JAMB UTME - Economics - 1997

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One of the fundamental differences between a capitalist and a socialist economy is that in the former, prices act as signals in the allocation of resources, while in the latter, it is central authority that performs this function. In a capitalist economy, prices serve as signals that guide the allocation of resources, based on the law of supply and demand. The market determines the prices of goods and services, and businesses allocate resources according to the signals provided by these prices. On the other hand, in a socialist economy, the central authority determines the allocation of resources, based on a central plan that takes into account the needs of the society. Prices may still exist in a socialist economy, but they are often controlled by the central authority rather than determined by the market. Therefore, the difference between a capitalist and a socialist economy lies in the way resources are allocated: through market signals in the former and central planning in the latter.

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Ike's preferences are inconsistent. This is because he has contradictory preferences: he prefers bananas to pawpaw, pawpaw to oranges, and oranges to bananas. This violates the transitivity property of rational preferences, which states that if a person prefers option A to option B, and option B to option C, then they should also prefer option A to option C. Since Ike's preferences violate this property, they are inconsistent.

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The most important attribute of money is general acceptability. Money is a medium of exchange that is widely accepted in transactions for goods and services. General acceptability means that people are willing to accept money as payment because they trust that it will be accepted by others. This trust is typically based on the stability and credibility of the issuing authority, such as a government or a central bank. Other attributes of money, such as homogeneity, divisibility, and relative scarcity, are also important, but they are secondary to general acceptability. Without general acceptability, money would not function as a medium of exchange, making it impossible to conduct modern commerce and trade. Therefore, the correct option is "general acceptability".

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In commercial banking, an account from which the customer cannot withdraw money instantly is called a time deposit account. This type of account is also known as a term deposit or a certificate of deposit (CD). When a customer opens a time deposit account, they agree to keep their money in the account for a specific period of time, known as the term. During this time, the customer cannot withdraw the money without paying a penalty. In exchange for this restriction, time deposit accounts typically offer higher interest rates than other types of deposit accounts. Therefore, the correct option is "time deposit account".

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A firm is said to have benefited from external economies in production if it has realized reduced resource costs due to the operation of other firms. External economies of scale occur when a group of firms operating within the same industry or geographic area benefit from each other's presence, such as shared infrastructure or access to specialized labor. For example, if a group of software firms locate in the same area, they may benefit from a shared pool of skilled workers or access to specialized suppliers. These external economies can lead to lower costs for each individual firm and allow them to produce more efficiently. This can result in lower prices for consumers and increased profits for firms. Therefore, the correct option is "reduced resource costs due to the operation of other firms".

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The most important factor ensuring economic development is the formulation of appropriate government policies. Economic development requires a stable and conducive environment that fosters growth and investment. Governments play a critical role in creating such an environment by putting in place policies that attract investment, promote competition, and ensure stability. For example, policies that provide incentives for businesses to invest in infrastructure, research and development, and training can help to boost economic growth. Additionally, policies that address issues such as inflation, taxation, and labor market regulations can help to ensure that the economy remains stable and competitive over the long term. Therefore, the formulation of appropriate government policies is crucial for ensuring sustained economic development.

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Privatization of government-owned companies means the relinquishing of government equity participation to private individuals. This is a process in which a government transfers ownership of state-owned enterprises or assets to the private sector. This is typically done through the sale of shares in the company to private investors, allowing them to take control of the company's management and operations. The aim of privatization is to increase efficiency, reduce government control over the economy, and raise revenue for the government. This can lead to better management of the companies, more innovation, and greater competition, resulting in better products and services for consumers. Therefore, the correct option is "relinquishing of government equity participation to private individuals".

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The equilibrium price and quantity are the values at which the quantity demanded equals the quantity supplied in a market. To find the equilibrium price and quantity, we need to set the demand and supply equations equal to each other and solve for p and Q. 120-2p = 4p 120 = 6p p = 20 Substituting p = 20 into either the demand or supply equation, we can find the equilibrium quantity: Q = 120 - 2p Q = 120 - 2(20) Q = 80 Therefore, the equilibrium price is 20 and the equilibrium quantity is 80. In conclusion, the equilibrium price and quantity respectively, given a market demand curve Q=120-2p and a supply curve Q=4p, are 20 and 80.

