JAMB Economics 1986 past questions and answers

Choice in economic life is necessitated by

1. A.the need to construct scale of preference
2. B.the opportunity cost of consumption
3. C.unlimited wants
4. D.scarcity of economic resources

Which of these is the real cost of satisfying any want in the sense of the alternative that has to be foregone?

1. A.Variable cost
2. B.Opportunity cost
3. C.Total cost
4. D.Prime cost

Under normal circumstances the concept of consumer sovereignty implies that

1. A.the consumer and not the producer owns the means of production
2. B.the producer and not the consumer determines what is to be produced
3. C.the consumer and not the producer determines what is to be produced
4. D.both the consumer and the producer determine what is to be produced.

A firm is at its optimum size when

1. A.it produces the greatest output at the minimum cost
2. B.it has a motive to increase output
3. C.marginal cost equals marginal revenue
4. D.marginal cost is less than marginal revenue

The degree of specialization is limited by the

1. A.availability of specialized skills and machinery
2. B.marginal cost exceeding marginal revenue
3. C.extent of the market
4. D.disadvantage of standardization

Production in Economics can be defined as the

1. A.totality of producing, buying and consuming
2. B.transformation of raw materials and services in order to provide ultimate utility
3. C.transformation of raw materials and services in order to make maximum profit
4. D.production of goods and services for consumption.

A firm achieves least cost in production by substituting factors until

1. A.their factor prices are equal
2. B.their marginal-physical products are each equal to their factor prices
3. C.their marginal-physical-products are each zero
4. D.the ratio of their marginal-physical-products equals the ratio of their prices.

If a person receives a higher wage than would be necessary to induce him to work, he is said to be receiving

1. A.rent
2. B.profit
3. C.interest
4. D.surtax income

Mobility of labour is NOT affected by

1. A.optimum size of population
2. B.marriage and family
3. C.regulation of trade unions
4. D.period of training.

A country has a population distribution as shown below:
Age Group in Years | Corresponding Percentage
Above 60 | 22
15 - 60 | 60
0 - 14 | 15
The dependency ratio is

1. A.3 : 2
2. B.1 : 3
3. C.2 : 3
4. D.1 : 5

Population density refers to

1. A.densely populated urban centres
2. B.the total area divided by the total population
3. C.densely populated rural areas
4. D.the total population divided by the total area

What fundamentally determines how much a consumer spends in a producer's shop?

1. A.Individual's propensity to consume
2. B.Level of his taxation
3. C.Level of his income
4. D.Individual's taste or fashion.

Which of the following statements describes a mixed economy?

1. A.The government and the private sector interact in solving the basic economic problems
2. B.The invisible hand solves the basic economic problems
3. C.The government produces and distributes all goods and services
4. D.Society answers the 'what', 'how', and 'for whom' questions only through the market system.

In drawing an individual's demand curve for a commodity, which of the following is NOT kept constant? The

1. A.individual's money income
2. B.price of substitutes
3. C.price of complementary goods
4. D.price of the commodity under consideration.

Given that beef and fish are substitutes, a rise in the price of beef relative to that of fish will

1. A.induce greater demand for beef
2. B.induce greater demand for fish
3. C.induce lower demand for fish
4. D.equate demands for beef and fish.

The main function of price mechanism is to

1. A.limit consumer demand
2. B.enable producers make profits
3. C.allocate scarce resources among competing ends
4. D.ensure consumer sovereignty.

Use the table below to answer this question.
Market Demand Schedule for Commodity X.
Price (₦) | Quantity (million units)
60 | 100
50 | 140
40 | 220
30 | 260
20 | 300
10 | 340
If the price of commodity X falls from ₦40.00 to ₦30.00 what is the price elasticity of demand?

1. A.0.62
2. B.0.73
3. C.1.00
4. D.1.50

Use the table below to answer this question.
Market Demand Schedule for Commodity X.
Price (₦) | Quantity (million units)
60 | 100
50 | 140
40 | 220
30 | 260
20 | 300
10 | 340
The revenue accruing to the seller of commodity X as a result of a fall in price will

1. A.increase
2. B.fall
3. C.first fall but will increase later
4. D.remain unchanged.

Which of the following is an important function of prices in a market economy?

1. A.Ensuring that resources are used in the most efficient manner
2. B.Ensuring an equitable distribution of goods and services
3. C.Ensuring that all industries are perfectly competitive in the long run
4. D.Equating level of purchases with level of needs.

One major difference between monopoly and perfect competition is that

1. A.the perfect competitor is a price taker while the monopolist determines his own output
2. B.homogeneity of purpose exists for the perfect competitor while non-homogeneity of purpose exists for the monopolist
3. C.sellers are located all over the world in the case of perfect competition but sellers are located only in one country monopolist
4. D.there is free entry and exit in perfect competition but no free exit in monopoly

A producer sustains a loss in the short run if

1. A.marginal revenue is less than price
2. B.price is less than average cost
3. C.average variable cost is less than average cost
4. D.marginal cost is less than marginal revenue.

A monopolist will practise price discrimination in two markets if

1. A.the cost of separating the markets is large
2. B.the markets have different elasticities of demand
3. C.there is free flow of information in the two markets
4. D.there is a patent of the commodity.

In the normal channels of distribution the breaking of bulk is performed by the

1. A.producer
2. B.wholesaler
3. C.retailer
4. D.consumer.

The most important advantage of co-operative societies is

1. A.their high degree of democracy
2. B.the increase in the cost of marketing
3. C.that members are encouraged to save money
4. D.the possibility of raising loans for the members.

