Economics 2007 Jamb Examination

B. subsistence economy

A subsistence economy is one where producers create goods mainly for their own use, not for market exchange. Here, the producer and consumer are essentially the same household or individual, with little or no surplus generated.

This economic system is typical of traditional societies, where families grow crops or rear animals primarily to meet their needs. Trade and profit are minimal, and production is focused on survival and self-sufficiency, making it a subsistence economy.

D. the central government

In a command economy, production and allocation decisions are made by the central government. It dictates what goods and services should be produced, in what quantities, and how they are distributed across the economy.

This differs from a market economy, where demand and supply drive decisions. Command economies are usually associated with socialist or communist systems, where the government takes direct control of resources and output choices.

C. determine the spread of a set of data

The range is defined as the difference between the maximum and minimum values in a data set. It provides a quick and simple measure of variability, showing how spread out the values are.

Although less precise than variance or standard deviation, the range still helps indicate the degree of dispersion. For example, if the highest score is 90 and the lowest is 40, the range is 50, giving a direct measure of spread.

D. there is an increase in demand

When income rises, consumers are able and willing to purchase more of certain goods, leading to an outward shift of the demand curve. This represents an increase in demand, not merely a change in quantity demanded.

Such goods are referred to as normal goods. The demand for them grows with rising income, unlike inferior goods whose demand falls when income increases. This distinction explains why option D is correct.

A. perfectly inelastic supply curve

When a firm is producing at full capacity, it cannot increase its output regardless of increases in price. This means the supply is fixed and unresponsive, resulting in a perfectly inelastic supply curve, represented as a vertical line.

In the short run, constraints like limited machinery, labor, or raw materials prevent additional output. Only in the long run can capacity be adjusted to make supply more elastic, but at full capacity, supply remains completely unresponsive.

Cross elasticity of demand depends on the closeness of substitutes or complements. If two goods are close substitutes, a small change in the price of one causes a significant change in demand for the other. This makes substitutes the major determinant.

On the other hand, unrelated goods show little to no cross elasticity since a price change in one has negligible effect on the demand of the other.

An inferior good is one whose demand decreases as consumer income rises. In this case, the income effect is negative, since higher earnings shift demand away from such goods to superior alternatives.

Examples include staples like garri or low-quality rice, which consumers abandon for higher quality foods once income increases.

The coefficient of price elasticity of supply is always positive because supply generally moves in the same direction as price. An increase in price induces suppliers to increase output, while a fall reduces supply.

Unlike demand elasticity, which can be negative due to the inverse relationship, supply elasticity maintains positivity as both variables move together.

The world market for crude oil encompasses the global interaction of total demand and total supply of crude oil. It reflects how producers and consumers worldwide determine price and quantity through market forces.

This includes both OPEC and non-OPEC members, making it broader than production or supply from one region.

Division of labour involves breaking a task into smaller stages, with each worker specializing in a particular aspect. This enhances efficiency and productivity, since workers become more skilled at their assigned duties.

The process also reduces production time and encourages the use of machinery, which further supports large-scale production.