Economics 2018 Jamb Examination

The price elasticity of supply measures the responsiveness of quantity supplied to changes in price.
Producers generally increase quantity supplied when price rises, creating a direct relationship between price and quantity supplied.
This direct relationship ensures that the elasticity of supply is always positive, since both price and quantity move in the same direction.

The concept of division of labour is strongly linked to Adam Smith, who explained it extensively in his work *The Wealth of Nations*.
He described how breaking production into specialised tasks increases efficiency and overall productivity.
This idea remains a foundational principle in classical and modern economics.

The equilibrium condition is:\[ Y = C + I \]Substituting the consumption function:\[ Y = (50 + 0.75Y) + 45 \]Simplifying:\[ Y = 95 + 0.75Y \]\[ Y - 0.75Y = 95 \]\[ 0.25Y = 95 \]\[ Y = \dfrac{95}{0.25} = 380 \]Thus, the equilibrium income is N380m.

The optimal point of production occurs where the highest attainable isoquant is tangent to the isocost line.
At this point, the marginal rate of technical substitution equals the input price ratio, ensuring productive efficiency.
Point S is the tangency point in the diagram, making it the optimal production point.

An ad valorem tax is a tax based on the value of a good or service rather than on quantity.
It is usually expressed as a percentage of the value of the commodity.
This makes option C the correct representation of how ad valorem taxes operate.

The labour force consists of individuals who are of working age and are either employed or actively seeking employment.
The key factor determining this is the age structure of the population, as it specifies how many people fall within the economically active age range.
Younger children and the elderly fall outside this bracket, making the age distribution crucial.

Privatisation involves shifting ownership or control of public enterprises to private individuals or firms.
This process aims to increase efficiency, reduce government financial burden, and allow market forces to drive performance.
It differs from commercialisation, which focuses on operating public enterprises on profit-oriented principles without transferring ownership.

A mixed economy combines features of both capitalism and socialism.
In such a system, the government and private individuals jointly participate in economic activities and decision-making.
This ensures both public welfare and private enterprise efficiency coexist.

A capital market deals with long-term funds used for investment purposes, such as shares, bonds, and long-term loans.
In contrast, the money market deals with short-term borrowing and lending, usually under one year.
Hence, the distinguishing factor is that capital markets handle long-term loans and financial instruments.

Devaluation refers to the deliberate downward adjustment of a country’s currency value relative to other currencies, typically under a fixed or semi-fixed exchange rate system.
It makes exports cheaper and imports more expensive.
This distinguishes it from inflation (general price rise) and deflation (general price fall).