In a public company, shares are

1. A.sold to one person only
2. B.distributed freely
3. C.advertised to members of the public for subscription
4. D.disposed of by the Chief Executive.

Which of the following is a characteristic of private limited liability company?

1. A.Its shares can be sold to the public.
2. B.The number of shareholders ranges from fifty to one hundred
3. C.All shareholders have equal powers and responsibilities
4. D.The number of shareholders ranges from two to fifty.

One of the advantages of a partnership over a sole proprietorship is that

1. A.it is the most popular form of business organization
2. B.the partner can easily withdraw from the business
3. C.it makes an increase in the capital of the business possible
4. D.there is no limit to the number of people who may bring in capital.

Which of the following is an external economy derived by a firm?

1. A.Low cost opportunities enjoyed by being in a place where other producers concentrate
2. B.Technical economies enjoyed by varying the factors of production
3. C.Economies of management by putting administrators where they are most efficient
4. D.Marketing advantages attained through preferential treatment in the purchase and distribution of produce.

Which of the following advantages of localization of industries may also be a disadvantage?

1. A.External economies
2. B.Concentration of industries and of people
3. C.Development of organized markets
4. D.Reduced costs of research.

The Nigerian Bank for Commerce and Industry is

1. A.a commercial bank
2. B.a development bank
3. C.an industrial bank
4. D.a merchant bank.

To control inflation, the monetary authorities of a country can

1. A.reduce taxes
2. B.advise government to increase its expenditure
3. C.engage in expansive monetary policy
4. D.engage in restrictive monetary policy.

Which of the following is used by the Central Bank to control the rate of interest?

1. A.Bill of Exchange
2. B.Banker's order
3. C.Fixed deposit account
4. D.Open market operation

Graham's law in Economics shows that

1. A.bad money drives good money out of circulation
2. B.good money drives bad money out of circulation
3. C.gold must be available to maintain the value of paper money
4. D.the price level varies directly with the quantity of money.

Given that the cash reserve ratio is 10 per cent, what is the maximum amount of money that the banking system can create from an initial cash deposit of ₦1,000.00?

1. A.₦100.00
2. B.₦1,000.00
3. C.₦9,000.00
4. D.₦10,000.00.

The most important economic characteristic differentiating commercial banks from other financial institutions is their

1. A.function as a safe and profitable store place for savings
2. B.role in financing balance of payments deficits
3. C.status as an intermediary between savers and borrowers
4. D.ability to create and destroy money.

Deflation is a persistent fall in the general price level and is usually caused by

1. A.a reduction in total demand
2. B.an increase in government spending
3. C.an increase in the money supply
4. D.an increase in aggregate demand.

Which of the following causes of inflation is related to demand-pull inflation?

1. A.Low productivity on farms and in firms
2. B.Poor storage facilities
3. C.Poor distribution system
4. D.Increase in government expenditure on construction.

Which of the following is NOT a goal of modern budgets?

1. A.The control on inflation
2. B.The reduction in income inequality
3. C.The shift of all resources from the private to the public sector
4. D.Economic development.

The best technical description of a progressive tax is a

1. A.tax which takes more money from the rich than from the poor
2. B.more equitable tax than a regressive one
3. C.tax which takes a higher proportion of extra naira received as income rises
4. D.tax which falls directly on those in the high income brackets.

Tax incidence is the analysis of

1. A.how progressive a tax is
2. B.how a tax is collected
3. C.how distorting a tax is
4. D.who ultimately pays the tax.

In international trade, a country specializes in the production of a commodity or group of commodities for which it has

1. A.a buoyant market
2. B.plenty of raw materials
3. C.the greatest relative advantage
4. D.executive manpower.

Balance of payments deficit in Nigeria CANNOT be solved by

1. A.importing more goods and services
2. B.devaluation of the currency
3. C.imposing import duties
4. D.imposing import bans on some commodities.

The term balance of trade, can be defined as the

1. A.relation between value of exports and value of imports over a given period of time
2. B.balance owed to the rest of the world in payment for imports
3. C.price paid for imports in terms of exports
4. D.relation between payments of all kinds made by a country to the rest of the world, over a given period of time.

The terms of trade is often measured by the ratio of the index of export prices

1. A.divided by the index of import prices multiplied by 100
2. B.multiplied by the index of import prices
3. C.plus the index of import prices multiplied by 100
4. D.minus the index of import prices.

A society which forgoes present consumption

1. A.is forced to do so because of excessive consumption within the country in the past
2. B.is devoting new resources to new capital formation
3. C.is merely devoting resources to the replacement of capital
4. D.expects to consume only that amount tomorrow which was forgone today.

ECOWAS will enable the countries involved to achieve

1. A.comparative political advantage over other countries not in the region
2. B.a large market for their products
3. C.military superiority over countries not in the region
4. D.lower the transportation cost of goods within the region.

Which of the following methods is most likely to lead to an increased rate of growth in the national economy?

1. A.An increase in wages and profits
2. B.An increase in consumer demand
3. C.A greater fraction of the National Product going into investment
4. D.A continuous rise in bank loans.

The difference between the Gross Domestic Product and the Gross National Product is

1. A.allowance for total depreciation
2. B.total interest payments
3. C.total tax and interest payments
4. D.net income from abroad

Which of the following strategies will provide more employment opportunities for Nigerians?

1. A.Investment in social services
2. B.Industrialization
3. C.Economic planning
4. D.Eradication of illiteracy.

A nation's distribution of income shows

1. A.the value of all goods produced in the economy
2. B.how income is divided among different groups
3. C.where the economy system is on its production possibility curve
4. D.the consumption behaviour of the people.