Economics 2015 Jamb Examination

According to the quantity theory of money, there is a direct relationship between the quantity of money in circulation and the general price level. When the amount of money in circulation is reduced, people have less money to spend, which lowers aggregate demand and leads to a proportional fall in prices.
Therefore, the fall in money supply leads to a corresponding decrease in the price level, maintaining equilibrium in the economy.

Excise duty is a tax imposed on goods produced within a country. It is typically paid by manufacturers but passed on to consumers in the form of higher prices.
In contrast, import duty applies to goods brought from abroad, while value added tax (VAT) is levied on the value added at each stage of production and distribution.
Hence, excise duty is specifically a tax on locally produced goods.

Revenue refers to the total amount of money a firm receives from selling its goods or services before any expenses are deducted. It is mathematically represented as:
\( \text{Revenue} = \text{Price} \times \text{Quantity Sold} \).
It differs from profit, which is the revenue remaining after deducting all costs and expenses.

A change in supply is caused by non-price factors such as technology, production costs, government policies, and number of firms in the market.
However, the price of the commodity itself does not shift the supply curve — it only causes movement along the supply curve.
Therefore, price of the commodity does not cause a change in supply.

An indifference curve represents various combinations of two goods that give a consumer equal satisfaction or utility.
Each point on the curve indicates that the consumer is indifferent between the two combinations.
Consumer surplus, on the other hand, is the difference between what a consumer is willing to pay and what they actually pay.

The demand for labour is inelastic when changes in wages do not lead to significant changes in the quantity of labour demanded.
This happens when labour costs form only a small part of total costs, as employers are less sensitive to wage changes.
Hence, even if wages rise or fall, the overall cost impact is minimal, and firms continue employing nearly the same number of workers.

The Organisation of Petroleum Exporting Countries (OPEC) was founded in 1960 to coordinate and unify petroleum policies among member countries.
Its headquarters is located in Vienna, Austria, where major decisions on oil production and pricing are made.
The city was chosen for its neutrality and accessibility to member states.

The law of variable proportions, also called the law of diminishing returns, states that as more units of a variable factor (like labour) are added to a fixed factor (like land or machinery), total output increases at a decreasing rate beyond a certain point.
This law applies in the short run when at least one factor of production remains constant.

Agriculture in West Africa faces challenges such as poor land tenure systems, low education levels among farmers, and the use of crude implements.
However, provision of food for the teeming population is a positive outcome of agriculture, not a problem.
Therefore, it is the correct exception among the listed options.

When both demand and supply curves shift, the new equilibrium is determined by their new intersection point.
From the diagram, after both curves shift, they intersect at point E2, indicating the new equilibrium price and quantity.
This reflects the balance between the new demand and supply conditions in the market.