WAEC SSCE - Economics - 1990

Antwoorddetails

One of the greatest demerits of middlemen in Nigeria is that they increase the price of goods and services at will. This means that when middlemen are involved in the process of buying and selling goods, they tend to add an extra cost to the price of the goods, which can make them more expensive for the final consumer. This is because the middlemen want to make a profit, and they do so by increasing the price of the goods. This practice can make it difficult for people to afford basic goods and services, which can negatively impact their standard of living.

Antwoorddetails

A regressive tax is not a good tax system because it does not ensure equity in payment. A tax system is said to be regressive when the percentage of income paid in taxes decreases as the income level increases. In other words, those with lower incomes pay a higher percentage of their income in taxes compared to those with higher incomes. This means that a regressive tax system places a heavier burden on those who can least afford to pay. This system is not fair because those who are wealthy have a lower tax burden, while those who are poor have a higher tax burden. This can exacerbate income inequality and make it more difficult for low-income individuals and families to make ends meet. Additionally, a regressive tax system can reduce the ability of low-income individuals to participate in the economy. If they have less disposable income due to the higher tax burden, they may have less money to spend on goods and services, which can slow down economic growth. In summary, a regressive tax system is not a good tax system because it does not ensure equity in payment. It can exacerbate income inequality, reduce the ability of low-income individuals to participate in the economy, and slow down economic growth.

Antwoorddetails

Antwoorddetails

Antwoorddetails

The country that makes the largest contribution to the International Monetary Fund (IMF) is the United States of America (USA). The IMF is an international organization that helps promote global monetary cooperation, trade, and economic growth. It provides loans to countries experiencing financial difficulties and also provides policy advice, technical assistance, and training to member countries. Each member country contributes to the IMF based on their quota, which is determined by their relative size in the global economy. The USA has the largest quota of all the member countries, which means they contribute the most money to the IMF. In fact, the USA contributes around 17% of the total funds of the IMF, followed by Japan and China. The contributions made by member countries are important for the IMF to carry out its mandate of promoting global monetary cooperation and economic stability. The contributions are used to provide financial assistance to countries in need, as well as to support the day-to-day operations of the IMF.

Antwoorddetails

The Nigerian economy can be best described as a mixed economy. This means that it combines elements of both capitalist and socialist economies. In Nigeria, there is private ownership of businesses and individuals are free to engage in economic activities. At the same time, the government plays a significant role in regulating and controlling certain sectors such as the oil industry and utilities. Additionally, the government provides social services such as healthcare and education, which are characteristic of socialist economies. Overall, Nigeria's mixed economy allows for a balance between private enterprise and government intervention to ensure economic growth and social welfare.

Antwoorddetails

The concentration of industries in one place is referred to as the "localization of industries". This means that a large number of industries or factories are located in a particular region or area. The main reason for the localization of industries is to take advantage of certain benefits such as the availability of raw materials, proximity to markets, availability of skilled labor, and access to transportation. By having industries located in close proximity to each other, they can share resources, collaborate on research and development, and benefit from a skilled workforce. The localization of industries can also lead to the development of supporting industries and services, which further strengthens the regional economy.

Antwoorddetails

A firm that charges different prices for goods or services that have the same technical qualities is called a discriminating monopoly. This means that the firm has the power to charge different prices to different consumers or groups of consumers, based on factors such as their willingness to pay or their ability to pay. This is different from a perfect competitor, which is a market in which there are many small firms that sell identical products and have no power to set prices. A monopsony is a market in which there is only one buyer and many sellers, while an oligopoly is a market in which there are only a few large firms that dominate the market. A duopoly is a market in which there are only two firms that dominate the market. In summary, a discriminating monopoly is a firm that has the power to charge different prices to different consumers, while the other terms describe different market structures in which firms operate.

