JAMB UTME - Economics - 2006

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A perfectly competitive firm should close down when the price is below the average variable cost. This means that the firm is not generating enough revenue to cover its variable costs, such as labor and raw materials. Continuing to operate would mean incurring losses that are greater than if the firm shut down. In this scenario, the firm's fixed costs, such as rent, cannot be recovered in the short run. Therefore, it is better for the firm to shut down and minimize its losses.

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A distribution is said to be positively skewed if it has a long tail to the right. This means that the distribution has a cluster of data points towards the left side of the graph, and then a long "tail" of data points stretching out towards the right. The mean of a positively skewed distribution is usually greater than the median, which is the middle value of the data set. This is because the long tail on the right side pulls the mean towards higher values.

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An outward shift of the supply curve means that more of the good or service is being produced at every price level. Since demand and price remain unchanged, there will now be a surplus of the good or service, which means that the quantity supplied exceeds the quantity demanded. This excess supply is also known as a glut or oversupply, and it can lead to lower prices, lower profits for producers, and a buildup of unsold inventory. Therefore, the correct option is "excess supply".

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An oligopoly is the market structure in which there is interdependence of price-output policies. In an oligopoly, there are a small number of firms that dominate the market and their actions have a significant impact on the market as a whole. These firms often engage in strategic behavior, such as price fixing or collusion, in order to maximize profits. As a result, the firms must be aware of and respond to each other's pricing and output decisions, leading to interdependence of their policies.

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The marginal propensity to consume (MPC) is the fraction of additional income that is spent on consumption. If the MPC is 0.6, it means that for every additional N1 of income, 60 kobo (0.6 kobo) will be spent on consumption. If consumption expenditure changes by N10 million, and the MPC is 0.6, this means that the additional income (Y) generated will be Y = (N10 million) / (1 - 0.6) = N25 million. Therefore, the equilibrium level of income will change by N25 million, which is the same as the value of the additional income generated by the change in consumption expenditure. The correct answer is option B, N25.0 million.

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A rising short-run average cost is a result of "diminishing returns". This means that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually start to decrease, leading to higher average costs. In other words, the cost per unit of output will increase as a result of adding more variable inputs. This is due to the fact that the fixed input (such as a factory) has a limited capacity to produce, and adding more variable inputs (such as labor or raw materials) beyond this capacity will not result in a proportional increase in output. As a result, the cost per unit of output will increase as production moves beyond the optimal level.

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When the demand for a commodity is inelastic, it means that a change in price does not significantly affect the quantity demanded by consumers. Therefore, if a government imposes a tax on such a commodity, the burden of the tax will mostly be passed on to the consumers in the form of higher prices, and not much by the producers who will still produce the same quantity since the demand hasn't really changed much. So, the correct option is: "fall more heavily on consumers".

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The organization whose aim is to solve the trade problems of less developed nations is the United Nations Conference on Trade and Development (UNCTAD). UNCTAD is a permanent intergovernmental body of the United Nations that was established in 1964 to help promote international trade, investment, and development, especially among the less developed countries. UNCTAD provides research, analysis, technical assistance, and training to help developing countries improve their trade performance and participate more effectively in the global economy. The organization also serves as a forum for intergovernmental discussions on trade and development issues.

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Industrialization is a process where a country transforms from an agricultural-based economy to an industrial-based economy. One of the major advantages of industrialization is that it leads to growth and development. This is because industrialization leads to an increase in productivity, which in turn leads to an increase in output and income. The growth and development generated by industrialization are essential for a country to become more self-reliant and to improve its terms of trade. Additionally, industrialization also creates more job opportunities, which can help reduce unemployment levels. Therefore, industrialization is an important factor in the economic development of a country.

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A floating exchange rate is the exchange rate that is determined by the forces of demand and supply in the foreign exchange market. The exchange rate is allowed to fluctuate freely based on the changes in the market, without any intervention or control from the government or central bank. Hence, the answer is a "floating exchange rate".

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The range of a set of data is the difference between the largest and smallest values in that set. In this case, the largest value is 35 and the smallest value is 13. Therefore, the range is 35 - 13 = 22. So the correct answer is option b: 22.

