JAMB Economics 1987 past questions and answers

A production possibility curve shows

1. A.how much of the resources of society are used to produce a particular commodity
2. B.the rate of inflation
3. C.the rate of unemployment in the economy
4. D.the various combinations of two commodities that can be produced.

The study of the economic behaviour of individual decision-making units (consumers, resource owners and business firms) in a free-enterprise economy is known as

1. A.microeconomics
2. B.macroeconomics
3. C.production
4. D.indifference curve.

Which of the following best describes the concept of opportunity cost?

1. A.A special bargain or sale at below market price
2. B.Costs for inputs tend to go up as we use more of them
3. C.Goods that are not produced in order to produce more of another good
4. D.A cost that constantly decreases.

Market is defined as

1. A.one geographical location where people meet to buy and sell
2. B.the demand and supply of goods and services
3. C.a group of people whose sole interest is to make profit
4. D.any organizational framework which links the buyers and sellers of a good or service.

The additional revenue obtained by using one more unit of a factor is called its

1. A.marginal product
2. B.additional product
3. C.marginal revenue product
4. D.average product.

Labour productivity is defined as

1. A.output per man/hour
2. B.average output
3. C.the maximum number of hours worked
4. D.total level of output.

Efficiency of labour is enhanced by

1. A.involvement in own family affairs
2. B.mechanization processes
3. C.war against indiscipline
4. D.improved working condition and training.

Average Fixed Cost is

1. A.Average Total Cost less the sum of Average Variable Cost
2. B.half the sum of all costs
3. C.Total Fixed Cost divided by the level of output
4. D.Total Fixed Cost plus Marginal Cost.

The residual of production which accrues to the ownership of land after all other expenses have been met is called

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

In the history of Economic Thought the concept of Division of Labour is usually associated with

1. A.David Ricardo
2. B.J.M. Keynes
3. C.Adam Smith
4. D.Karl Marx

The form of capital which is usually consumed or transformed into finished goods and services in the production process is called

1. A.industrial capital
2. B.social capital
3. C.fixed capital
4. D.circulating capital.

The shut-down point for a firm in the short run is the output at which

1. A.the price of the product is lowest
2. B.Marginal Cost is constant
3. C.Average Variable Cost is not covered
4. D.Average Cost is minimum.

In the long run a firm will leave an industry if price

1. A.does not cover at least Average Total Cost
2. B.is not equal to Marginal Cost
3. C.is higher than Average Variable Cost
4. D.is not at least equal to the minimum of the Marginal Cost curve.

In the process of shopping, Mr. X whose salary per month does not exceed ₦ 200, finds that the price of a commodity he used to purchase with a fixed amount of ₦200 has now risen to ₦230. He therefore decides not to buy this commodity at all. Mr. X is thus affected by the

1. A.substitution effect of a price change
2. B.income effect of a price change
3. C.opportunity cost of a price change
4. D.inflation effect of a price change.

Price can be defined as

1. A.a rate of exchange
2. B.a medium of exchange
3. C.the cost of a product
4. D.the standard of accounting.

In the operation of market forces, the market is in equilibrium at the point where

1. A.demand and supply curves intersect in more than one point provided the market is cleared
2. B.the excess in the market can be conveniently stored
3. C.excess demand is negative
4. D.demand and supply curves intersect.

A shift in the demand curve for a commodity when the supply curve is vertical will lead to a change in the

1. A.price only
2. B.quantity only
3. C.quality only
4. D.price and quantity.

Given an original price of ₦3.50 per kilogram of rice and a change in price of ₦1.40, and given the quantity purchased at the old price as 10kg and a change in quantity as 5kg after the price change, the elasticity is equal to

1. A.10.20
2. B.3.57
3. C.1.25
4. D.0.80 .

For normal goods the income elasticity of demand is

1. A.positive
2. B.negative
3. C.zero
4. D.infinite.

In the diagram above, PS is the supply curve for a particular commodity while OP is the price. Which of the following statements is correct?

1. A.The quantity supplied is infinitely elastic
2. B.When price is zero, the quantity supplied is infinite
3. C.When price is infinite, the quantity supplied is zero
4. D.The quantity supplied is indefinite.

Use the following information to answer this question. X, Y and Z are the only three consumers of a commodity. Their respective demand schedules for the commodity are as given below:
X: Price (₦) | Quantity (Units)
0 | 20
2 | 15
5 | 10
10 | 0
Y: Price (₦) | Quantity (Units)
0 | 15
2 | 10
5 | 5
10 | 2
Z: Price (₦) | Quantity (Units)
0 | 40
2 | 30
5 | 15
10 | 5
The market demand curve for the commodity cuts the quantity axis when quantity is

1. A.75 units
2. B.35 units
3. C.7 units
4. D.not determinable from the schedules except when graphed.

Use the following information to answer this question. X, Y and Z are the only three consumers of a commodity. Their respective demand schedules for the commodity are as given below:
X: Price (₦) | Quantity (Units)
0 | 20
2 | 15
5 | 10
10 | 0
Y: Price (₦) | Quantity (Units)
0 | 15
2 | 10
5 | 5
10 | 2
Z: Price (₦) | Quantity (Units)
0 | 40
2 | 30
5 | 15
10 | 5
What is market demand for the commodity when price is ₦5?