Antwoorddetails

The notion of short-run and long-run periods is responsible for grouping costs into fixed and variable costs. In the short run, some costs are fixed, which means they do not change regardless of how much the firm produces. Examples of fixed costs include rent, salaries, and insurance premiums. However, other costs are variable, which means they change as the firm produces more or less. Examples of variable costs include raw materials, labor, and energy. In the long run, all costs are variable, which means the firm can adjust all of its inputs as it sees fit. Therefore, the distinction between fixed and variable costs is a temporary one that is based on the time horizon being considered. In summary, the notion of short-run and long-run periods is used to group costs into fixed and variable costs, based on whether they are fixed or can vary in response to changes in the level of output.

Antwoorddetails

Antwoorddetails

When a country has a large labour force, it is beneficial to use a method of production that is labour intensive. This means that the production process relies heavily on the use of labour, rather than on capital, land, or technology. A labour-intensive production method can be advantageous for several reasons. Firstly, in a country with a large labour force, there may be a surplus of available workers, which can make labour relatively inexpensive. By using a labour-intensive production method, firms can take advantage of this surplus labour and reduce their production costs. Secondly, a labour-intensive production method can help to create employment opportunities for a large number of people, which can be especially important in countries with high levels of unemployment or underemployment. Thirdly, a labour-intensive production method can help to develop the skills and capabilities of the labour force. By relying on the use of labour, workers can gain valuable experience and develop new skills, which can improve their productivity and enhance their employability. Overall, a labour-intensive production method can be a useful strategy for countries with a large labour force. By utilizing this method, firms can reduce their production costs, create employment opportunities, and develop the skills and capabilities of their workforce.

Antwoorddetails

Antwoorddetails

In the context of marketing and supply chain management, agents of distribution are intermediaries that help move products or services from producers to consumers. They are an important part of the distribution process and can include wholesalers, retailers, government agencies, and cooperative societies. However, consumers are not considered agents of distribution. This is because consumers are the end-users of the products or services and do not participate in the movement of products or services from the producer to themselves. Rather, they are the ultimate destination of the distribution process. Wholesalers are intermediaries who purchase goods in bulk from producers and sell them in smaller quantities to retailers or other intermediaries. Retailers, on the other hand, sell products or services directly to consumers. Government agencies can also act as intermediaries in the distribution process, especially in the distribution of goods or services that are controlled by the government. Cooperative societies are organizations formed by individuals with similar interests to pool their resources and work together for their mutual benefit. In summary, all the options listed except consumers can be classified as agents of distribution, as they all play a role in the movement of products or services from producers to consumers.

Antwoorddetails

The country that is not a member of OPEC is Egypt. OPEC stands for the Organization of the Petroleum Exporting Countries, and it is a group of countries that work together to control the production and pricing of oil. OPEC was founded in 1960, and it currently has 13 member countries, including Iran, Venezuela, and the United Arab Emirates. Indonesia was once a member of OPEC, but it suspended its membership in 2016. Egypt, on the other hand, has never been a member of OPEC. While Egypt is a significant oil producer, it is not considered a major exporter of oil. Therefore, it is not a part of the OPEC group.

Antwoorddetails

When a business has unlimited liability, it means that the owners are personally responsible for all the financial debts of the business. This means that if the business goes bankrupt and owes money to creditors, the owners can be held personally liable for paying back those debts, even if it means that they have to use their personal assets to do so. This is different from limited liability, where the owners are only responsible for the debts of the business up to the amount of their investment in the business. With unlimited liability, the owners have no such protection and are fully responsible for all the debts of the business. Therefore, in summary, unlimited liability means that the owners of a business are personally responsible for all the financial debts of the business, which can result in their personal assets being used to pay off the business's debts.

Antwoorddetails

Antwoorddetails

The amount of money that can be created by commercial banks is influenced by the legal reserve ratio. This is a regulation set by the central bank that requires commercial banks to hold a certain percentage of their deposits as reserves. The reserves are held in the form of cash or deposits with the central bank. When a bank receives a deposit from a customer, it is required to hold a percentage of that deposit as reserves and can use the rest to make loans or invest in other assets. The amount of money that a bank can lend out is determined by the reserve ratio. For example, if the reserve ratio is 10%, a bank can lend out 90% of the deposit it received. The reserve ratio influences the amount of money that can be created by commercial banks because it limits the amount of money that banks can lend out. If the reserve ratio is high, banks can only lend out a small percentage of their deposits, and if the reserve ratio is low, banks can lend out more. Therefore, the reserve ratio plays a crucial role in determining the amount of money that can be created by commercial banks.

