Economics 2004 Jamb Examination
Question 41
Am ajor characteristics of a mixed economy is that
Correct Answer: D. economic activities are undertaken by both the public and private sectors
A mixed economy combines elements of both capitalism and socialism, where the government (public sector) and private individuals or firms (private sector) jointly participate in economic activities and decision-making.
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Question 42
Given the cost function C = 160 + 36Q, what is the average cost at 20 units of output?
\[
\begin{aligned}
\text{Given:} \quad & C = 160 + 36Q \\
\text{At } Q = 20, \quad & \text{Average Cost (AC)} = \dfrac{C}{Q} \\
& = \dfrac{160 + 36 \times 20}{20} \\
& = \dfrac{160 + 720}{20} \\
& = \dfrac{880}{20} = 44
\end{aligned}\]
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Question 43
If an increase in the p rice of good X leads to an increase in the supply of good Y, X andY are said to
be
Correct Answer: A. jointly supplied
Goods X and Y are said to be jointly supplied if they are produced together such that an increase in the price of one (X) encourages the increased production of both, leading to higher supply of the other (Y) as a by-product or co-product.
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Question 44
The diagram above shows the shifts in both demand and supply curves. What is the new equilibrium point after the shifts?
Correct Answer: A. E₃
Eâ‚‚ is where S2 intersects D2, which is not the new equilibrium because supply has also shifted.
The correct new equilibrium is E₃, where D2 intersects S1.
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Question 45
When there is a change fron T to N, it implies that
Correct Answer: A. supply has increased
In the diagram:T lies on the original supply curve S1
N lies on the new supply curve S2
The movement from T to N shows a shift of the entire supply curve to the right, not just movement along a curve
This indicates an increase in supply, not just in quantity supplied (which would be a movement along the same curve).
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Question 46
A movement from M to T implies that there has been
Correct Answer: D. an increase in price
In the diagram:
Point M to T is a movement along the same supply curve S1Quantity increases from M to T, and price also rises
This kind of movement along a supply curve indicates a change in quantity supplied due to a change in price, not a shift in the supply curve itself.
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Question 47
A necessary condition for specialisataion in an economy is the existence of
Correct Answer: C. a medium of exchange
Specialisation requires a medium of exchange (like money) to facilitate trade. Without it, producers would rely on barter, which is inefficient and limits the ability to exchange goods and services effectively.
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Question 48
A firm operating at full capacity will experience rising short-run totall costs when
Correct option: A. prices of its variable inputs rise
In the short run, some inputs (like machinery or buildings) are fixed, but variable inputs (like raw materials, labor, fuel) affect total cost directly. If a firm is already operating at full capacity, any increase in the price of variable inputs will cause short-run total costs to rise, because the firm must pay more to maintain the same level of output.
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Question 49
In a textile factory, teh cost of cotton used is a typical example of
Correct option: B. a variable cost
The cost of cotton used in a textile factory changes with the level of production — more cotton is needed to produce more fabric. Hence, it is a variable cost.
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Question 50
A black market can occur when
Correct option: D. prices are set by government below the equilibrium
A black market arises when the government sets a price ceiling (maximum price) below the equilibrium price, leading to shortages. As a result, some buyers are willing to pay more than the official price, encouraging illegal or unofficial trading — the black market.
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