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The greatest proportion of government revenue in Nigeria comes from custom duties and excise duties. Custom duties are taxes imposed on imported goods, while excise duties are taxes imposed on locally produced goods. These taxes generate revenue for the government and help to protect local industries. Income taxes on individuals and businesses, export of raw materials, and loans and grants from industrially advanced countries are also sources of government revenue, but they do not contribute as significantly as custom duties and excise duties.

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Machinery and transport equipment account for the largest proportion of Nigeria's imports. This is because Nigeria, like many developing countries, relies heavily on imported machinery and equipment for industrial production and development. Machinery and transport equipment include items such as vehicles, aircraft, telecommunications equipment, and industrial machinery, which are essential for the development of Nigeria's infrastructure and industries. Additionally, Nigeria has limited manufacturing capabilities, which means that it relies on imports for finished products, such as machinery and equipment, to meet its development needs. Therefore, machinery and transport equipment account for a significant proportion of Nigeria's imports, much more than food and animal products, consumer goods, or chemicals.

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A good is said to be inferior if its demand falls as its price rises. This means that as the price of the inferior good increases, consumers tend to switch to alternative goods, resulting in a decrease in demand for the inferior good. This is different from a normal good, where demand increases as income increases, resulting in an increase in demand as the price of the good increases. In the case of an inferior good, as consumers' income increases, they are likely to switch to superior alternatives, causing the demand for the inferior good to decrease.

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One of the objectives of Nigeria's current population policy is to reduce the birth rate. This means that the government is implementing measures to control the number of births in the country, in order to slow down the rate of population growth. This is important because Nigeria has a rapidly growing population, which can put a strain on resources and limit opportunities for economic development. The government's efforts to reduce the birth rate may include education and awareness campaigns, increased access to family planning services, and other measures aimed at promoting smaller family sizes.

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Preference shares are the shares that must be redeemed first at liquidation of a company. This is because preference shares have a preferential right over ordinary shares in terms of dividends and repayment of capital. The holders of preference shares receive their dividends before ordinary shareholders, and in the event of a liquidation, they have priority in receiving their capital back before ordinary shareholders. Therefore, preference shares are a form of equity that offers a higher level of security to investors in terms of return of capital.

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The organization which provides credit to help countries achieve short-term balance in their balance of payment is the International Monetary Fund (IMF). The IMF is an international organization that works to promote international monetary cooperation and exchange rate stability, facilitate balanced international trade, and provide resources to help member countries in need. One of its key roles is to provide loans and financial assistance to member countries facing balance of payment difficulties, which can help stabilize their economies and prevent crises.

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An increase in government expenditure is inflationary. Inflation is a general increase in the prices of goods and services in an economy. When the government increases its expenditure, it injects more money into the economy, which can lead to an increase in demand for goods and services. If the supply of goods and services does not increase to meet the demand, prices will rise, leading to inflation. This is known as demand-pull inflation, where excess demand drives up prices. On the other hand, an increase in taxation and an increase in savings lead to a decrease in consumer spending, which can reduce demand and lower prices, resulting in deflation. A decrease in money supply also reduces demand and can lead to deflation. Therefore, out of the options given, an increase in government expenditure is inflationary.

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Labour productivity is the ratio of output to man-hours. It measures the efficiency of a production process by calculating the amount of output produced per unit of labor input. The output can be measured in terms of goods or services, while the man-hours refer to the total amount of time worked by all the workers involved in the production process. In other words, labour productivity measures how much output is generated for each hour worked by the labor force. Therefore, the correct option is "output to man-hours".