Antwoorddetails

The headquarters of the Organization of Petroleum Exporting Countries (OPEC) is located in Vienna, Austria. OPEC is an intergovernmental organization that is responsible for coordinating and unifying the petroleum policies of its member countries. Its main goal is to secure fair and stable prices for petroleum producers and ensure a regular supply of petroleum to consumers. The headquarters is the main office of the organization where the leaders and members of the organization meet and make decisions about petroleum policies and other important matters.

Antwoorddetails

A change in demand refers to a shift in the demand curve, which shows the relationship between the price of a product and the quantity demanded. It means that the consumers are now willing and able to buy a different quantity of a product at a given price than they were before. All of the factors listed can cause a change in demand except the price of the commodity. The price of the commodity does not cause a shift in the demand curve, but rather a movement along the existing demand curve. The other factors can cause a shift in the demand curve. For example, an increase in consumer income can shift the demand curve for a normal good to the right, indicating that consumers are now willing and able to buy more of the product at every given price. Similarly, a change in population size, consumer taste, or weather condition can also cause a shift in the demand curve. In summary, a change in demand refers to a shift in the demand curve, and the factors that can cause this shift include consumer income, taste, population size, and weather conditions, but not the price of the commodity itself.

Antwoorddetails

The price and quantity of crude oil and petrol sold by Nigeria to other countries is fixed by OPEC. OPEC stands for the Organization of the Petroleum Exporting Countries, which is a group of countries that cooperate to regulate the global supply and price of oil. Nigeria is a member of OPEC, and as such, the country follows the organization's agreements on production levels and pricing. OPEC meets regularly to discuss and decide on production quotas, which determine the amount of oil each member country can produce and sell to other countries. Therefore, OPEC plays a significant role in determining the price and quantity of crude oil and petrol that Nigeria sells to other countries.

Antwoorddetails

The specific example of an indirect tax that is not included in the list is the poll tax. Indirect taxes are those taxes that are imposed on goods and services rather than on individuals or companies directly. In other words, the burden of the tax is ultimately passed on to the consumer who buys the goods or services. Out of the options given, purchases tax, import duty, export duty, and excise duty are all examples of indirect taxes because they are imposed on goods and services. However, a poll tax is a type of tax that is levied on individuals or households directly, rather than on goods or services. Therefore, it is not an indirect tax but a direct tax. In summary, all of the options except for the poll tax are examples of indirect taxes because they are imposed on goods and services rather than on individuals directly.

Antwoorddetails

Antwoorddetails

It is a general belief that inflation in West Africa is not caused by a decrease in money supply. Inflation is a general rise in the price level of goods and services over time, resulting in a decrease in the purchasing power of money. Excessive bank lending, budget deficits, rising incomes, and a shortage of supply are factors that could increase the money supply in an economy, leading to inflation. However, a decrease in the money supply could lead to deflation, which is a general decrease in the price level of goods and services. Deflation is the opposite of inflation, and it is caused by a reduction in the money supply or a decrease in the demand for goods and services. Therefore, a decrease in the money supply is not a factor that causes inflation in West Africa. Instead, excessive bank lending, budget deficits, rising incomes, and a shortage of supply are factors that could increase the money supply, leading to inflation in the region.

Antwoorddetails

The purchasing power of the Naira will fall when there is inflation. Inflation happens when the general price level of goods and services in an economy increases over time, making each unit of currency, such as the Naira, worth less in terms of what it can buy. For instance, if the price of a bag of rice increases from 10,000 Naira to 15,000 Naira, the Naira's purchasing power will have decreased, as it can now buy less than it could before. Retrenching workers, changing the colour of the Naira, cutting all salaries and wages, or overvaluing the Naira do not necessarily lead to a fall in its purchasing power. However, if any of these factors contributes to inflation, it could ultimately lead to a decrease in the Naira's purchasing power.

