than ever before, and governments have implemented policies that help the economy grow and meet the needs of a growing population. This has prevented the population growth from outpacing food supply and leading to widespread poverty and famine.

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Upstream oil activities involve the exploration and extraction of crude oil from the earth's surface, including drilling wells and producing crude oil. In other words, upstream activities are focused on the early stages of the oil production process, starting from the search for oil deposits, up to the point of extracting the crude oil from the earth's surface. To understand this simply, consider the process of extracting crude oil from the earth. The upstream activities would involve the exploration of potential oil deposits, the drilling of wells to extract the crude oil, and the transportation of the oil to a refinery for processing. These activities are considered upstream because they occur at the beginning of the oil production process and are focused on obtaining crude oil from the earth's surface. Therefore, the correct answer is the exploration of crude oil. It is not the management of pollution, marketing of refined products, or refining of crude oil.

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The record of a country's transactions in international trade is called the balance of payments. The balance of payments is a systematic record of all economic transactions between the residents of a country and the rest of the world during a given period, usually a year. It includes all financial transactions, such as the imports and exports of goods and services, payments of interest and dividends, and the flow of capital in and out of the country. The balance of payments consists of two main components: the current account and the capital account. The current account records all transactions that involve the exchange of goods and services, as well as income flows between the country and the rest of the world. The capital account records all transactions that involve the transfer of capital, including investments and loans. The balance of trade is a component of the current account and records the difference between the value of a country's exports and the value of its imports. It is calculated by subtracting the value of imports from the value of exports. If a country exports more than it imports, it has a trade surplus, while if it imports more than it exports, it has a trade deficit. Therefore, the balance of payments is the record of a country's transactions in international trade, including both the current account and the capital account.

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The World Trade Organization (WTO) is an international organization that helps to promote fair and free trade between countries. It does this by working to minimize obstacles to international trade and investment. This means that it helps to remove things that get in the way of countries doing business with each other, such as tariffs (taxes on imported goods) and trade restrictions. The WTO also works to ensure that countries play by the same rules when it comes to trade, which helps to level the playing field for all countries. The ultimate goal of the WTO is to help increase economic growth and development around the world by making it easier for countries to trade with each other.

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If aggregate demand, which refers to the total amount of goods and services demanded by all consumers, firms, and the government in an economy, is lower than total output, which refers to the total amount of goods and services produced in an economy, the national income will fall. National income, also known as Gross Domestic Product (GDP), is a measure of the total income generated in an economy by the production of goods and services. If aggregate demand is lower than total output, it means that consumers, firms, and the government are not demanding enough goods and services to keep pace with the amount being produced. As a result, some of the output will go unsold, and businesses will start to cut back on their production, leading to lower economic activity and a decrease in national income. In simple terms, if people are not buying enough of what is being produced, the economy will slow down, and the national income will decrease.

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The main function of NNPC (Nigerian National Petroleum Corporation) is to oversee the development of the oil sector in Nigeria. This includes managing the exploration, production, and distribution of petroleum products, as well as ensuring that the country's oil reserves are used in a sustainable and responsible manner. NNPC also works to promote investment in the oil sector, both domestically and internationally, and to maintain good relationships with other countries that are involved in the production and distribution of petroleum products. In addition, NNPC plays a key role in regulating the oil industry in Nigeria, ensuring that companies operating in the sector comply with all relevant laws and regulations.

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Bank consolidation policy in Nigeria is a measure to increase the capital base of banks. Capital base refers to the amount of financial resources that a bank has available to support its operations and growth. By increasing the capital base of banks, the bank consolidation policy in Nigeria aims to strengthen the financial stability and stability of the banking sector, and make it better equipped to support economic growth and development. The capital base of a bank is important because it helps to ensure that the bank has enough financial resources to cover its potential losses and meet the demands of its customers, even in times of economic stress. By increasing the capital base of banks, the bank consolidation policy in Nigeria seeks to create a more stable and resilient banking sector that is better equipped to support economic growth and development. In simple terms, the bank consolidation policy in Nigeria is designed to make banks stronger and more financially stable by increasing the amount of money they have available to support their operations.

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The market determines demand patterns based on the principle of "consumer sovereignty." Consumer sovereignty means that consumers, as a group, have the power to determine which goods and services are produced by making their purchasing decisions in the marketplace. In other words, the market responds to the choices that consumers make, and producers adjust their production to meet the demands of the consumers. This creates a market-driven economy where the preferences of consumers shape the production and distribution of goods and services. Consumer sovereignty is driven by the consumers' rational behavior, where they aim to maximize their satisfaction by choosing the best combination of goods and services given their budget constraints. As consumers make choices, they reveal their "scale of preferences" – their willingness to pay for each good or service. The price of the commodity is an important factor that affects demand patterns. As the price of a good or service increases, consumers tend to demand less of it, and vice versa. This is because consumers will try to adjust their consumption patterns to maximize their utility, given their budget constraints. In summary, the market determines demand patterns based on consumer sovereignty, where consumers' choices and preferences shape the production and distribution of goods and services. The price of the commodity is an important factor that affects demand patterns as consumers adjust their consumption patterns to maximize their utility.