1. A.65 units
2. B.40 units
3. C.30 units
4. D.20 units

If a good is an inferior good, then

1. A.it is also necessarily a Giffen good
2. B.the quantity of the good demanded varies inversely with its price
3. C.its income elasticity of demand is negative
4. D.the poor buy the good only out of habit.

An increase in supply will lower price unless

1. A.supply is perfectly inelastic
2. B.demand is perfectly elastic
3. C.it is followed by an increase in demand
4. D.demand is highly inelastic.

Which of the following is compatible with a firm in a purely competitive market?

1. A.Demand is inelastic
2. B.Demand is infinitely elastic
3. C.Marginal Cost is falling
4. D.Price is greater than Marginal Cost.

In which of the diagrams above is the consumer surplus correctly shaded?

1. A.I
2. B.II
3. C.III
4. D.IV

What form of market is found in an imperfect competition where there are few buyers and many sellers?

1. A.Oligopoly
2. B.Monopoly
3. C.Duopoly
4. D.Oligopsony.

To which of the following sectors do services belong?

1. A.Primary
2. B.Secondary
3. C.Tertiary
4. D.Construction.

The liability of the sole trader is

1. A.indeterminable
2. B.unlimited
3. C.transferable
4. D.limited

Which of the following is NOT a type of business ownership?

1. A.Debenture holding
2. B.Private company
3. C.Partnership
4. D.Joint Stock venture.

Which of the following is a disadvantage of regional concentration of industries?

1. A.Development of congested urban areas
2. B.Existence of regional unemployment
3. C.High cost of labour
4. D.Immobility of labour.

Money market differs from capital market in that it

1. A.deals with short-term loans while capital market deals with long-term funds
2. B.deals with money only while capital market deals with capital as well
3. C.is limited in scope while capital market is not
4. D.uses interest rates while capital market does not.

The main reason for charging interest is to

1. A.reward entrepreneurial effort
2. B.redistribute profits
3. C.reward investors for present use of capital
4. D.mobilize more funds for development.

In the Keynesian model

1. A.the demand for money is inversely related to the rate of interest
2. B.investment is directly related to the rate of interest
3. C.investment is not related to the rate of interest
4. D.the demand for money is directly related to the rate of interest.

If inflation is anticipated to continue

1. A.people will lose confidence in goods
2. B.lenders will demand higher interest rates
3. C.the growth of full-employment output will be accelerated
4. D.people will want to hold more money.

Ad valorem tax means

1. A.a certain percentage tax based on the value of the commodity
2. B.a certain percentage tax based on the volume of the commodity
3. C.a tax on the income of the consumer
4. D.payment of a tax on the profits made.

In order to raise more revenue for a certain period, government should impose higher taxes on goods whose demand is

1. A.elastic
2. B.inelastic
3. C.perfectly elastic
4. D.unitary elastic.

A budget with a projected revenue in excess of its expenditure is said to be

1. A.balanced
2. B.surplus
3. C.deficit
4. D.inflationary.

The money which government spends yearly for the maintenance of its schools is

1. A.used only for wages and salaries
2. B.part of the government's capital expenditure
3. C.part of the government's recurrent expenditure
4. D.the government's budget for its schools

Which of the following applies to a commodity sold abroad at a price lower than that in the producing country?

1. A.Dumping
2. B.Counter-trade
3. C.Bilateral trade
4. D.Trade liberalization.

The rate of exchange between a domestic and a foreign currency is defined as the

1. A.terms of trade
2. B.domestic currency price of a unit of the foreign currency
3. C.foreign currency price of gold
4. D.domestic currency price of gold.

Which of the following best explains the structural changes in the population of a country?

1. A.Positive changes in the size and ethnic composition of the population
2. B.A decrease in the size of the population
3. C.An increase in the birth rate which is higher than the decrease in the death rate
4. D.Changes in the age, sex and occupational composition of the population.

Statistical information available in most West African countries suggests that

1. A.the marginal propensity to save is high
2. B.the marginal propensity to consume is high
3. C.the consumption pattern is negative
4. D.there exists perfect correlation between consumption and savings.

Transfer payments are

1. A.transfer earnings
2. B.money transferred from one country to another
3. C.unearned income
4. D.payment transferred from one account to another.

Capital consumption allowance refers to

1. A.personal consumption expenditure
2. B.indirect business taxes
3. C.depreciation of capital equipment
4. D.expenditure on capital equipment.

The difference between personal income and personal disposable income is

1. A.personal income tax
2. B.investment income
3. C.personal savings
4. D.consumption expenditure.

Frictional unemployment

1. A.is total unemployment minus structural unemployment
2. B.occurs when the unemployed are persons with specific training
3. C.occurs when the number of job seekers exceeds the number of vacancies
4. D.occurs when people are changing jobs.

For the improvement of the welfare of a people, a high production level is not enough because

1. A.the have-nots deserve more than a fair share
2. B.equitable distribution is necessary
3. C.productive efficiency is vital
4. D.savings in the country must be guaranteed at more than 50 per cent of income earned.

Economic development is defined as

1. A.positive change plus growth
2. B.availability of more goods and services
3. C.outward shift of the production possibility curve
4. D.growth in the national income.