Economics 2011 Jamb Examination

A monopolist earns normal profit when total revenue equals total cost. This occurs when price equals average cost (AC). At this point, the monopolist’s profit is zero, meaning all costs are covered but no excess profit is made.
Thus, profit is eliminated when price equals AC.

The Central Bank of Nigeria introduced the bank consolidation policy to strengthen the financial sector by increasing the minimum capital requirement for banks. This led to mergers and acquisitions that enhanced financial stability and improved banks' ability to handle large transactions.
Hence, the policy aimed at increasing the capital base of banks.

When the amount of money in circulation rises faster than the production of goods and services, there will be more money chasing the same quantity of goods. This imbalance results in a general increase in prices, known as inflation.
Therefore, inflation occurs when money supply increases without a matching increase in output.

Government spending in national income accounting includes all expenditures on goods and services that directly contribute to economic activity. Social welfare payments represent transfer payments aimed at improving citizens' living standards and are part of government expenditure in calculating GDP.
Hence, social welfare is counted as part of government spending.

Ranking measures satisfaction by ordering preferences rather than assigning numerical values. This approach is known as ordinal utility, where consumers rank goods based on preference levels but do not quantify satisfaction.
Therefore, ranking is used in measuring ordinal utility.

An elastic supply curve means that a small increase in price causes a larger increase in quantity supplied. Consequently, total revenue rises more than proportionately to the change in price.
Thus, with an elastic supply curve, revenue increases by more than the percentage increase in price.

Diseconomies of scale occur when a firm becomes too large and inefficiencies develop, often due to management and coordination difficulties. These lead to rising average costs as production expands beyond the optimal level.
Therefore, a firm experiences diseconomies of scale when there are difficulties in coordinating production.

The law of variable proportions examines how output changes when one factor of production is varied while others remain constant. This is only possible in the short run, as at least one input (like capital) is fixed.
Hence, the law applies only in the short-run period.

When two goods cannot be used together, such as tea and coffee as alternatives, they are in competitive demand. The use of one excludes the other because they satisfy similar wants.
Therefore, when the demand for one commodity excludes another, it is competitive demand.