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Agricultural production in Nigeria is constrained by poor implementation of policies. There are several policies in place to support the agricultural sector in Nigeria, such as subsidies, extension services, and credit facilities. However, these policies are often poorly implemented or not effectively targeted to reach the farmers who need them most. This can lead to low productivity, low yields, and a lack of competitiveness in the global market. Additionally, many farmers in Nigeria lack access to modern technologies, such as irrigation systems and improved seeds, which can further hinder agricultural production. As a result, Nigeria has struggled to meet the growing demand for food, leading to food insecurity and high levels of poverty in rural areas. To address these challenges, there is a need for more effective policies and better implementation strategies to support agricultural production in Nigeria.

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Total output is at its maximum when Marginal Product (MP) is equal to zero. This is because as the production increases, the increase in output (the MP) will eventually start to decrease, meaning that adding more resources is no longer resulting in a larger increase in output. When MP equals zero, it means that the production has reached its maximum level, and adding more resources will not result in an increase in output. On the other hand, Average Product (AP) can be greater than or equal to zero at the maximum point of output. AP is the average output per unit of input, and it will continue to decrease as the production increases and the inputs become more spread out over more output.

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A major disadvantage of the arithmetic mean is that it is affected by extreme data. The arithmetic mean is a statistical measure used to calculate the average of a set of data points. It is calculated by adding up all the data points and dividing the sum by the number of data points. However, the problem with using the arithmetic mean is that it can be heavily influenced by extreme data points, or outliers. Outliers are data points that are significantly different from the rest of the data, either higher or lower than the average. When outliers are present in a data set, they can skew the arithmetic mean, making it an inaccurate representation of the data. For example, if a data set consists of salaries for a company, and the CEO's salary is much higher than the rest of the salaries, then the arithmetic mean will be heavily influenced by the CEO's salary and will not represent the average salary of the employees. Therefore, the correct answer is affected by extreme data. It is not that the arithmetic mean is not useful for large data, not suitable for further statistical analysis, or cumbersome to determine the actual value.

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The import-substitution strategy of industrialization is aimed at encouraging domestic production of goods that are currently being imported from other countries. This strategy involves the implementation of policies and measures to support the growth and development of domestic industries that can produce these goods. The main goal of import-substitution is to reduce reliance on imported goods, which can help to save foreign exchange and increase local employment opportunities. By promoting domestic production, the strategy seeks to create a self-sufficient economy that can meet the needs of its citizens without relying on imports. Import-substitution encourages the growth of industries that can produce goods on a large scale, which can help to lower production costs and make the products more affordable. This can lead to increased consumer demand for domestic products and can help to boost economic growth. In contrast to exportation, which involves producing goods for sale in other countries, import-substitution is focused on producing goods for local consumption. While exportation can bring in foreign exchange, import-substitution aims to reduce the need for foreign exchange by producing goods locally. Overall, the import-substitution strategy of industrialization aims to promote domestic production, reduce reliance on imports, and create a self-sufficient economy that can meet the needs of its citizens.

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The money paid per hour for work done is called the wage rate. Wage rate refers to the amount of money that a worker is paid for each hour of work performed. It is a measure of the value that is placed on an hour of work in a particular job or industry. The wage rate is usually determined by the market forces of supply and demand, based on factors such as the worker's skills, experience, and the demand for their labor. For example, if a worker is paid ₦500 for each hour of work, their wage rate is ₦500 per hour. If they work for 8 hours a day, their daily wage would be ₦4,000 (₦500 x 8 hours). It is important to note that the wage rate is different from a salary, which is the total amount of money paid to an employee over a specified period, usually a month or a year. A salary may be paid on a monthly or yearly basis, while the wage rate is paid on an hourly basis. The other options, cost and bonus, are not directly related to the concept of wage rate. Cost refers to the total expenses incurred by a company or organization in the production of goods or services, while a bonus is an additional payment made to an employee as a reward for good performance.

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If demand increases without a change in supply, the equilibrium price and quantity will rise. In economics, the law of demand states that as the price of a good increases, the quantity demanded of that good will decrease, and vice versa. The law of supply states that as the price of a good increases, the quantity supplied of that good will increase, and vice versa. The intersection of the demand and supply curves represents the market equilibrium, where the quantity demanded and quantity supplied are equal and the price is stable. If demand increases without a change in supply, the demand curve will shift to the right, causing the equilibrium price and quantity to rise. This happens because there is now more demand for the good at every price, so the price must rise in order to balance the market and bring the quantity demanded in line with the quantity supplied. In simple terms, if people want more of a good without an increase in the amount being produced, the price of the good will go up to balance supply and demand.

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The correct term for a situation where the demand for one commodity excludes another is "competitive demand." Competitive demand occurs when two or more products are in direct competition with each other because they serve a similar purpose or satisfy the same need. For example, if you have a craving for either a chocolate bar or a bag of potato chips, and you can only choose one, then the demand for one product competes with the demand for the other. In other words, when the price of one product increases or decreases, it affects the demand for the other product as consumers will make a choice between them. As a result, the products become substitutes for each other. Therefore, competitive demand refers to products that are competing for the same set of customers, and an increase in demand for one will decrease demand for the other.

