JAMB Economics 1989 past questions and answers

In its simplified form, the circular flow of income concept refers to the

1. A.real flow in goods and services between the product and factor markets
2. B.monetary payments for goods and services produced by individual firms
3. C.transactions in goods and services and payments for such transactions between individual firms and households
4. D.money flows associated with transactions between individual firms and households.

The need to construct a scale of preference is necessitated by

1. A.the need to satisfy wants
2. B.scarcity and the need for choice
3. C.scarcity of resources
4. D.non-availability of factors of production.

A shift in the production possibility frontier could result from

1. A.unemployment
2. B.changes in the combination of goods produced
3. C.inflation
4. D.changes in production techniques.

The primary problem of Economics is

1. A.to obtain a more equitable distribution of money income
2. B.the scarcity of productive resources relative to material needs
3. C.how to reach prices which correctly depict that products and resources are not in abundance
4. D.to teach people how to save so as to make more money.

Efficiency in production involves

1. A.reducing the size of the workforce
2. B.producing a given output with the lowest cost combination of factors of production
3. C.adoption of capital-intensive technology
4. D.increasing the quantity of the fixed factor of production.

If X represents the factors of production and Y represents the factor price, which of the following sets of association is correct?

1. A.(Land, rent), (capital, wage), (labour, profit)
2. B.(Land, interest), (capital, profit), (labour, wage)
3. C.(Land, wage), (capital, interest), (labour, rent)
4. D.(Land, rent), (capital, interest), (labour, wage).

If the cost of production for a firm continues to increase as its output rises, the firm is said to be experiencing

1. A.large-scale production
2. B.profit maximization
3. C.economies of scale
4. D.diseconomies of scale.

Given perfect competition in the capital market, the opportunity cost of capital is adequately reflected by the

1. A.interest rate
2. B.returns on capital
3. C.alternative capital foregone
4. D.shadow price of foreign exchange.

If at 10k per kg, 1000kg of yam were purchased and at 5k per kg, 1,500kg were purchased, the resultant point elasticity of demand is

1. A.0.33
2. B.0.0001
3. C.1
4. D.10,000.

If, as the price of a commodity rises, the quantity demanded of the commodity remains the same, then the demand for the commodity is

1. A.static
2. B.infinitely elastic
3. C.externally determined
4. D.perfectly inelastic.

In the diagram above, what happens when the minimum wage is fixed at OW?

1. A.Unemployment is reduced
2. B.Unemployment results
3. C.The demand schedule will shift
4. D.The supply schedule will become steeper.

If the curve above shows the relationship between the price of commodity X and the quantity demanded of commodity Y, then X and Y are

1. A.complementary goods
2. B.substitutes
3. C.inferior goods
4. D.luxury goods.

Which of the following factors is an important determinant of the magnitude of price elasticity of demand?

1. A.The production period
2. B.Cost of storage
3. C.Durability of the product
4. D.Availability of factors of production.

The marginal theory of distribution makes an assertion that the price of any factor depends upon its marginal

1. A.utility
2. B.productivity
3. C.rate of substitution
4. D.revenue.

In order to increase its profit margin, the monopolist can manipulate

1. A.both price and output
2. B.either price or output
3. C.only its price
4. D.only its output.

For a purely competitive industry, a fundamental requirement of the demand curve faced by individual firms is that it should be

1. A.downward sloping and price inelastic
2. B.perfectly price elastic
3. C.downward sloping but price inelastic
4. D.perfectly price inelastic.

The merging of firms engaged in different stages of production and marketing is called

1. A.external economies of scale
2. B.vertical integration
3. C.horizontal integration
4. D.economic union.

Which of the following is an important function of the retailer?

1. A.Grants credit to the wholesaler
2. B.Breaks bulk and sells products in small units
3. C.Reduces cost of distribution
4. D.Generates demand for products through advertisement.

Q(ton) | TC(₦) | TR(₦)
400 | 16000 | 20000
500 | 18000 | 22500
600 | 19800 | 24000
700 | 21000 | 24500
800 | 24000 | 25000
900 | 31500 | 18000
1000 | 40000 | 15000
The table above gives the various levels of output (Q) and its corresponding total cost of production (TC) and total revenue (TR) for a firm. Which output level Q results in maximum profit?

1. A.400
2. B.500
3. C.600
4. D.700

One of the purposes of advertisement in marketing is to

1. A.change the quality of the product
2. B.raise the quantity of the product demanded as its price falls
3. C.shift the demand curve for the product to the right
4. D.raise production costs.

The size of a business unit tends to be small if the activity

1. A.involves mass production of goods
2. B.requires a large capital
3. C.requires division of labour
4. D.involves the provision of direct services.

Which type of business organization has the attribute of effectively combining management with control?

1. A.Sole proprietorship
2. B.Partnership
3. C.Limited liability company
4. D.Co-operatives.

The co-operative as a form of business organization differs from partnership by having

1. A.several sources of capital for business financing
2. B.ability to issue preferred stocks to members
3. C.entrenched democratic control in the conduct of business
4. D.established rules and regulations governing the activities of its members.

The type of business finance that entitles the holder to a fixed rate of dividend is

1. A.preferred stock
2. B.common stock
3. C.debenture
4. D.bank loan.

Which of the business organizations listed below is characterized by limited authority and liability of the individual owners?

