JAMB UTME - Economics - 2014

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If the importation of a commodity is limited to a definite quantity, the trade control measure imposed is called a quota. This means that only a specified amount of the commodity can be imported into the country within a given period. A quota is a tool used by governments to control the amount of foreign goods that enter the domestic market, and it is a type of non-tariff barrier to trade. Unlike an import duty or tariff, which is a tax on imported goods, a quota sets a limit on the quantity of the imported goods. This can be used to protect domestic industries from foreign competition or to control the balance of trade.

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Wage freeze is a policy measure aimed at curbing inflation. It involves freezing or slowing down the rate of increase in wages, which is the amount of money paid to employees for their work. This is done to control the overall rise in prices of goods and services in an economy. By keeping wages low, the cost of producing goods and services also decreases, which helps in controlling inflation and maintaining a stable economy.

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The location of an industry is mainly determined by its proximity to the market. This is because being close to the target market can make it easier and cheaper to transport goods and services, which reduces production costs and makes the industry more competitive. Other factors like tax exemption grants, capital base, and social responsibility of the firm can also play a role, but they are typically secondary considerations.

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The major contribution of the Organization of the Petroleum Exporting Countries (OPEC) to the Nigerian economy is the stabilization of oil prices. OPEC is a group of countries, including Nigeria, that are major exporters of oil. They work together to regulate the supply of oil to the global market, in order to ensure stability in oil prices. Oil is a significant source of revenue for Nigeria, and fluctuations in oil prices can have a significant impact on the Nigerian economy. When oil prices are high, Nigeria earns more revenue from oil exports, which can lead to economic growth and development. However, when oil prices are low, Nigeria's revenue from oil exports decreases, which can lead to economic challenges. OPEC helps to stabilize oil prices by adjusting the supply of oil to the global market based on demand. When demand for oil is high, OPEC increases the supply to ensure that prices do not rise too high. Similarly, when demand for oil is low, OPEC reduces the supply to prevent prices from falling too low. Therefore, the main contribution of OPEC to the Nigerian economy is the stabilization of oil prices, which helps to ensure a consistent and predictable source of revenue from oil exports. This revenue can then be used to invest in social infrastructure, including building refineries and providing subsidies on petroleum products, as well as other areas of the economy.

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The major determinant of the total volume of output in an economy is the level of total expenditure. When consumers, businesses, and the government spend more money on goods and services, this creates a demand for those goods and services, and producers respond by increasing their output to meet that demand. This, in turn, leads to an increase in the total volume of output in the economy. The composition of consumer spending and the number of farmers or the size of the labor force may also affect the economy, but they are not the primary determinants of the total volume of output. The composition of consumer spending may affect the types of goods and services that are produced, but the overall level of expenditure is what drives the volume of output. The number of farmers or the size of the labor force may impact the supply side of the economy, but it is the demand side that determines the overall level of output.

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The correct option to measure the Gross National Product (GNP) in an open economy is "C+I+G+(X-M)". The formula for GNP includes all the goods and services produced by the residents of a country, regardless of their location. In an open economy, this means that goods and services produced abroad by a country's residents need to be subtracted from the formula, and goods and services produced within the country by non-residents need to be added to the formula. The letters in the formula represent the following: - C: Consumer spending on goods and services - I: Investment spending on capital goods - G: Government spending on goods and services - X: Exports, which are goods and services produced domestically and sold to foreign countries - M: Imports, which are goods and services produced in foreign countries and purchased domestically Therefore, the correct formula to measure GNP in an open economy is "C+I+G+(X-M)", as it includes all the components needed to account for both domestic and foreign production and consumption.

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Firms may embark on vertical integration in order to enjoy economies of large-scale production. Vertical integration occurs when a company acquires or merges with other companies that are part of its supply chain, such as suppliers or distributors. By doing so, the firm can better control the costs and quality of inputs, and ensure a more efficient production process. Additionally, vertical integration can help firms reduce transaction costs, improve coordination and communication, and enable better risk management. However, vertical integration can also lead to higher administrative and coordination costs, and may limit the firm's flexibility and innovation.