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An increase in the circulation of money, without a corresponding increase in output or productivity, can lead to inflation. Inflation is a term used in economics to describe a situation where there is a general and sustained rise in the prices of goods and services in an economy over time. When there is more money available to buy goods and services, but the supply of goods and services available in the market remains the same, people will compete to buy the limited goods and services, driving up their prices. To explain this simply, consider a scenario where there is an increase in the amount of money available in an economy, but there is no increase in the production of goods and services. This means that people will have more money to spend, but the number of goods and services available to buy remains the same. As a result, people will bid up the prices of the existing goods and services, leading to a general increase in the level of prices. This is what is known as inflation. Therefore, the correct answer is inflation. It is not a rise in income levels, stagflation, or deflation.

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In national income accounts, an item counted as part of government spending is salaries and wages paid to government employees. This includes the salaries and wages paid to civil servants, police officers, teachers, and other public employees. These payments are considered a part of government spending because they represent a significant portion of the government's budget and are used to provide important public services to the community. Other items that may be counted as part of government spending in national income accounts include pensions, scholarships, and social welfare programs. These payments are also considered to be part of government spending because they are funded by the government and are used to support the welfare of the citizens.

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During the era of barter, money was generally in the form of commodities. In the era of barter, people used to exchange goods and services directly without the use of money. However, as the economy grew and people started engaging in more complex transactions, the need for a common medium of exchange arose. This led to the evolution of money. In its early stages, money was generally in the form of commodities, such as grains, cattle, shells, salt, and other goods that were widely accepted as a medium of exchange. For example, if a farmer wanted to buy a horse from a trader, he could pay for it with a certain number of bags of wheat or a herd of cattle. The trader could then use the wheat or cattle to buy goods or services from others. Commodities used as money had certain characteristics that made them suitable for use as a medium of exchange. They were durable, divisible, portable, and had intrinsic value. Intrinsic value means that the commodity had value in and of itself, aside from its use as money. Over time, as economies became more complex, people started using other forms of money, such as coins, precious metals, and paper money. However, the use of commodities as money was an important step in the evolution of money and helped facilitate the growth of trade and commerce.

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The optimal range of output for a perfectly competitive firm is where the firm's marginal cost (MC) is equal to its marginal revenue (MR) and is also equal to or greater than its average variable cost (AVC). In a perfectly competitive market, firms are price takers and must sell their products at the market price. Therefore, the marginal revenue (MR) for a perfectly competitive firm is equal to the market price. The marginal cost (MC) of producing an additional unit of output is the additional cost of producing that unit. The perfectly competitive firm will continue to produce output as long as the marginal revenue (MR) is greater than or equal to the marginal cost (MC). When the firm produces output up to the point where MC equals MR, it is operating at the optimal range of output. In this range of output, the firm is maximizing its profits, because any increase or decrease in production would lead to a decrease in profits. The firm's average variable cost (AVC) should also be taken into account to ensure that it is covering its variable costs and operating efficiently. If the firm produces output at a level where MC is rising above MR, it means that the cost of producing an additional unit is higher than the revenue it generates, leading to a decrease in profits. Conversely, if the firm produces output at a level where MC is falling below MR, it means that it could increase profits by producing more output. Therefore, the optimal range of output for a perfectly competitive firm is where MC equals MR and is equal to or greater than AVC.

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The transfer of public shareholding corporations to private enterprises is called privatization. This is a process whereby the ownership and control of state-owned enterprises, such as utilities, transport companies, and communication systems, are transferred to private entities. The aim of privatization is to increase efficiency, reduce government bureaucracy, and encourage private sector investment. Through privatization, public enterprises are sold to private investors who assume full control of the company. This allows private investors to manage the company in a way that maximizes profits and reduces costs. By doing so, the new private owners can often provide better services and products to consumers, improve productivity, and contribute to economic growth. Overall, privatization is seen as a way to promote economic development and improve the competitiveness of a country's economy.

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If a firm faces an elastic supply curve, it means that the quantity supplied by the firm is highly responsive to changes in price. In other words, if the firm raises the price of its product, the quantity supplied will decrease significantly, and if it lowers the price, the quantity supplied will increase significantly. In this scenario, if the firm raises the price of its product, the total revenue earned by the firm will decrease. This is because the increase in price will cause a decrease in the quantity of the product demanded by consumers. As a result, the firm will sell fewer units of the product at a higher price, leading to a decrease in total revenue. On the other hand, if the firm lowers the price of its product, the total revenue earned by the firm will increase. This is because the decrease in price will cause an increase in the quantity of the product demanded by consumers. As a result, the firm will sell more units of the product at a lower price, leading to an increase in total revenue. Therefore, the answer is that the firm's revenue will increase by more than the percentage increase in price if it faces an elastic supply curve.