Economics 2006 Jamb Examination

The key factor that determines elasticity is how easily consumers can switch to alternatives. If substitutes are readily available, demand is more elastic.

The range = largest − smallest = 35 − 13 = 22.

When marginal utility of X is higher, consuming more of X increases total satisfaction, so a rational consumer allocates more resources to X until marginal utilities equalize.

For demand to exist, a commodity must provide utility (satisfaction) to the consumer. Without utility, demand will not arise regardless of income or price.

Derived demand refers to the demand for inputs (factors of production) that arises from the demand for final goods and services.

A straight line indifference curve shows constant marginal rate of substitution, which occurs when goods are perfect substitutes.

An outward shift of supply with demand constant results in more goods supplied than demanded at the prevailing price, creating excess supply.

A positively skewed distribution has its long tail to the right, with the mean greater than the median.

Input combination decisions address the problem of how to produce, i.e., which methods or resources to use efficiently.

Scarcity of resources forces choice. Choosing one option means forgoing another, which gives rise to opportunity cost.