Economics 2015 Jamb Examination

The profit-maximising output occurs where marginal cost equals marginal revenue (MC = MR).
From the diagram, this condition is satisfied at the point corresponding to 900 units.
Producing beyond or below this point would result in lower profit since costs would exceed revenues or potential revenue would be unexploited.
Therefore, 900 units is the equilibrium output for maximum profit.

Using the supply function: \( Q_s = 25 + 0.25P \).
Substituting \( P = 30 \):\[ Q_s = 25 + 0.25(30) = 25 + 7.5 = 32.5 \text{ litres} \]Thus, the quantity supplied at ₦30 per litre is 32.5 litres.

International division of labour thrives when trade between nations becomes easier and more efficient.
Improved transportation systems reduce costs and facilitate movement of goods and services across borders.
Therefore, better transport networks encourage countries to specialise in the production of goods where they have a comparative advantage.

At equilibrium, \( Q_d = Q_s \).
Hence, \( 20 - 2P = 6P - 12 \).
Solving for \( P \):\[ 20 + 12 = 8P \Rightarrow 32 = 8P \Rightarrow P = 4 \]Therefore, the equilibrium price is ₦4.

Dumping occurs when a country or firm sells goods abroad at prices lower than their domestic selling price or production cost.
This is often done to gain market share or eliminate competition in the foreign market.
It can lead to trade disputes and the imposition of anti-dumping duties.

In a perfectly competitive market, total revenue (TR) is given by \( P \times Q \).
Given \( P = 7 \) and \( Q = 25 \):\[ TR = 7 \times 25 = 175 \] Profit = TR - TC = 175 - 75 = ₦100 .
Therefore, the firm’s profit is ₦100.

The theory of comparative cost advantage was developed by David Ricardo.
It explains that countries should specialise in producing goods where they have the lowest opportunity cost relative to others.
This leads to increased global efficiency and mutual gains from trade.

Utility maximisation occurs when the ratio of marginal utility to price is equal across all goods, i.e. \( \dfrac{MU_x}{P_x} = \dfrac{MU_y}{P_y} \).
For one good, equilibrium is achieved when the marginal utility of X equals its price (\( MU_X = P_X \)), meaning that the consumer gains equal satisfaction per naira spent on the product.

The efficiency of labour is determined by how effectively input is converted into output.
The input-output ratio compares the quantity of output produced to the input used, showing how productive workers are.
Higher efficiency is reflected in a lower input requirement for a given output.

External economies of scale are benefits a firm receives from the growth of the entire industry rather than from its own expansion.
By locating in an area where the industry is already developed, the firm can take advantage of shared infrastructure, skilled labour, and supplier networks, thereby reducing production costs and improving efficiency.