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A major feature of an underdeveloped economy is a low level of standard of living. This means that the people living in such an economy have limited access to basic necessities such as food, shelter, healthcare, and education. This could be due to several factors such as a lack of infrastructure, limited resources, poor governance, and political instability. In underdeveloped economies, the majority of people may have low incomes, limited job opportunities, and inadequate access to basic services, which can lead to a lack of social and economic mobility. As a result, many people are unable to improve their living standards or create a better future for themselves and their families. Therefore, improving the standard of living is a crucial goal for underdeveloped economies. This can be achieved through investment in infrastructure, education, healthcare, and the creation of job opportunities. By providing the basic necessities of life and promoting economic growth, underdeveloped economies can break the cycle of poverty and create a more prosperous future for their citizens.

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A cooperative is "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise" (Wikipedia, The Free Encyclopedia). These persons or members are shareholders with equal rights and voting is one person one vote irrespective of the member's contributions or position.

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One of the most significant determinants of floating exchange rates is the market forces of demand and supply. Floating exchange rates are determined by the market forces of supply and demand, which means that the value of a currency is determined by the number of buyers and sellers in the foreign exchange market. In a floating exchange rate system, the value of a currency is allowed to fluctuate freely based on market forces. This means that the exchange rate between two currencies is determined by the supply and demand for each currency in the foreign exchange market. If there is high demand for a currency, its value will increase, and if there is low demand, its value will decrease. The factors that influence supply and demand for a currency are diverse and complex. For example, if a country's economy is growing rapidly, there may be increased demand for its currency from foreign investors looking to invest in the country. Similarly, if a country is experiencing political instability or economic downturns, there may be reduced demand for its currency. Therefore, the value of a currency in a floating exchange rate system is mainly determined by the supply and demand dynamics in the market. The market forces of supply and demand operate on a global scale, and the exchange rate between two currencies can fluctuate rapidly based on any number of factors.

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The precautionary demand is dependent on the size of income, the availability of credit, and the rate of interest.

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The oil and gas industry is usually divided into three major sectors: upstream, midstream, and downstream. The upstream industry finds and produces crude oil and natural gas. The upstream is sometimes known as the exploration and production (E&P) sector. The downstream sector is the refining of petroleum crude oil and the processing and purifying of raw natural gas, as well as the marketing and distribution of products derived from crude oil and natural gas.

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If the production of a large firm is higher than that of a small firm, it is likely experiencing internal economies of scale. This means that as the firm grows and produces more, it benefits from lower average costs due to factors such as specialization, better technology, and more efficient use of resources. Essentially, the larger firm is able to spread its fixed costs over a larger output, which results in lower average costs per unit produced. On the other hand, if a firm's production increases and its costs per unit of output also increase, it may be experiencing internal diseconomies of scale. This could happen due to factors such as communication problems, bureaucracy, or inefficient management. External economies and diseconomies of scale refer to the impact of industry-wide factors on a firm's costs. If the production of all firms in the industry increases and they all benefit from lower costs, then there are external economies of scale. Conversely, if an increase in production leads to higher costs for all firms in the industry, then there are external diseconomies of scale.

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A monopolist has the power to control the price and output of a product in the market as it is the only supplier of that product. To boost up the revenue, a monopolist has to maximize its profit, which is the difference between total revenue and total cost. To increase revenue, a monopolist can either increase the price of the product or the quantity sold, or both. However, the increase in price or quantity sold may have different effects on the revenue depending on the price elasticity of demand. If the demand for the product is inelastic, an increase in price will result in a relatively small decrease in quantity demanded, which will lead to an increase in total revenue. Conversely, if the demand is elastic, a price increase will lead to a significant decrease in quantity demanded, resulting in a decrease in total revenue. Therefore, to boost up the revenue, a monopolist may increase the price of the product if the demand is relatively inelastic. Additionally, if the monopolist has the ability to restrict the output and increase the price, it can increase revenue by producing less and charging a higher price, provided that the price is not too high that it drives away all customers. In summary, a monopolist can boost up its revenue by either increasing the price of the product, reducing the total output to match the price, or adjusting both the price and output upward, depending on the demand elasticity and market conditions.