Antwoorddetails

Antwoorddetails

The option that is not done by the NNPC is "Pricing of crude oil". The NNPC (Nigerian National Petroleum Corporation) is a government-owned oil company in Nigeria responsible for the management of the country's oil and gas resources. The NNPC is involved in the production, refining, exploration, and exploitation of crude oil, but it is not responsible for the pricing of crude oil. The pricing of crude oil is determined by the global market forces of supply and demand, and it is influenced by factors such as production levels, geopolitical events, and economic conditions. While the NNPC may sell crude oil at a negotiated price to buyers, it does not control the global market price of crude oil. Therefore, the correct option is "Pricing of crude oil".

Antwoorddetails

The statement that is not true of capital income is: "it is calculated as National Income Population." Capital income refers to income earned through investments in assets such as stocks, real estate, and businesses. It is one of the two main categories of income, the other being labor income, which is earned through wages, salaries, and other compensation for work done. Capital income is an important indicator of economic growth and helps to assess the standard of living of a population. It is calculated as the total income earned through investments in assets. It is also used by the United Nations (UN) to assess and assist developing countries in achieving economic growth. However, the statement "it is calculated as National Income Population" is incorrect. Capital income is not calculated by dividing the national income by the population. Rather, it is calculated as the sum of all income earned from capital investments, including interest, dividends, rents, and profits. In summary, capital income is an important indicator of economic growth and helps assess the standard of living. It is calculated as the sum of all income earned from capital investments and is not calculated by dividing the national income by the population.

Antwoorddetails

Distribution involves the transfer of goods and services from the production centre to the consumers. This means that once goods and services are produced, they need to be moved from where they are produced to the people who need them. The process of distribution involves various activities such as transportation, storage, and handling of goods. The main goal of distribution is to ensure that goods and services are available to consumers at the right time, in the right place, and in the right quantity. This process is essential to the economy as it helps to meet the demands of consumers and improve their standard of living.

Antwoorddetails

Antwoorddetails

One major function of the Central Bank is to control and regulate the money supply in an economy. The Central Bank is the highest monetary authority in a country, and it is responsible for implementing monetary policies that help to maintain economic stability. One of the ways it does this is by controlling the amount of money that is circulating in the economy. This is important because if there is too much money in circulation, it can lead to inflation, and if there is too little money, it can lead to a recession. To control the money supply, the Central Bank can use various tools, such as setting interest rates, regulating the reserve requirements for banks, and buying or selling government securities. By using these tools, the Central Bank can influence the amount of money that is available in the economy, and help to maintain stable prices, employment, and economic growth. In summary, the Central Bank's role in controlling and regulating the money supply is essential to ensuring the stability and growth of an economy.

Antwoorddetails

Antwoorddetails

The statement "cheques are legal tender" is not true. Cheques are a type of negotiable instrument that serve as a written order to a bank to pay a specific amount of money from a person's account to another person or organization. However, they are not considered legal tender, which refers to a form of payment that is accepted by law to settle a debt. Legal tender typically includes cash or coins issued by the government, and it is the only form of payment that creditors are required to accept. While cheques are a widely accepted form of payment, they are not considered legal tender, and creditors have the right to refuse them if they choose to do so.

Antwoorddetails

The theory of consumer behavior is based on all of the following assumptions except that the consumer is assumed irrational. In fact, the theory assumes that the consumer is rational and seeks to maximize their utility, subject to a budget constraint. This means that consumers make choices based on their preferences and the prices of goods and services, with the goal of maximizing their satisfaction or "utility" within the constraints of their budget. Additionally, the theory assumes that consumer tastes are consistent and that consumers are exposed to more than one commodity, meaning that they have a choice between different goods and services. Overall, the theory of consumer behavior seeks to explain how consumers make choices based on their preferences and available resources.

