Economics 2019 Jamb Examination

Substitute \(P = 3\) into the demand function:\[Q_d = 80 - 2P\]\[Q_d = 80 - 2(3) = 80 - 6 = 74\]The demand function shows an inverse relationship between price and quantity demanded. Therefore, when price rises, quantity demanded falls. For \(P = 3\), the computed quantity demanded is 74 units.

Measures of location include statistics that identify the central position within a dataset, such as the arithmetic mean, geometric mean, and harmonic mean.
The range measures dispersion, not location. It captures how spread out the values are rather than representing a central value.

M₃ is a broad definition of money supply that includes M₁ plus time and savings deposits held in banks and discount houses.
This expands liquidity beyond strictly narrow money to include deposits accessible with some delay, reflecting a broader measure of money in circulation.

The second equation of exchange expresses the price level as a function of money supply, the income velocity of money, and total transactions.
The correct expression is:\[P = \dfrac{M}{KR}\]This form relates price level to money supply divided by the product of the proportion of income held as cash (K) and real income (R).

Money at call and short notice refers to very short-term loans that commercial banks give mainly to participants in the money market.
These funds can be recalled quickly and provide liquidity support to short-term financial operations.

A contractionary monetary policy reduces money supply or increases interest rates.
This is applied when the economy is experiencing excessive demand and rising prices. By tightening money supply, inflationary pressure is reduced and price stability is restored.

Variable costs are costs that change with the level of production. They include wages, raw materials, and power.
Compute:
Wages: 6000
Raw materials: 800
Power: 300
Variable cost = 6000 + 800 + 300 = 7100
Rent, rates, and depreciation are fixed costs and should not be included.

The marginal cost (MC) curve intersects the average cost (AC) curve at the minimum point of AC.
This is because when MC is below AC, AC falls; when MC is above AC, AC rises. Therefore, equality occurs exactly at AC's lowest point.

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay.
In the diagram, the surplus is represented by the triangular area above total expenditure and below the demand curve. This corresponds to area VWX.

According to Adam Smith's labour theory of value, the value of a commodity is determined by the quantity of labour required for its production.
This reflects the early classical view that labour inputs fundamentally determine value in exchange.