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Rent and administrative expenses are examples of fixed costs. Fixed costs are expenses that do not change with the level of output or sales. They remain constant regardless of the amount of goods or services produced or sold. For example, rent for a storefront or office space is typically a fixed cost because it does not vary with the number of customers who visit the store or the amount of work done in the office. Administrative expenses, such as salaries for office staff, are also typically fixed costs because they do not vary with the level of production. Variable costs, on the other hand, are expenses that change with the level of output or sales. For example, the cost of raw materials used to produce a product is a variable cost because it increases as the amount of product produced increases.

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Qd = 40 + 2P
Qs = 6P - 24
At equilibrium price, Qd = Qs
40 + 2P = 6P - 24
40 + 24 = 6P - 2P
64 = 4P
P = 16

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In capitalist economies, questions about what to produce are ultimately answered by the output decisions of firms. This means that businesses decide what goods and services to produce based on their assessments of consumer demand, production costs, and potential profits. Under a capitalist system, firms are typically owned by private individuals or investors who seek to maximize their profits by producing goods and services that can be sold for the highest price possible. In order to do this, businesses must respond to market signals such as changes in consumer preferences, technological advances, and competitive pressures from other firms. Consumers play a crucial role in this process, as their choices about what to buy and how much to pay for it signal to producers which goods and services are in demand. Firms use this information to adjust their production processes and allocate resources toward the goods and services that are likely to generate the highest profits. While there are many factors that influence what firms choose to produce, including the available technical skills in the economy and the income levels of households, ultimately it is the output decisions of firms that determine the mix of goods and services that are produced in a capitalist economy.

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In a command economy, the choice of how to produce is determined by the government. The government makes all the economic decisions, such as what goods and services should be produced, how much they should cost, and how they should be distributed. This means that the government decides which industries and businesses will receive resources and funding. The government's control over the economy allows it to direct resources towards its goals, such as meeting the needs of the population or achieving specific economic targets. However, this also means that there is little room for individual decision-making by consumers, industrialists, or labor unions. The government may consider the needs of consumers and labor unions in its decisions, but ultimately, the government has the final say in all economic matters. This centralization of economic decision-making can be an advantage in certain situations, but it can also lead to inefficiencies and a lack of innovation if the government does not make informed decisions based on market demand and supply.

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In economics, the Total Revenue Test is a means for determining whether demand is elastic or inelastic. If an increase in price causes an increase in total revenue, then demand can be said to be inelastic, since the increase in price does not have a large impact on quantity demanded. If an increase in price causes a decrease in total revenue, then demand can be said to be elastic, since the increase in price has a large impact on quantity demanded.

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Short-term loans for investment can be obtained through the money market. The money market is a financial market where short-term borrowing and lending takes place, usually for a period of less than one year. In the money market, individuals and institutions can lend or borrow funds in the form of certificates of deposit, Treasury bills, commercial paper, and other similar instruments. These instruments are typically considered low-risk and are used as a source of short-term financing for businesses, governments, and other entities.

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The major disadvantage of localization of industry is the potential for under-utilization of installed industrial capacity. Localization refers to the concentration of industries in a particular geographic area, which can result in industries having limited access to markets, resources, and customers outside of that area. This can lead to a situation where industries are not able to fully utilize their production capacity, which can result in inefficiencies and increased costs. Additionally, the lack of access to external markets and resources can limit innovation and growth opportunities for industries.

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To find the average cost of the product, we need to divide the total cost (fixed cost + variable cost) by the total number of units produced. In this case, we are given that the fixed cost (FC) is N500, the variable cost per unit (VC) is N1,500, and the quantity produced (Q) is 50 units. The total cost can be calculated as follows: Total Cost = Fixed Cost + Variable Cost Total Cost = N500 + (N1,500 x 50) Total Cost = N75,500 Therefore, the average cost of the product can be calculated as follows: Average Cost = Total Cost / Quantity Produced Average Cost = N75,500 / 50 Average Cost = N1,510 So, the average cost of the product is N1,510. (N40) is the closest answer, but it is not correct.

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A monopolist has the ability to influence both the price and quantity of a good or service in the market. Unlike in a competitive market, where there are many buyers and sellers and no single entity has control over the market, a monopolist is the sole provider of a good or service in the market. Because of this, the monopolist has the power to set prices higher than they would be in a competitive market, as there are no other producers to compete with. Additionally, the monopolist can also control the quantity of goods or services produced, as they have no incentive to increase output to meet demand and lower prices. Overall, a monopolist has the ability to exert significant influence over the market, which can result in higher prices and less output than would be seen in a competitive market.

