JAMB Economics 1981 past questions and answers

'Choice arises because of scarcity of resources'. In discussing this statement, which of the following is NOT correct?

1. A.Human wants are numerous but the resources needed to satisfy them are limited
2. B.Given numerous wants and limited resources only individuals and business firms make choice
3. C.The process of making a choice involves opportunity cost
4. D.An economist is not interested in the morality or otherwise of any choice so made
5. E.Usually choice is made from a list of wants compiled in the context of a scale of preference.

Which of the following alternatives will NOT assist in checking the population growth in West African countries?

1. A.Immigration
2. B.Birth control measures, e.g. use of contraceptives
3. C.Late marriage
4. D.Creating more educational opportunities for women
5. E.Sex education.

If P₈ and P₉ represent the population of West Africa in 1978 and 1979 respectively, and given that in 1979
D = number of deaths
B = number of births
I = number of immigrants
E = number of emigrants.
Then the size of the population in 1979 is given by

1. A.P₉ = P₈ + D − B + I − E
2. B.P₉ = P₈ + B − D + I − E
3. C.P₉ = P₈ + B − D + E − I
4. D.P₉ = B − D + I − E
5. E.P₉ = P₈ + B + D + I + E.

A movement along a given demand curve for a good is caused by a change in

1. A.consumer income
2. B.the price of the good
3. C.taste
4. D.the prices of other goods
5. E.population.

External economies are

1. A.the advantages accruing to a firm as a result of its expansion
2. B.the advantages accruing to one firm as a result of the existence of other firms in the same locality
3. C.benefits derived by a firm as a result of its own individual policy
4. D.reaped only by agricultural firms
5. E.bound to increase the costs of production whatever the circumstances.

Two goods, X and Y, are said to be complementary when

1. A.a fall in the price of X raises the demand for Y
2. B.a fall in the price of X causes a fall in the demand for Y
3. C.a fall in the price of X does not affect the demand for Y
4. D.a rise in the price of X does not affect the demand for Y
5. E.the two goods are competitive.

Market schedules for milk
Price per tin — Quantity demanded (tins) — Quantity supplied (tins)
8k — 25,000 — 7,500
10k — 23,000 — 9,000
13k — 20,000 — 11,500
15k — 18,000 — 13,000
18k — 15,000 — 15,000
20k — 13,000 — 17,500
23k — 10,000 — 21,000
25k — 8,000 — 24,000
From the above market demand and supply schedules for milk, we can say that equilibrium price and quantity are

1. A.15k; 13,000
2. B.20k; 17,500
3. C.13k; 20,000
4. D.18k; 18,000
5. E.18k; 15,000.

Which of the following is NOT true about specialization or division of labour?

1. A.Specialization and exchange go hand in hand
2. B.Specialization implies that each person produces a surplus of one or a few items (e.g commodities) in which he is specialized
3. C.Division of labour need not take account of the extent of the market
4. D.Division of labour results in increased productivity
5. E.Division of labour involves the danger of unemployment.

Money becomes a very poor store of value in a period of

1. A.deflation
2. B.stable prices
3. C.recession
4. D.inflation
5. E.harvest.

In the above diagram, S_oS_o is the original supply curve while S₁S₁ is the new curve. Which of the following does S₁S₁ represent?

1. A.A movement along a given supply curve
2. B.An increase in supply
3. C.A decrease in supply
4. D.A perfectly elastic supply curve
5. E.An abnormal supply curve.

Governments in West African countries engage in running a number of enterprises because

1. A.large amounts of capital are needed and key industries should not be left in private hands
2. B.private capital would not establish an adequate infrastructure
3. C.it brings about a more even distribution of the country's wealth
4. D.the social costs of some enterprises make the government the most suitable body to set them up
5. E.all of the above

The function of money as a standard of deferred payments

1. A.makes it possible for an individual to build up stores of many things for future use
2. B.makes it possible for payments to be postponed from the present to a future date
3. C.facilitates the exchange of goods
4. D.makes easy calculations possible
5. E.none of the above.

By open market operations we mean the process by which

1. A.the Central Bank intervenes in the open market to buy or sell securities
2. B.the commercial banks intervene in the open market to buy or sell treasury bills
3. C.market women buy and sell commodities in the open market
4. D.the money market takes over the functions of the Central Bank
5. E.the bank rate is determined in the open market.

Which of the following is NOT a major function of a Central Bank?

1. A.Serving as Government's bank
2. B.Serving as banker's bank
3. C.Acceptance of deposits from the public
4. D.Responsibility for monetary policy
5. E.Serving as lender of last resort.

