Economics 2007 Jamb Examination

B. output and all inputs change by the same percentage.

The linear production function shows a direct proportional relationship between inputs and output. This means if labour and capital are increased by 10%, output will also increase by 10%. There are no diminishing or increasing returns under this function.

In essence, every input added is matched exactly by an output increase. This provides a simple benchmark for comparing efficiency but is rarely sustainable in real-life scenarios where diminishing returns often set in.

D. decreasing.

Total fixed cost does not change with output, but average fixed cost is total fixed cost divided by output. As output increases, the denominator grows larger, and thus average fixed cost continues to fall.

This explains why average fixed cost curves are always downward sloping. The more units are produced, the smaller the fixed cost burden each unit carries, thereby reducing cost per unit.

C. cost-push inflation.

When input costs such as raw materials, wages, or energy rise persistently, producers face higher production costs. To maintain profitability, they pass these costs onto consumers in the form of higher prices, which is referred to as cost-push inflation.

Unlike demand-pull inflation which is driven by excess demand, cost-push inflation originates from the supply side. It can cause slower growth if rising prices reduce consumer purchasing power.

A. NEEDS.

The monetization policy in Nigeria was derived from the National Economic Empowerment and Development Strategy (NEEDS). It aimed at reducing government expenditure by converting non-cash benefits such as housing and official vehicles into monetary allowances.

This reform sought to enhance transparency, minimize waste, and encourage accountability among public servants. It also reduced the burden of maintaining government-owned assets by transferring responsibility to the individuals themselves.

D. economic development.

Economic development goes beyond mere increases in national income. It involves structural transformation such as industrialization, better education, improved healthcare, equitable income distribution, and rising standards of living.

Economic growth may occur without development, but true development integrates growth with social progress and institutional improvements. This is why development is regarded as a more holistic concept than growth.

C. output-labour ratio.

Productivity in developing economies is generally assessed by how much output is produced relative to labour employed. Since labour is the most abundant factor of production in these economies, measuring productivity through the output-labour ratio gives a more accurate picture of efficiency.

This ratio highlights how improvements in skills, training, and technology can enhance production per worker. Over time, increases in this measure reflect rising efficiency and improved use of human resources in the economy.

C. terms of trade.

The benefits from international trade are distributed depending on the relative prices at which countries exchange goods, known as the terms of trade. These terms indicate how many units of imports a country can obtain for a given amount of exports.

A favourable term of trade allows a country to gain more from trade, while an unfavourable one reduces its advantage. Thus, terms of trade serve as the central determinant of how trade benefits are shared among trading partners.

B. devalue a country's currency.

Devaluation makes a country’s exports cheaper to foreigners and imports more expensive for domestic consumers. This encourages higher exports and discourages imports, thereby improving the balance of payments situation over time.

Although devaluation can temporarily raise inflation due to higher import prices, it remains a widely used tool to address persistent deficits. It restores competitiveness and helps stabilize external accounts when deficits are unsustainable.

D. provide a mechanism for tariff reductions.

The World Trade Organization (WTO) was established primarily to promote free and fair trade among nations. Its main instrument is the negotiation of agreements that reduce tariffs and trade barriers, thereby encouraging global commerce.

Through these tariff reduction mechanisms, the WTO fosters competition, improves efficiency, and facilitates greater access to international markets. This strengthens global economic integration and helps countries expand their trade opportunities.

D. 7.

By company law provisions in many jurisdictions, a joint stock company must have at least seven shareholders at formation. This requirement distinguishes it from smaller business organizations like partnerships, which require fewer participants.

The larger minimum number ensures wider ownership, greater capital mobilization, and stronger continuity. It also reflects the public-oriented nature of joint stock companies compared to closely held firms.