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MPC stands for Marginal Propensity to Consume, which refers to the percentage of each additional unit of income that a consumer will spend on consumption. If the MPC is 2/3, this means that for every additional Naira earned, 2/3 of that amount will be spent on consumption, and 1/3 will be saved. If investment is N100 million, it will increase the total income in the economy by a multiple of the initial investment. This multiple is called the multiplier. The formula for the multiplier is: Multiplier = 1 / (1 - MPC) In this case, the multiplier is: Multiplier = 1 / (1 - 2/3) = 1 / (1/3) = 3 This means that every Naira of investment will generate N3 of total income in the economy. Therefore, the level of national income is: National Income = Investment * Multiplier = N100 million * 3 = N300 million Therefore, the correct option is N300 million.

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An important role of agriculture in Nigeria's economic development is the provision of employment. Agriculture is a major source of employment in Nigeria, particularly in rural areas where a large portion of the population is engaged in agricultural activities. This includes farming, livestock production, fishing, and other related activities. By providing employment opportunities, agriculture contributes to the overall economic development of Nigeria by improving the standard of living for people in rural areas and reducing poverty levels. In addition, agriculture also plays a role in the provision of food for the growing population, and contributes to the country's overall food security. This, in turn, helps to support economic growth and development by ensuring a stable supply of food for the population, which is essential for maintaining a healthy and productive workforce.

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A rightward shift of the budget line is caused by a rise in the commodity relative price. The budget line shows the various combinations of goods and services that a consumer can afford to buy given their income and the prices of the goods. The slope of the budget line represents the relative price of the two goods, which is the amount of one good that must be given up to purchase an additional unit of the other good. A rightward shift of the budget line means that the consumer can now afford to buy more of both goods than before. This could happen if there is a rise in the commodity relative price, which means that the price of one of the goods has become relatively more expensive compared to the other. For example, suppose a consumer has a fixed income and can buy either apples or bananas. If the relative price of apples increases, the consumer will have to give up more bananas to buy the same amount of apples as before. As a result, the budget line shifts to the right, indicating that the consumer can now afford to buy more of both apples and bananas. On the other hand, if the relative price of bananas were to increase instead, the budget line would shift to the left, indicating that the consumer can now afford to buy less of both apples and bananas.

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The short-run average variable cost of a firm will rise owing to an increase in the cost of labor. This is because in the short run, some costs are fixed and cannot be changed, while others are variable and can change with changes in production levels. Labor costs are typically a variable cost, meaning that as the firm increases its production, it will also need to hire more workers, leading to an increase in its labor costs. An increase in labor costs will cause the firm's short-run average variable cost to rise, as the average cost per unit of output will increase. The short-run average variable cost is calculated by dividing the firm's total variable costs by the quantity of output produced. So, as the cost of labor increases, the firm's total variable costs will also increase, leading to a rise in its short-run average variable cost. In summary, the short-run average variable cost of a firm will rise due to an increase in the cost of labor in a simple and comprehensive way.

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Price mechanism determines the prices of commodities through market forces. Market forces refer to the interaction of supply and demand in a market economy. In a free market, the price of a commodity is determined by the level of supply and demand for that commodity. If there is a high demand for a commodity and the supply is limited, the price of the commodity will increase until the demand and supply are balanced. Conversely, if the supply of a commodity is high and the demand is low, the price of the commodity will decrease until the demand and supply are balanced. The price mechanism works through the interaction of buyers and sellers in a market. Buyers are willing to pay a certain price for a commodity based on their needs and preferences, while sellers are willing to offer a certain price based on their costs of production and desired profit margins. The market price of the commodity is the point where the quantity demanded by buyers equals the quantity supplied by sellers. Therefore, the price mechanism is a way of allocating resources in a market economy. When prices are allowed to fluctuate based on supply and demand, resources are allocated efficiently to the production of goods and services that are in highest demand. This allows for the most efficient use of resources and ensures that the market is responsive to the needs and wants of consumers.