1. A.Sole proprietorship
2. B.Partnership
3. C.Joint stock company
4. D.Co-operative society.

A company is said to be highly geared if the

1. A.value of fixed interest loans is high compared with share capital
2. B.value of share capital is high compared with fixed interest loans
3. C.dividend rate is high
4. D.interest rate is high.

Industries that can be randomly located are characterized by

1. A.relatively low transport cost for both raw materials and output and factor mobility
2. B.relatively heavy transport cost for raw material or output
3. C.constant returns to scale
4. D.significant economy of scale.

The term 'double coincidence' of wants is usually associated with a

1. A.bilateral exchange mechanism
2. B.monetary exchange mechanism
3. C.stock exchange system
4. D.barter exchange mechanism.

A major factor affecting the value of money is the

1. A.price level
2. B.banking habit
3. C.transaction motive
4. D.divisible nature of money.

Cost-push inflation is caused by

1. A.growth of government expenditure
2. B.increase in factor prices
3. C.increase in money supply
4. D.hoarding.

The stock exchange market is where

1. A.businessmen borrow some capital
2. B.the federal government trades on treasury bills
3. C.existing bonds and stocks are traded
4. D.new stocks and shares are bought or sold.

Commercial bank reserves at the Central Bank have the effect of

1. A.controlling credit and money supply
2. B.discouraging banking operations
3. C.advancing trade prospects
4. D.reducing bank frauds.

A tax is defined as regressive if

1. A.the proportion of income paid as tax increases as the income level increases
2. B.all income groups pay the same percentage of their income as taxes
3. C.the proportion of income taken by the tax falls as income increases
4. D.the proportion of income taken by the tax is a fixed nominal amount of income for all income groups.

Government intervention in an economy is often justified on the group that

1. A.wants are unlimited while resources are scarce
2. B.productivity is higher in the public than in the private sector
3. C.free market may not work or produce desirable results
4. D.opportunity cost of government expenditure is zero.

The three major groups of government revenue are

1. A.investment income, direct tax and indirect tax
2. B.import duties, excise tax and export duties
3. C.company tax, personal income tax and import duties
4. D.company tax, import duties and excise tax.

The main objectives of public expenditure does NOT include

1. A.stabilization of national economy
2. B.achievement of a more equitable income distribution
3. C.meeting the social needs of the people
4. D.revenue sharing and profit maximization.

A perfect example of a public good is

1. A.air
2. B.education
3. C.defence
4. D.transport.

A balanced budget is defined as a condition of

1. A.balance of payments equilibrium
2. B.equality of aggregate demand and aggregate supply
3. C.equality of planned receipts and planned expenditure
4. D.equality of planned exports and planned imports.

ITEM | AMOUNT (Million Naira)
Visible exports | 55.54
Visible imports | 53.32
Invisible exports | 30.56
Invisible imports | 28.70
Balance | 4.08
The amount, N4.08 million, shown as balance in the table above represents

1. A.terms of payments
2. B.balance of current accounts
3. C.balance of trade
4. D.terms of trade.

By using exchange controls, a country tries to eliminate a balance of payments deficit by

1. A.limiting her imports to its currency value of exports
2. B.reducing the nation's domestic price level
3. C.limiting her exports to its currency value of imports
4. D.overvaluing the country's currency.

The law of comparative advantage states that a country should specialise in the production of a commodity

1. A.for which local demand is greatest
2. B.in which its opportunity cost is lower than that of the trade partner
3. C.for which foreign demand is greatest
4. D.for which there is abundant supply of raw materials.

International and inter-regional trade differ primarily because

1. A.comparative advantage is relevant to the former but not to the latter
2. B.products flow across national boundaries
3. C.there are different resource supplies among countries of the world
4. D.of regulation from GATT.

Optimum population is the population level at which

1. A.death rate is at a minimum
2. B.per capita income is at a maximum
3. C.population is at a maximum
4. D.death rate is equal to birth rate.

The group of people engaged in banking or insurance services by occupational distributions are classified as

1. A.primary producers
2. B.secondary producers
3. C.tertiary producers
4. D.technical producers.

The difference between gross national product and net national product is equal to

1. A.gross investment
2. B.net investment
3. C.net foreign income
4. D.capital depreciation.

The value of the total output produced within Nigeria by all residents (citizens and non-citizens) is referred to as the

1. A.gross national product
2. B.disposable income
3. C.national income
4. D.gross domestic product.

The multiplier is defined as

1. A.the ratio of the change in income to the change in investment
2. B.the change in investment divided by the change in income
3. C.1/(MPC)
4. D.1/(1 − MPS)

If C stands for consumption expenditure, I for investment, X for exports, and M for imports, then national income is

1. A.C + I + X + M
2. B.C + I + X − M
3. C.C + I − X + M
4. D.C + I + X.

A sustained increase in the per capita income of a country over a period of time is called

1. A.economic growth
2. B.economic development
3. C.structural change
4. D.stagflation.

The primary goal of development planning in Nigeria is to

1. A.increase profitability of enterprises
2. B.achieve a rapid increase in the welfare and standard of living of Nigerians
3. C.increase the level of gross domestic product
4. D.make Nigeria a super-power.