Summary of production conditions in countries I and II
— Amount of labour days — Cocoa (tons) — Cloth (metres)
Country I — 200 — 600 — 900
Country II — 200 — 300 — 800
From the above table, we can correctly say in respect of international trade that

1. A.country I has absolute disadvantage in the production of both cocoa and cloth
2. B.country I has absolute advantage in the production of both cocoa and cloth
3. C.country II has absolute advantage in the production of both cocoa and cloth
4. D.country II has a comparative advantage in the production of cocoa
5. E.country II should leave the production of both cocoa and cloth to country I.

The infant industry argument for protection in developing countries recognizes the need to employ tariffs to protect

1. A.industries producing baby food and clothing
2. B.industries owned by infants
3. C.newly set-up industries
4. D.industries in which infants will be taken care of
5. E.industries that behave like infants.

Invisible trade refers to trade in

1. A.services
2. B.goods and services
3. C.tangible goods
4. D.short-term and long-term capital
5. E.goods that cannot be seen.

Indirect taxes are taxes

1. A.which are levied on the incomes and profits of individuals and firms
2. B.whose incidence always falls on the consumer
3. C.which are based on the progressive principle
4. D.on casinos, airports and capital gains
5. E.which are levied on people and economic units through the goods and services they purchase.

The situation whereby in a fiscal year a government's revenue receipts are less than its expenditures is referred to as

1. A.budget deficit
2. B.balanced budget
3. C.budget surplus
4. D.budget statement
5. E.unfavourable budget.

Which of the following statements is NOT true about agriculture in West Africa?

1. A.Agriculture employs over 60 per cent of West Africa's occupied population
2. B.Agricultural production is the basis for excise taxes in West Africa
3. C.Many West African countries depend on agricultural exports for foreign exchange earnings
4. D.Agriculture supplies West African industries with raw materials
5. E.Agriculture provides incomes to West African farmers who engage in it.

The process by which West African countries attempt to reduce the import of manufactured goods by encouraging firms to produce these goods at home is known as

1. A.industrialization
2. B.export-promotion
3. C.import-substitution
4. D.export-substitution
5. E.import-expansion.

Economics may be defined as

1. A.the study of money and banking
2. B.the study of markets and prices
3. C.the study of production and distribution
4. D.the study of human behaviour in the allocation of scarce resources
5. E.the study of the employment of labour, land, and capital.

Elasticity of demand is given by

1. A.the percentage change in quantity demanded divided by the corresponding percentage change in price
2. B.the percentage change in price divided by the corresponding percentage change in quantity demanded
3. C.the percentage change in quantity demanded divided by the corresponding price
4. D.the percentage change in price divided by the corresponding quantity demanded
5. E.none of the above.

If a commodity has many substitutes, it is most likely that

1. A.the demand curve is fairly inelastic
2. B.the demand curve is fairly elastic
3. C.the demand curve is parallel to the quantity axis
4. D.the demand curve is positively sloped
5. E.the price of the commodity is too high.

With reference to the figure above, what is the new equilibrium quantity and price if the Demand Curve shifts forward from D₁ to D₂ and the Supply Curve shifts downward from S₁ to S₂?

1. A.(P₂, q₃)
2. B.(P₃, q₂)
3. C.(P₂, q_o)
4. D.(P_o, q₁)
5. E.(P₂, q₂)

Which of the following statements does NOT describe a situation of perfect competition?

1. A.The firm faces an infinitely elastic demand curve
2. B.The firm makes no pure profit in the short run
3. C.The price does not change with changes in the output level of the firm
4. D.There is freedom of entry into, and exit out of the industry
5. E.The firm can sell all it produces at the market price.

Surplus in balance of payments leads to

1. A.inflation or increasing prices generally
2. B.increase in foreign reserves
3. C.decrease in foreign reserves
4. D.Government budget surplus
5. E.none of the above.

Which of the following does NOT belong in respect of the quantity of money?

1. A.Durability
2. B.Divisible into the smallest units of value
3. C.Portable
4. D.Identifiable by all
5. E.Measure of value.

Government budget can be described as the sum of

1. A.indirect tax, direct tax, and loans expected within a financial year
2. B.planned recurrent expenditure and planned investment expenditure
3. C.planned capital expenditure for a development plan within a plan period
4. D.planned expenditure and expected revenue within a financial year
5. E.planned expenses of all ministries within a financial year.

An economy in which both the public and the private sectors contribute substantially to the growth of output is

1. A.a socialist economy
2. B.a capitalist economy
3. C.a mixed economy
4. D.an industrial economy
5. E.a peasant economy.

Sector 1 (Agriculture): share in National Output 25%, share in total Employment 60%, growth rate of Sectoral Output 2%
Sector 2 (Manufacturing and Crafts): share in National Output 10%, share in total Employment 10%, growth rate of Sectoral Output 5%
Sector 3 (Petroleum and Mining): share in National Output 50%, share in total Employment 5%, growth rate of Sectoral Output 10%
Sector 4 (Services): share in National Output 15%, share in total Employment 25%, growth rate of Sectoral Output 3%
From the above, the growth rate of Total National Output or GDP is

1. A.6.45% i.e. (25x2+10x5+50x10+15x3)/100%
2. B.20.0%, i.e. (2+5+10+3)%
3. C.2.95%, i.e. (60x2+10x5+5x10+25x3)/100%
4. D.5.0%, i.e. (2+5+10+3)/4%
5. E.not obtainable.