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The oil-producing areas in Nigeria are agitating for special compensation owing mainly to environmental pollution. This is because oil exploration and production activities have caused severe pollution of the air, land, and water resources in the region. The oil spills, gas flaring, and other activities have led to serious health problems, loss of biodiversity, and destruction of farmlands and aquatic life. The people in the region are demanding that the government and oil companies provide compensation for the damage caused to their environment and their livelihoods.

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Personal income tax is a tax that individuals pay on the income they earn. The government generates revenue from personal income tax by applying a certain percentage or rate to the taxable income of individuals. Therefore, when the tax rate is raised, more tax revenue is generated for the government. This happens because individuals have to pay a higher percentage of their income as tax, resulting in an increase in the overall revenue from personal income tax.

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When the Central Bank of Nigeria reduces the bank rate, it becomes cheaper for commercial banks to borrow money from the Central Bank. As a result, commercial banks are likely to increase their lending to customers. This increase in lending means that there will be more money in circulation in the economy, which will lead to an increase in the money supply. Therefore, the correct option is: money supply to increase.

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When the short-run cost curve of a firm is U-shaped, it means that initially the marginal cost of production falls, then reaches a minimum and eventually rises. The point where the marginal cost curve intersects the average cost curve is the minimum point of the average cost curve. At this point, the average cost is at its minimum value. Therefore, the answer is: where the average cost is minimum.

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A commodity will be demanded only if it has utility. This means that a good or service must be able to satisfy a consumer's want or need in order for it to be demanded in the market. Even if a commodity is affordable, has no close substitutes, or consumers have high income levels, it will not be demanded if it does not provide any utility. Utility refers to the satisfaction or benefit a consumer receives from consuming a good or service, and it is the fundamental reason why consumers are willing to pay a price for a commodity.

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Mobility of labor is higher when there are alternative jobs in the same location. This means that if workers have access to multiple job opportunities in the same geographical location, they are more likely to move between jobs in search of better wages, working conditions, and job security. This leads to increased labor mobility, as workers have more options to choose from, and employers have to compete for workers by offering better wages and benefits. On the other hand, when there is a monopoly of jobs in one location or no alternative jobs in the same location, workers may be reluctant to move due to the lack of job opportunities, which leads to lower labor mobility.

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Economic growth can be accelerated through increased current investment. This is because investment contributes to the creation of new businesses, expansion of existing ones, and development of infrastructure. All these activities stimulate economic activity and create job opportunities, which leads to increased output and higher incomes. With higher incomes, people can afford to consume more goods and services, leading to increased demand, which in turn drives further growth. On the other hand, if consumption is increased without a corresponding increase in investment, there will be a strain on resources, which could lead to inflation and slow down economic growth.

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The law of demand is a fundamental concept in economics that states that as the price of a product or service increases, the quantity demanded of that product or service decreases, all other things being equal. This relationship can be mathematically expressed as: Qd = f(P) where Qd represents the quantity demanded, P represents the price of the product or service, and f() represents the functional relationship between them. In simpler terms, this means that the quantity of a product or service that people are willing and able to buy will decrease as its price increases.

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The correct formula for calculating a price index is: current price / base year price X 100. A price index measures the average price changes of goods and services over time. The formula compares the current price of a specific good or service to the price of the same good or service in a chosen base year. By comparing these two prices, we can calculate the percentage change in price over time, which is represented as a percentage value. This percentage value is multiplied by 100 to get the price index.

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A major factor militating against rapid industrialization in Nigeria is epileptic power supply. This means that the country's power supply is unreliable and inconsistent, making it difficult for industries to operate efficiently and effectively. Without a steady power supply, industries cannot produce goods and services to meet demand, leading to a decline in productivity and profitability. It also makes it difficult for new industries to emerge and existing ones to expand, hindering the country's overall economic growth and development.

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Transfers are excluded from the computation of national income because they are not payments for productive activities. Transfers are simply the transfer of money or goods from one person or institution to another, without any productive activity involved. They are not part of the income generated by the production of goods and services in the economy, so they are not included in the calculation of national income. Examples of transfers include social security payments, welfare payments, and gifts.

