Economics 2019 Jamb Examination

Effective demand exists when a consumer not only wants a product but is also willing and financially able to pay for it.
This distinguishes mere desire from actual purchasing power in the market.
Therefore, both willingness and ability to pay must be present for demand to be considered effective.

A normal good is one for which demand increases when consumer income rises and decreases when income falls.
This direct relationship between income and demand defines normal commodities in economics.

Demand can be influenced by several factors including preferences, real income, income distribution, and taxation levels.
All four listed items are recognised determinants of shifts in the demand curve, either increasing or decreasing market demand.

A perfectly competitive market requires many buyers and sellers, homogeneous products and free information.
The foreign exchange market closely fits these characteristics because currencies are uniform and information is widely available.

A monopolist’s revenue is tied to the elasticity and shape of the demand curve he faces.
If demand is inelastic over a range, restricting output can raise price and increase revenue.
Thus, it is the demand curve that determines this possibility.

A vertical combination occurs when firms at different stages of production or distribution merge.
A spinning firm and a weaving firm operate at successive production stages in the textile industry, making this a vertical merger.

Supply can be affected by production technology, labour costs, availability of raw materials, and taxation.
listed item can shift the supply curve either outward or inward.
Thus all four factors influence supply conditions.

A typical supply curve rises from left to right, showing that higher prices encourage producers to supply more.
This direct relationship between price and quantity supplied is reflected in a positive slope.

National income at factor cost is obtained by subtracting indirect taxes and capital consumption from total expenditure.\[ \text{National Income} = 80{,}000 - 8{,}000 - 6{,}000 = 66{,}000 \]This gives a national income value of £66,000m.

Gross national expenditure at factor cost is calculated by subtracting indirect taxes from total expenditure, but not deducting capital consumption.\[ \text{GNE at factor cost} = 80{,}000 - 8{,}000 = 72{,}000 \]Thus the correct value is £72,000μ.