Which is NOT an important factor responsible for high concentration of population in some parts of Nigeria?

1. A.Climatic influences
2. B.Development of trade and markets
3. C.Soil fertility
4. D.Processing of petroleum oil
5. E.Concentration of educational facilities.

Scarcity in economics generally refers to

1. A.a period of farming
2. B.monopolization of existing supply of resources
3. C.nationalization of sources of raw materials
4. D.the control of outlets to sell goods
5. E.none of the above.

Prohibiting the sale of lace materials in Nigeria would probably lead to

1. A.increased supply of lace materials in Nigeria
2. B.production of better quality lace materials abroad
3. C.lower price of lace materials in Nigeria
4. D.higher price of lace materials in Nigeria
5. E.increased income to all dealers of lace materials in Nigeria.

In the graph above, FG indicates

1. A.excess demand
2. B.excess supply
3. C.equilibrium quantity supplied
4. D.equilibrium quantity demanded
5. E.equilibrium price.

Which of the following is NOT a visible item on international trade payments?

1. A.Payments for imported cars
2. B.Receipts from cocoa exports
3. C.Payments to foreign shipping companies
4. D.Payments for steel imports
5. E.Payments for petroleum imports.

Given the international trade statistics of Nigeria for the past 6 years, which of these statements would you consider to be correct?

1. A.The value of industrial exports is declining
2. B.The value of industrial imports is constant
3. C.The share of agricultural exports is increasing
4. D.The share of agricultural exports is decreasing
5. E.The value of mineral exports is declining

The most basic concern of economists is to

1. A.create human wants
2. B.satisfy all human wants
3. C.redistribute income so that it is used correctly
4. D.create perfect competition
5. E.study ways of allocating scarce resources in order to satisfy human wants.

An increase in the price of butter causes an increase in the demand for margarine. This indicates that butter and margarine are

1. A.substitute goods
2. B.complementary goods
3. C.elastic goods
4. D.inelastic goods
5. E.inferior goods.

An equilibrium price

1. A.keeps excess demand within limits
2. B.keeps excess supply within limits
3. C.generates the greatest possible demand and supply
4. D.generates the greatest possible profits
5. E.equates the quantity supplied to be equal to the quantity demanded.

Market for GARRI
Price per tin — Demand per week — Supply per week
N6 — 0 tin — 35 tins
N5 — 5 tines — 25 tins
N4 — 10 tins — 35 tins
N3 — 15 tins — 15 tins
N2 — 20 tins — 5 tins
N1 — 25 tins — 0 tin.
At a price of N5, the excess supply is

1. A.30 tins per week
2. B.45 tins per week
3. C.15 tins per week
4. D.20 tins per week
5. E.indeterminate.

When a nation's exports are greater than its imports

1. A.the net foreign trade is zero
2. B.an unfavourable balance of payments exists
3. C.a favourable balance of payments exists
4. D.an unfavourable balance of trade exists
5. E.a favourable balance of trade exists.

Unlimited liability means

1. A.the government can tax a company without limit
2. B.the debts of a company must be paid out of its assets
3. C.a company ceases to exist at the death of one of its owners
4. D.a firm must pay its debts from business as well as private funds
5. E.none of the above.

One of the probable effects of an increased minimum wage in Nigeria is

1. A.to create voluntary unemployment
2. B.to decrease the wage rate
3. C.to increase the level of employment
4. D.to create involuntary unemployment
5. E.to increase the demand for labour.

If the income of a consumer rises and his demand for good X falls, good X can be described as

1. A.a normal good
2. B.an abnormal good
3. C.a good with inelastic demand
4. D.a good with unitary elastic demand
5. E.none of the above.

Inflation is likely to benefit

1. A.persons with bank savings
2. B.persons employed in financial houses
3. C.debtors
4. D.persons who live on fixed pension funds
5. E.creditors.

Which of the following is NOT a characteristic of perfect competition?

1. A.Many sellers and buyers in the markets
2. B.There is perfect knowledge
3. C.Supply and demand are equal
4. D.There is no advertising
5. E.Products are identical.

Opportunity cost is best defined as

1. A.the penalty for not seizing golden opportunities
2. B.sacrificed alternative (output, income, etc.)
3. C.the cost of creating job opportunities
4. D.payment made to an industrial worker
5. E.the difference between fixed and variable costs.

Progressive income tax can be expressed as

1. A.tax that falls as income rises
2. B.tax that rises as income falls
3. C.tax that is independent of income
4. D.tax that rises as income rises
5. E.tax that is neutral to income.