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The major role of NDIC (Nigeria Deposit Insurance Corporation) is to insure bank deposits. This means that in the event of a bank failure, NDIC provides a form of protection to depositors by guaranteeing the repayment of their insured deposits. The aim of the corporation is to promote public confidence in the banking system and ensure the stability of the financial system by protecting depositors and providing an orderly means of resolution in the event of bank failure. Therefore, NDIC provides insurance cover to depositors of licensed banks and ensures that they are compensated in the event of a bank failure up to the maximum limit specified by the corporation.

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A straight line indifference curve indicates that the two products are perfect substitutes. This means that the consumer is indifferent between the two products and is willing to exchange one for the other at a constant rate, regardless of the price or quantity consumed. For example, if a consumer is equally satisfied with consuming one apple or one banana, and the price of apples increases, the consumer will switch to consuming only bananas as they are perfect substitutes.

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The characteristic that is common to partnership and sole proprietorship is "unlimited liability". Unlimited liability refers to the owner(s) being personally liable for all the debts and obligations of the business. This means that in the event of financial losses or debts incurred by the business, the personal assets of the owner(s) can be used to settle those obligations. In a sole proprietorship, there is only one owner who has unlimited liability. In a partnership, all the partners share unlimited liability. This is in contrast to corporations, where the liability of shareholders is limited to the amount of their investment.

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Derived demand refers to the demand for a good or service that arises from the demand for another good or service. In other words, when the demand for one good or service is dependent on the demand for another good or service, the demand for the former is said to be derived. The most common application of derived demand is with regards to factors of production, such as labor or capital. For example, the demand for labor is derived from the demand for the goods or services that the labor is used to produce. Similarly, the demand for capital is derived from the demand for the goods or services that the capital is used to produce. Therefore, the correct answer is "the factors of production".

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The price elasticity of demand measures the responsiveness of quantity demanded to changes in price. One of the main determinants of price elasticity of demand is the ease of substitution, which refers to the availability of alternative products or services that consumers can switch to in response to a change in price. The easier it is for consumers to find substitutes, the more elastic the demand for a product will be. Other factors that can affect price elasticity of demand include the degree of necessity of the product, the proportion of income spent on the product, and the availability of close complements or substitutes. Government policy can indirectly affect price elasticity of demand by influencing factors such as consumer income, availability of substitutes, and market competition.

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Nigeria's exports usually comprise primary goods. Primary goods are raw materials and natural resources that are extracted from the earth, such as crude oil, solid minerals, agricultural products, and natural gas. Nigeria is well-endowed with natural resources, and primary goods account for a significant portion of the country's exports. These exports generate revenue for the country, which can be used to finance the importation of capital goods, consumer goods, and other intermediate goods.

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An association formed by a group of individuals solely for the marketing of their product is called a "producer cooperative society". In such a cooperative society, the individual producers (such as farmers or artisans) come together to collectively market their products, thereby increasing their bargaining power and improving their access to markets. The producers pool their resources and share the profits, thus enabling them to earn a better price for their products. This helps in eliminating intermediaries, reducing marketing costs, and ensuring a fair price for the producers.

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The Revenue Mobilization, Allocation and Fiscal Commission in Nigeria is primarily responsible for "evolving an acceptable revenue-sharing formula". This means that the Commission is tasked with the responsibility of ensuring that revenue generated by the Nigerian government is shared equitably among the different tiers of government - federal, state and local - in a way that is acceptable to all parties involved. The Commission is also responsible for reviewing the revenue allocation formula periodically to reflect changing economic realities and needs.

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Product differentiation in monopolistic competition implies that the same type of product is available in different forms, which means that firms produce goods that are slightly different from each other in terms of quality, design, packaging, or branding to make their products unique and attractive to consumers. This creates a situation where each firm has some degree of market power to set its own price based on the perceived differences in the product, but there is still some competition among firms. Different buyers may pay different prices for different products based on their preferences for the particular product features. Therefore, the correct option is "the same product is available in different forms".

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The constraint on the expansion of a firm refers to a limiting factor that restricts the firm's ability to grow or increase its output. Among the options given, the size of the market is the most relevant constraint on the expansion of a firm because a firm's growth is largely dependent on the availability of customers or demand for its products. If the market is small, the firm may have limited opportunities for expansion, which can impede its growth potential. Therefore, the size of the market can be a constraint on the expansion of a firm.

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