Antwoorddetails

The International Banks for Reconstruction and Development (IBRD) is also known as the World Bank. It was established after World War II to provide financial and technical assistance to countries for reconstruction and development projects. The World Bank works with developing countries to help them reduce poverty, increase economic growth, and improve living standards. It provides loans, grants, and other forms of financial assistance, as well as technical assistance and policy advice. Therefore, the option that best describes another name for the International Banks for Reconstruction and Development (IBRD) is the World Bank.

Antwoorddetails

Limited liability in Economics means that a shareholder's liability in the event of debt or bankruptcy is limited to the amount they have invested in a company. When a company is formed, its owners, also known as shareholders, are not personally responsible for the company's debts or obligations. Instead, they have limited liability, which means that their liability is limited to the amount of money they have invested in the company. If the company incurs a debt or is unable to pay its obligations, the shareholders' personal assets are not at risk. This concept of limited liability is a critical feature of modern economic systems as it encourages investment in businesses. Shareholders are more willing to invest in companies knowing that their personal assets are not at risk. This allows companies to raise funds for expansion or investments, which can create jobs and stimulate economic growth. In summary, limited liability in Economics means that shareholders are not personally responsible for the company's debts or obligations, and their liability is limited to the amount they have invested in the company. This feature encourages investment in businesses, which can stimulate economic growth.

Antwoorddetails

The Joint Stock Company can be a company whose minimum membership is 2. A Joint Stock Company is a type of business organization that is owned by shareholders who own a portion of the company's stock. These shareholders invest in the company by buying shares, and they receive a portion of the company's profits in the form of dividends. The minimum number of members required to form a Joint Stock Company varies depending on the laws of the country where the company is being registered. However, in many countries, including the United States and the United Kingdom, a Joint Stock Company can be formed with just two members, who are known as the founding shareholders. In some cases, the minimum membership requirement may be higher, depending on the size of the company or the industry it operates in. But in general, a Joint Stock Company can be formed with as few as two members.

Antwoorddetails

A rational consumer tends to do all of the following except buying more at a high price than at a low price. A rational consumer is one who makes choices that maximize their satisfaction or utility while spending their income wisely. When it comes to purchasing goods and services, a rational consumer would choose to buy more when the price is low and less when the price is high. This is in accordance with the law of demand, which states that as the price of a good or service increases, the quantity demanded decreases, and vice versa. In other words, a rational consumer would choose to buy more of a good or service when the price is lower because they can obtain more satisfaction or utility per unit of money spent. Conversely, when the price is higher, they will buy less because the satisfaction or utility per unit of money spent is lower. Therefore, a rational consumer would not buy more at a high price than at a low price because it would not be in their best interest to spend more money for less satisfaction or utility.

Antwoorddetails

Antwoorddetails

Supply is the quantity of a commodity that producers are willing and able to offer for sale at a given price over a period. The main factors that motivate a producer to supply more are:

• A rise in the price of the commodity: by the law of supply, a higher price raises the producer's profit and encourages him to supply more.
• A fall in the cost of production: cheaper inputs (labour, raw materials) lower cost and widen the profit margin, so more is supplied.
• Improvement in technology: better machines and methods raise output and productivity at lower cost, increasing supply.
• Favourable weather (for agricultural goods): good rainfall and climate raise yields, so more can be supplied.
• Government subsidy: financial assistance to producers reduces their effective costs and encourages greater output.
• A fall in the prices of other commodities: when substitutes in production become less profitable, resources are switched to produce more of this commodity.
• Expectation of a future price fall: producers may release more now to sell before prices drop.
• Availability of factors of production and good infrastructure: ready supply of labour, capital and good transport enable larger output.

Antwoorddetails

(a) Equilibrium price and quantity. Equilibrium occurs where quantity demanded equals quantity supplied, \(Q_d = Q_s\):

\[ 20 - 2P = 6P - 12 \]

\[ 20 + 12 = 6P + 2P \;\Rightarrow\; 32 = 8P \;\Rightarrow\; P = 4 \]

Substituting \(P = 4\) into either function: \(Q_d = 20 - 2(4) = 12\). So the equilibrium price is N4.00 and the quantity bought and sold is 12 units.

