Economics 2012 Jamb Examination

Cost elasticity of supply measures how responsive the quantity supplied is to changes in cost or price of production inputs.
It is a useful tool for evaluating productivity because it assesses the efficiency of converting input costs into output levels.
A high cost elasticity implies that producers can adjust production easily when costs change, which reflects improved productivity.

The concept of the invisible hand, introduced by Adam Smith, suggests that when individuals pursue their self-interest in a competitive market, they unintentionally promote the welfare of society as a whole.
By seeking profit, producers supply goods consumers want, leading to efficient allocation of resources that benefits society collectively.

In economics, the slope of a graph shows how one variable responds to changes in another. The sign (positive or negative) of the slope indicates whether the relationship between variables is direct or inverse.
For example, the demand curve usually has a negative slope, indicating an inverse relationship between price and quantity demanded.

A change in the quantity demanded occurs when the change in the amount purchased results from a change in the price of the good, all other factors remaining constant.
Here, the fall in quantity of rice bought is due solely to an increase in price, which means there is a movement along the same demand curve rather than a shift of the curve.

An increase in income usually leads to an increase in demand for normal goods, causing the demand curve to shift rightward.
This is because consumers have more purchasing power and can afford to buy more goods at each price level, representing a new demand curve rather than movement along the old one.

The small decrease in quantity demanded (from 1500 to 1492) despite an 8% rise in price indicates that consumers are not very responsive to price changes.
This shows that the demand is inelastic, meaning the percentage change in quantity demanded is less than the percentage change in price.

Utility represents satisfaction, which is a subjective concept that varies from one individual to another and cannot be objectively measured or compared across people.
Since utility is determined by personal preferences and perceptions, interpersonal comparisons are impossible in economic analysis.

In a socialist economy, the state controls the means of production and decides what goods are produced, limiting consumers' choices.
This leads to a loss of consumer sovereignty, as individual preferences do not directly influence production decisions.

Normative reasoning expresses a value judgment about what ought to be, rather than what is. The statement claims that privatisation *will lead* to efficiency, which reflects an opinion on desirable economic policy rather than an objective fact.
Hence, it represents normative reasoning rather than positive or factual analysis.