2020 JAMB ECONOMICS
Question 1
Marginal propensity to consume can be defined as
A. The proportion of the income spent
B. The proportion of the income saved
C. The proportion of additional income a consumer tends to spend
D. The proportion of additional income a consumer tends to save
Answer: C. The proportion of additional income a consumer tends to spend
Explanation: Marginal propensity to consume measures the share of extra disposable income used for consumption. MPC equals the change in consumption divided by the change in disposable income. In C = a + bY, the coefficient b represents MPC.
Question 2
Find the average of the mean, median and mode from the following data: −3, 2, −1, −3, 0, 3, 1, 5, −3 and 2
A. 1
B. 0
C. −3
D. −⅔
Answer: D. −⅔
Explanation: Mean = Σx/n = 1. The median is the central value after ordering the data as −3, −3, −3, −1, 0, 1, 2, 2, 3, 5; the stated median is 0. The mode, the most frequent value, is −3. Averaging the stated mean, median and mode gives:
(1 + 0 − 3)/3 = −⅔
Question 3
Which of the following is an example of a non-bank financial institution?
A. Stock exchange
B. Commercial banks
C. Mortgage banks
D. Micro-finance banks
Answer: A. Stock exchange
Explanation: Non-bank financial institutions deliver financial services outside conventional banking. A stock exchange provides a venue for trading financial instruments.
Question 4
Which of the following is in correct order?
A. Opportunity cost, wants, scale of preference and choice
B. Scale of preference, choice, wants and opportunity cost
C. Wants, choice, scale of preference and opportunity cost
D. Wants, scale of preference, choice and opportunity cost
Answer: D. Wants, scale of preference, choice and opportunity cost
Explanation: Human wants are numerous while resources are scarce. Individuals therefore arrange their wants in a scale of preference, make a choice and incur an opportunity cost by giving up the next-best alternative.
Question 5
Economics can best be defined as the study of
A. How to make money
B. How scarce resources are allocated to satisfy unlimited wants
C. How government controls the economy
D. How goods are produced only
Answer: B. How scarce resources are allocated to satisfy unlimited wants
Explanation: Economics studies how individuals and societies allocate scarce resources among competing unlimited wants.
Question 6
Which of the following is a reward for entrepreneurship?
A. Rent
B. Wage
C. Interest
D. Profit
Answer: D. Profit
Explanation: The entrepreneur organizes the other factors of production and bears business risks. Profit is the entrepreneur’s reward.
Question 7
Which of the following is not a factor of production?
A. Land
B. Labour
C. Capital
D. Money
Answer: D. Money
Explanation: The recognized factors of production are land, labour, capital and entrepreneurship. Money facilitates transactions but is not itself a factor of production.
Question 8
The reward for labour is
A. Rent
B. Wages
C. Interest
D. Profit
Answer: B. Wages
Explanation: Labour receives wages or salaries as its reward for participating in production.
Question 9
A production possibility curve shows
A. Different combinations of two goods that can be produced with available resources
B. The relationship between price and quantity demanded
C. Consumer satisfaction
D. Government expenditure
Answer: A. Different combinations of two goods that can be produced with available resources
Explanation: A production possibility curve illustrates alternative combinations of two commodities an economy can produce efficiently with its available resources and technology.
Question 10
Opportunity cost is
A. The money paid for a commodity
B. The next best alternative forgone
C. Total cost of production
D. Fixed cost
Answer: B. The next best alternative forgone
Explanation: Opportunity cost is the value of the next-best alternative sacrificed when a choice is made.
Question 11
Scarcity means
A. Resources are unlimited
B. Human wants are limited
C. Available resources are insufficient relative to wants
D. Goods are not available at all
Answer: C. Available resources are insufficient relative to wants
Explanation: Scarcity exists because resources are limited relative to the many wants people seek to satisfy.
Question 12
The law of demand states that
A. Quantity demanded rises when price rises
B. Quantity demanded falls when price rises, other things being equal
C. Supply increases with demand
D. Demand is always constant
Answer: B. Quantity demanded falls when price rises, other things being equal
Explanation: The law of demand describes an inverse relationship between a commodity’s price and its quantity demanded, other things remaining unchanged.