(b) Excess supply at the fixed price. At a price above equilibrium, quantity supplied exceeds quantity demanded, giving excess supply (a surplus). Excess supply \(= Q_s - Q_d\). Taking the fixed price as N6.00 (the sensible value above the equilibrium of N4):

\[ Q_s = 6(6) - 12 = 24, \qquad Q_d = 20 - 2(6) = 8 \]

\[ \text{Excess supply} = 24 - 8 = 16 \text{ units} \]

The magnitude of the excess supply is therefore 16 units. (Note: the figure printed as N60.00 is almost certainly a typographical error for N6.00, since a price of N60 lies far outside the range of these functions.)

Antwoorddetails

National income is the total money value of all final goods and services produced by the nationals of a country within a given period, usually one year. It is also the sum of all incomes (wages, rent, interest and profit) earned by the factors of production in that period.

Importance of national income

• Measures the standard of living: national income per head (per capita income) gives an indication of the average welfare of the people.
• Shows economic growth: comparing national income over the years reveals whether the economy is growing or declining.
• Reveals the structure of the economy: it shows the contribution of each sector (agriculture, industry, services) to total output.
• Aids economic planning: government uses the figures to plan, allocate resources and set realistic targets.
• Enables international comparison: it allows a country's economic performance to be compared with that of other countries.
• Shows income distribution: it indicates how income is shared among the people and guides policy on inequality.
• Guides government policy: it is a basis for fiscal, monetary and taxation decisions.

Antwoorddetails

Tax collectors in Nigeria face several difficulties that reduce the amount of revenue actually collected:

• Tax evasion and avoidance: many taxpayers deliberately refuse to pay (evasion) or exploit loopholes to reduce their liability (avoidance).
• Widespread illiteracy: many people do not understand tax laws or how to complete tax returns, making assessment difficult.
• Poor record keeping: individuals and small businesses keep no proper accounts, so their true incomes cannot be assessed.
• Large informal sector: the many self-employed traders, artisans and farmers have irregular, unrecorded incomes that are hard to assess and reach.
• Corruption and dishonesty: some tax officials collude with taxpayers, or collected money is embezzled.
• Inadequate and incompetent staff: shortage of well-trained tax personnel and equipment.
• Lack of reliable data: absence of an accurate register of taxpayers and their incomes.
• Poor infrastructure and communication: bad roads and poor addressing make it hard to reach and identify taxpayers.
• Political interference and weak penalties: influence from powerful persons and light penalties encourage default.

Antwoorddetails

Scores: 38, 28, 70, 43, 39, 20, 64, 66, 12, 46, 52, 53, 20, 34, 48, 69, 18, 20, 64, 34. Number of students \(n = 20\), pass mark = 40%.

(a) Mean score. The sum of all scores is 838.

\[ \bar{x} = \frac{\sum x}{n} = \frac{838}{20} = 41.9 \]

The mean score is 41.9%.

(b) Number who passed. Scores of 40 and above are: 70, 43, 64, 66, 46, 52, 53, 48, 69, 64. That is 10 students.

(c) Percentage who failed. Failures = \(20 - 10 = 10\) students.

\[ \text{Percentage failed} = \frac{10}{20} \times 100 = 50\% \]

(d) Range of scores. Highest = 70, lowest = 12.

\[ \text{Range} = 70 - 12 = 58 \]

(e) Number scoring below the mean (41.9). Scores below 41.9 are: 38, 28, 39, 20, 12, 20, 34, 18, 20, 34, giving 10 students.