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The type of cost which has to be covered for a firm to continue production in the short-run is the average variable cost. Average variable cost (AVC) is a type of cost that varies with the level of production. It includes the cost of inputs such as labor and raw materials, which are required for a firm to produce goods and services. In the short run, a firm must cover its AVC to continue production, as these costs cannot be avoided without shutting down the business. If a firm is unable to cover its AVC, it will experience losses and may have to shut down in the long run. Fixed costs such as rent or lease payments are not included in AVC since they do not vary with the level of production. Therefore, in the short run, a firm must focus on covering its AVC to ensure its survival and continuity of production.

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The most important requirement for increasing agricultural output in Nigeria is to increase farmers' incomes and improve farming techniques. Farmers in Nigeria are mostly small-scale, subsistence farmers who lack access to modern farming techniques and technologies, as well as credit and financing to invest in their farms. Improving farming techniques and providing farmers with access to modern technologies and equipment can help increase productivity and output. Additionally, increasing farmers' incomes through measures such as providing better market access, improving infrastructure, and reducing post-harvest losses can help incentivize farmers to invest in their farms and increase production. Employing more extension workers can also help provide farmers with the necessary knowledge and training to adopt new technologies and techniques. While government involvement in large scale farming and land tenure reforms can be important, they are not the most important requirements for increasing agricultural output in Nigeria. Therefore, out of the options given, increasing farmers' incomes and improving farming techniques is the most important requirement for increasing agricultural output in Nigeria.

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The major determinant of the total volume of output in an economy is the level of total expenditure. Total expenditure refers to the total amount of money spent on goods and services in an economy. When consumers and businesses spend more money, the demand for goods and services increases, which leads to an increase in production and output. This, in turn, can lead to increased employment, income, and economic growth. On the other hand, if total expenditure decreases, the demand for goods and services decreases, leading to a decrease in production and output. Therefore, the level of total expenditure is a critical factor in determining the level of output in an economy.

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The total money value of all goods and services produced in a country during a certain period is measured using the output method, also known as the production approach. The output method involves adding up the total value of all goods and services produced in a country, by all firms and industries, during a particular period. This is also known as gross domestic product (GDP). The GDP is a measure of a country's economic performance and is used to determine the size and growth rate of its economy. The output method of measuring GDP is based on the value of the goods and services produced, regardless of who buys them, and is therefore an objective measure of economic activity within a country.

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Plywood industries are often located near the source of raw materials. Plywood is a type of engineered wood made from thin sheets of wood veneer, which are glued together to form a flat sheet. The primary raw material used in the production of plywood is wood, typically from trees such as pine, fir, or spruce. By locating their operations near the source of these raw materials, plywood industries can reduce their transportation costs and ensure a reliable supply of high-quality wood. This can help to make their operations more efficient and cost-effective.

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Banks can create more money by lending out money from customer deposits. When banks receive deposits from customers, they keep a fraction of these deposits as cash reserves and lend out the rest to borrowers. This loan is then deposited in another bank account and the process continues. As banks keep making loans, they create new money in the economy. This is known as the money multiplier effect. The more deposits banks receive and lend out, the more money they can create. Therefore, accepting more deposits from customers and lending out money from those deposits is one of the ways banks can create more money.

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Given that at the beginning of 1973, Nigeria had a birth rate of 3% per annum and a population of 75 million, it means that there were 2.25 million live births in that year. Birth rate refers to the number of live births per 1000 people in a population within a specific period. Therefore, a birth rate of 3% implies that for every 1000 people in the population, 30 births occurred in a year. To calculate the number of live births in a population of 75 million with a birth rate of 3%, we can use the formula: Live births = (Birth rate/1000) x Total population Substituting the values, we have: Live births = (3/1000) x 75,000,000 = 2,250,000 Therefore, in 1973, Nigeria had 2.25 million live births.

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A consumer maximizes satisfaction from the consumption of goods and services when the marginal utility derived per naira spent is the same for all the goods and services. This is because consumers have limited income and want to get the most satisfaction from their spending. To achieve this, the consumer allocates their income in such a way that the marginal utility (additional satisfaction) per naira spent on each good or service is the same. When this condition is satisfied, the consumer has achieved the maximum level of satisfaction possible given their income and the prices of goods and services.

