Economics 2021 Jamb Examination

Old Bendel State was historically known for its abundance of naturally occurring palm trees. This provided an ample supply of fresh palm fruit, which is essential for palm-oil processing.
The availability of raw materials reduces production costs and encourages the siting of agro-based industries near their primary inputs.
Therefore, the location of the palm-oil industry is directly linked to the region being a major palm-tree growing area.

The factors of production are the essential resources required to produce goods and services. These traditionally include land, labour, capital and enterprise.
With modern economic development, technology is often considered an additional factor because it improves productivity and efficiency.
Other options list resources or economic elements that do not form the comprehensive classical and modern set of production factors.

An oligopoly is a market structure in which a small number of firms dominate the supply of a product or service.
The few sellers often influence price, output and market behaviour, leading to mutual interdependence.
This distinguishes it from monopoly (single seller) and perfect competition (many sellers).

ECOWAS is composed of West African nations. Countries such as Nigeria, Togo and The Gambia are recognised members.
Sudan, however, is located in the eastern region of Africa and does not belong to ECOWAS.
Therefore, Sudan is the only country listed that is not a member of the organisation.

Opportunity cost compares what must be given up to produce one unit of another good.
For Nigeria: 20 tonnes of cocoa and 10 metres of lace → 1 cocoa costs 0.5 lace; 1 lace costs 2 cocoa.
For Austria: 12 tonnes of cocoa and 8 metres of lace → 1 cocoa costs 0.67 lace; 1 lace costs 1.5 cocoa.
Thus, the comparative opportunity-cost ratio between both countries aligns with the ratio 1.5:2.

Comparative advantage is determined by lower opportunity cost.
Nigeria has a lower opportunity cost in producing cocoa, while Austria has a relatively lower opportunity cost in producing lace.
Therefore, specialisation requires Nigeria to specialise in cocoa and Austria in lace to maximise efficiency and mutual gains from trade.

PAYE is structured such that tax rates increase as income rises. Higher-income earners pay a larger proportion of their earnings as tax compared with lower-income earners.
This characteristic aligns with progressive taxation, which ensures equitable distribution of the tax burden.

A favourable balance of trade occurs when export earnings exceed import expenditure.
This means the country sells more goods abroad than it buys, resulting in a positive trade balance.
It does not automatically imply a favourable balance of payments, which includes broader financial transactions.

Inflation reduces the purchasing power of money over time. Debtors repay loans with money that is worth less than when they borrowed it, effectively reducing the real value of their debt.
Conversely, creditors, savers and those on fixed incomes lose because the real value of the money they receive declines.

In perfect competition, assumptions include identical products, many buyers and sellers, perfect information and absence of advertising due to homogenous goods.
However, supply and demand being equal is not a defining characteristic of the market structure; it is simply a point of equilibrium, not a structural feature.
Thus, it does not describe perfect competition as a market model.