Economics 2005 Jamb Examination

One of the key drivers of Nigeria’s inflation has been exchange rate depreciation, which raises the cost of imports and pushes up domestic prices.

Hence, option A is correct.

Government spending on public works (e.g. roads, bridges, housing) is expansionary fiscal policy aimed at creating jobs and boosting aggregate demand.

Hence, option B is correct.

The European Union (EU) regulates trade relations among its member countries by establishing common policies, tariffs, and trade agreements.

The IMF focuses on monetary stability, OPEC on oil, and ADB on development loans. Hence, option C is correct.

The quantities are 6, 5, 4, 3, 2. Arranged in ascending order: 2, 3, 4, 5, 6. The middle value is 4.

Therefore, the median quantity is 4kg. Option D is correct.

By the law of comparative advantage, Nigeria has lower opportunity cost in producing groundnuts (8000 vs. 1000 cocoa). Ghana specializes in cocoa. Thus Nigeria produces 8000 units of groundnuts.

Hence, option D is correct.

To compute the mean price for this distribution we must use the weighted mean (price weighted by quantity) because the prices have different frequencies (quantities). Compute the weighted mean as:

\[\bar{P} = \dfrac{\sum (P_i \times Q_i)}{\sum Q_i} \]\[= \dfrac{40\times6 + 48\times5 + 55\times4 + 60\times3 + 70\times2}{6+5+4+3+2}  \]\[ = \dfrac{1020}{20} = 51.\]

Therefore the mean price (weighted) is N51, corresponding to option B. Using the simple (unweighted) mean would be incorrect here because it ignores the differing quantities.

When each country specializes according to comparative advantage (Nigeria in groundnuts, Ghana in cocoa), each country will produce the commodity in which it specialises. From the table, Nigeria specialises in groundnuts (8000 units) and Ghana in cocoa (8000 units). The question asks for "the difference in each country's total output on specification" — interpreted as the amount each country produces when specialized: each produces 8000 units of their specialised commodity.

Thus each country's total output under specialization (for its specialised product) is 8000 units. Option C correctly corresponds to 8000 units.

A monopolist maximizes profit where marginal revenue (MR) = marginal cost (MC). Because MR is less than price for a monopoly, producing on the inelastic portion of the demand curve would reduce total revenue when output rises (MR would be negative), which cannot be profit maximizing.

Therefore a profit-maximizing monopolist produces on the elastic portion of the demand curve where increases in output raise total revenue up to the MR = MC point. Option B is correct.

Savings deposits in commercial banks are often referred to as "near-money" because while they are not cash in hand, they can be readily converted into cash. Near-money includes bank deposits, savings accounts, short-term government securities, and other liquid assets that can be quickly converted.

Hence among the choices given, "Near" best matches the economic term "near-money" for savings deposits. Option C is correct.

Profit maximization occurs where marginal revenue equals marginal cost (MR = MC), provided MR crosses MC from above. From the table the MR and MC values at each output are:

\[\text{At }240\text{kg: }MR=75,\;MC=41\; (MR>MC)\]

\(\text{At }450\text{kg: }MR=48,\)MC=48 \(MR=MC)\)

\(\text{At }580\text{kg: }MR=-40,\;MC=77\); (MR)

Thus the profit-maximizing output is 450 kg where MR = MC. Option A is correct.