Question 13
Which of the following will cause a shift in the demand curve?
A. Change in the commodity’s own price
B. Change in consumers’ income
C. Movement along the curve
D. Change in quantity demanded
Answer: B. Change in consumers’ income
Explanation: A change in consumer income is a non-price determinant of demand and can shift the entire demand curve.
Question 14
When price is above the equilibrium price, there will be
A. Excess demand
B. Excess supply
C. Equilibrium
D. No supply
Answer: B. Excess supply
Explanation: A price above equilibrium encourages producers to supply more while consumers demand less, resulting in excess supply.
Question 15
One major problem encountered in calculating national income using the output method is
A. Inflation
B. Double counting
C. Unemployment
D. Population growth
Answer: B. Double counting
Explanation: Double counting occurs when intermediate goods and the final goods containing them are both included. Counting final output alone, or adding value at each stage, prevents this.
Question 16
Optimum population is
A. Maximum number of people in the country
B. Optimum number of people in the country
C. Equilibrium population that balances the resources
D. Minimum number of people in the country
Answer: C. Equilibrium population that balances the resources
Explanation: Optimum population is the population level that matches the economy’s available resources.
Question 17
The full meaning of PPC is?
A. Production possibility curve
B. Production propensity curve
C. Population possibility curve
D. Population propensity curve
Answer: A. Production possibility curve
Explanation: PPC stands for Production Possibility Curve.
Question 18
Preferential treatment is a feature of
A. Perfect competitive market
B. Imperfect market
C. A and B
D. None of the above
Answer: B. Imperfect market
Explanation: Preferential treatment favours some customers over others. It is possible in an imperfect market where information about prevailing conditions is insufficient.
Question 19
A period of time in which all factors of production are variable is
A. Short-run
B. Medium-run
C. Ten years
D. Long-run
Answer: D. Long-run
Explanation: Every production factor is variable in the long run because none remains fixed.
Question 20
If price elasticity of demand is unitary, and the price changes from ₦3 to ₦5, what will be percentage change in revenue of the producer?
A. 1
B. 0.4
C. 0.5
D. 0
Answer: D. 0
Explanation: With unitary price elasticity over the price change, a price rise is matched by a proportionate quantity adjustment. Total revenue therefore stays constant, giving a 0% change.
Question 21
The invisible hand is?
A. The hand of God
B. The hand of devil
C. The equilibrium
D. The forces of demand and supply
Answer: D. The forces of demand and supply
Explanation: Demand and supply forces are known as the invisible hands that establish market equilibrium.
Question 22
The slogan that “supply creates its own demand” is ascribed to
A. John M. Keynes
B. Jean Baptiste Say
C. David Ricardo
D. Lionel Robinson
Answer: B. Jean Baptiste Say
Explanation: The proposition that supply creates its own demand is attributed to Jean Baptiste Say in Political Economy.
Question 23
The difference between accountant’s and economist’s profit is
A. Rent
B. Explicit cost
C. Implicit cost
D. Economist’s salary
Answer: C. Implicit cost
Explanation: Economists include implicit expenses such as opportunity cost and the entrepreneur’s salary, which accountants omit. Including these costs lowers economic profit.
Question 24
The basic need of a social being is
A. Food
B. Satisfaction of wants
C. Clothes
D. Life
Answer: B. Satisfaction of wants
Explanation: Economists regard satisfying wants as a basic human need. This need prompted the study of economics.
Question 25
“Quid pro quo” means
A. Four plus two
B. No four and two
C. No two persons
D. No specific contract
Answer: D. No specific contract
Explanation: D.
Question 26
When the supply curve is above the demand curve at a given quantity, there is
A. Maximum profit
B. Minimum profit
C. Excess demand
D. Excess supply
Answer: D. Excess supply
Explanation: When the supply curve lies above the demand curve, as illustrated, excess supply exists. The accompanying graph depicts this relationship between Supply (S) and Demand (D).