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The given information implies that a large proportion of the population consists of children below the age of 15 and elderly people above 60 years. This means that a smaller proportion of the population falls in the age group which is considered active and capable of working and contributing to the economy. Therefore, this situation is indicative of a high dependency ratio, where a larger number of dependents are being supported by a smaller number of active individuals. Hence, the correct answer is that the dependency ratio is high.

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One of the factors which is likely to check the growth of public debts is debt reputation. Public debt is the total amount of money owed by a government to its creditors. If a government has a good reputation for managing its debt, creditors are more likely to lend it money at favorable interest rates, which can help to keep the growth of public debt in check. On the other hand, if a government has a poor reputation for managing its debt, creditors may be less willing to lend it money, or may require higher interest rates to compensate for the increased risk. This can make it more difficult for the government to borrow money and can lead to a rapid increase in public debt. Therefore, the correct option is "debt reputation".

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A market where there are many differentiated products is called monopolistic competition. In a monopolistic competition market, there are many firms producing similar, but not identical products. Each firm has a small degree of market power, meaning they can influence the price of their product by adjusting the quality, design, or marketing of their product. However, they must also compete with other firms in the market, which limits their market power. This results in a range of prices for similar products, creating product differentiation. Examples of monopolistic competition markets include restaurants, clothing, and consumer electronics. Therefore, the correct option is "monopolistic competition".

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We are given the following equations: - Investment = N100 million - Consumption = N200 m + 0.75Y - Y = C + I We can substitute the value of I in the third equation with N100 million (from the first equation) and simplify the second equation as follows: Y = C + I Y = (N200 m + 0.75Y) + N100 m Y = N200 m + N100 m + 0.75Y 0.25Y = N300 m Y = N1,200 million Therefore, the income level to the nearest million is N1,200 million.

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The use of legally permissible means to reduce tax liabilities is known as tax avoidance. Tax avoidance is the practice of using legal methods to minimize the amount of tax that an individual or business owes. This is different from tax evasion, which is the illegal practice of not reporting or underreporting income to avoid paying taxes. Tax avoidance can include actions such as taking advantage of tax deductions, tax credits, and tax shelters. While tax avoidance is legal, it can be controversial because some people argue that it can contribute to income inequality and reduce the government's ability to fund public services. Therefore, the correct option is "avoidance".

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Nigeria's balance of payments has continued to register a deficit due to various factors. One factor is the increased government spending overseas, which leads to more foreign currency leaving the country. Another factor is the rising import prices, meaning that more foreign currency is needed to pay for imports. Additionally, increasing prices of exports could also contribute to a deficit, as Nigeria earns less foreign currency for its exports. Finally, more payments to overseas investors can also contribute to a deficit. Therefore, the correct option is (iv) i, ii, iii, and iv.

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One of the features of a free market economy is that resources are directed by the price mechanism. In a free market economy, prices of goods and services are determined by the forces of supply and demand, with no interference from the government. Consumers and producers interact in the marketplace to determine the prices of goods and services, and the allocation of resources is guided by these prices. As prices rise, producers are incentivized to produce more of a particular good, and as prices fall, consumers are incentivized to purchase more of that good. Therefore, the correct option is "resources are directed by the price mechanism".

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Counter trading is an international trade arrangement whereby goods and services are exchanged between countries in a manner similar to barter. This means that instead of using traditional currency to pay for imports, a country may offer goods or services in exchange for the imported goods or services. For example, if Country A wants to import goods from Country B but does not have enough foreign currency to pay for them, they may offer to export goods to Country B instead, to balance the trade. Counter trading is often used by developing countries as a means of overcoming the foreign exchange constraints that they may face.

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The danger of localization of industries is mass unemployment. This occurs when an industry is located in a particular region or area, and due to some reasons such as the depletion of resources or changes in technology, the industry becomes unviable, leading to the closure of the industry. This, in turn, leads to job losses for the workers in the affected industry and related industries, and this can have ripple effects on the entire economy of the region or country.