Antwoorddetails

Although about 75% of the labour force in West African countries works in agriculture, food output remains too low to meet domestic needs. The reasons are:

• Use of crude and primitive tools: reliance on the hoe and cutlass instead of machinery keeps output per worker very low.
• Subsistence nature of farming: most farmers produce mainly for family consumption on small scattered plots, so little surplus reaches the market.
• Poor storage and preservation: lack of silos and processing facilities causes heavy post-harvest losses.
• Inadequate finance and credit: farmers cannot afford improved seeds, fertilizers and equipment.
• Land tenure problems: fragmented holdings and communal ownership discourage large-scale, mechanised farming.
• Rural-urban migration: the young and able-bodied leave the farms for the towns, leaving mostly aged and weak workers.
• Poor transport and infrastructure: bad rural roads make it costly to move produce, so much rots before reaching markets.
• Pests, diseases and unfavourable weather: drought, flooding and crop pests reduce yields.
• Illiteracy of farmers and low use of modern techniques: little access to extension services and improved methods.
• Rapid population growth: food demand rises faster than the slow growth in food production.

Antwoorddetails

Internal economies of scale are the cost advantages a single firm enjoys as it grows larger and expands its own output. As a very large organisation, the Nigerian National Petroleum Corporation (NNPC) can achieve them in the following ways:

• Technical economies: it can install and fully use large, specialised and indivisible plant such as refineries, pipelines and storage depots, spreading their cost over a huge output so that cost per unit of oil falls.
• Managerial economies: being large, it can employ specialist managers, engineers and accountants each handling one department, raising efficiency and lowering cost per unit.
• Financial economies: as a big and reputable corporation it can raise large loans and capital more easily and at lower interest rates than small firms.
• Marketing (commercial) economies: it can buy inputs and equipment in bulk at discounts and sell its products in large quantities, reducing buying and selling costs per unit.
• Risk-bearing economies: by diversifying into exploration, refining, distribution and petrochemicals, it spreads its risks so that a loss in one area is offset by gains in another.
• Research economies: its large size lets it fund research and development into better and cheaper methods of production, whose cost is spread over large output.

Antwoorddetails

Development planning is the deliberate government effort to direct the economy over a period towards defined goals. The reasons for development planning in Nigeria include:

• Efficient allocation of scarce resources: to channel limited resources into the most productive and priority uses.
• To accelerate economic growth and development: planning sets targets that speed up growth in output and income.
• To reduce unemployment: planned projects and industries create jobs for the growing labour force.
• To achieve balanced development: to spread projects across regions and sectors and reduce regional inequality.
• To diversify the economy: to reduce over-dependence on oil by developing agriculture and industry.
• To provide social and economic infrastructure: roads, schools, hospitals, power and water are planned and provided.
• To reduce inequality in income distribution: planning aims to share the benefits of growth more fairly.
• To attract and coordinate foreign aid and investment: a clear plan guides donors and investors.
• To set priorities and coordinate government activities: so that different projects work together rather than in conflict.

Antwoorddetails

Opportunity cost is the real cost of a choice, measured as the next best alternative that is forgone (given up) when a decision is made. Because resources are scarce, choosing to use them for one purpose means sacrificing another. For example, if a farmer uses his land to grow maize, the opportunity cost is the yam he could have grown instead.

Money cost is the amount of money actually paid out or spent to acquire or produce a commodity, that is the monetary expenditure on the good or service. If a shirt is bought for N2,000, the money cost is N2,000.

The distinction: money cost is measured in naira and shows what is paid; opportunity cost is measured in terms of the alternative goods or satisfaction sacrificed and need not involve any money changing hands. Opportunity cost is the more fundamental economic concept because it captures the true sacrifice behind every choice.

Antwoorddetails

Meaning of inflation. Inflation is a persistent and general rise in the level of prices of goods and services in an economy over a period of time, accompanied by a fall in the purchasing power (value) of money.

Government efforts to combat inflation in Nigeria

• Contractionary monetary policy: the Central Bank of Nigeria raises interest rates, sells securities through open market operations and raises the cash reserve ratio to reduce the money supply and check demand.
• Contractionary fiscal policy: the government reduces its own spending and increases taxes to withdraw excess purchasing power from the public.
• Increased production of goods: agricultural and industrial programmes (for example food-production schemes) raise the supply of goods to match demand.
• Importation of essential commodities: importing scarce goods increases supply and eases pressure on prices.
• Price control: setting maximum (ceiling) prices for essential goods to restrain runaway prices.
• Wage and income control: restraining sharp wage increases that would push up costs and demand.