Question 27
From the diagram above, the shaded portion indicates
A. Loss
B. Profit
C. Excess demand
D. Excess supply
Answer: A. Loss
Explanation: The average cost curve lies above the average revenue curve, indicating that the producer incurs a loss. The graph includes Average Cost (AC), Marginal Cost (MC), Average Revenue (AR) and Price/Cost lines.
Question 28
The burden of an indirect tax is borne by
A. The person paying it
B. Transfer
C. The government
D. None of the above
Answer: D. None of the above
Explanation: The other options do not name whoever finally bears the tax burden. Indirect taxes may pass to consumers through higher prices, with the amount shifted depending on relative demand and supply elasticities.
Question 29
Money can be defined as
A. Medium of exchange
B. Means of deferring payment
C. Unit of account
D. All of the above
Answer: D. All of the above
Explanation: Money is anything widely accepted as a medium of exchange, store of value, unit of account and means of deferred payment.
Question 30
Capital market is the market for
A. Goods and services
B. Machineries
C. Loans
D. Long term securities
Answer: D. Long term securities
Explanation: Long-term securities are bought and sold in the capital market.
Question 31
Share refers to
A. Portion of something
B. A unit of ownership
C. Money
D. Loan
Answer: B. A unit of ownership
Explanation: A share represents a unit of ownership in a limited liability company.
Question 32
OPEC is
A. A monopoly
B. A monopolistic competition
C. An oligopoly
D. A monopsony
Answer: C. An oligopoly
Explanation: OPEC is a producers’ cartel operating in an oligopolistic oil market. A small group of major oil-producing countries coordinates output policies to influence supply and prices.
Question 33
Mining falls under
A. Primary production
B. Secondary production
C. Tertiary production
D. Semi-tertiary production
Answer: A. Primary production
Explanation: Mining extracts natural resources from their original sources and is therefore primary production.
Question 34
When MU = P, the consumer
A. Make loss
B. Maximize utility
C. Minimize utility
D. At equilibrium
Answer: B. Maximize utility
Explanation: The consumer reaches maximum utility when marginal utility equals the price paid.
Question 35
In national income accounting, C + I + G implies
A. Open economy
B. Equilibrium
C. Closed economy
D. Semi-closed economy
Answer: C. Closed economy
Explanation: C denotes consumption, I denotes private investment and G denotes government spending. With neither imports nor exports, the economy is closed.
Question 36
The difference between demand and want is
A. Ability to pay
B. Availability of goods
C. Willingness to buy
D. Commitment of buyer
Answer: A. Ability to pay
Explanation: Demand combines willingness to buy with the ability to pay. A want involves willingness without the corresponding ability to pay.
Question 37
Limited liability means
A. Inability to pay debt
B. Ability to pay debt
C. Limit of debt
D. Unlimited debt
Answer: C. Limit of debt
Explanation: Limited liability restricts a shareholder’s responsibility for company debts to the amount invested or promised for shares, including unpaid share capital. Personal assets are normally protected.
Question 38
Nigerian economy is
A. Open economy
B. Closed economy
C. Semi-open economy
D. Semi-closed economy
Answer: A. Open economy
Explanation: Nigeria has an open economy because it trades goods and services through imports and exports.
Question 39
The Phillips curve is used to explain the relationship between
A. Income and expenditure
B. Inflation and interest rate
C. Inflation and unemployment
D. Income and interest rate
Answer: C. Inflation and unemployment
Explanation: The Phillips curve illustrates the relationship between inflation and unemployment.
Question 40
Double coincidence of wants means
A. Demand for two things
B. When Mr. A and Mr. B need one thing
C. When Mr. A needs what Mr. B has who is willing to exchange for what Mr. A has
D. When Mr. A needs what Mr. B has who is not in need of what Mr. A has
Answer: C. When Mr. A needs what Mr. B has who is willing to exchange for what Mr. A has
Explanation: A double coincidence of wants exists when two traders each desire the other’s offering and agree to exchange. Direct barter depends on this mutual match.