Economics 2024 Jamb Examination

The income approach to national income measures all incomes earned by factors of production—wages, rent, interest, and profit.
Profits earned by companies and wages earned by workers (e.g., a bricklayer) are legitimate factor incomes and therefore included.
However, allowances given to an aged mother by a civil servant constitute transfer payments. Transfer payments are excluded because they are not payments for productive services rendered.

Minimum price legislation sets a price floor above the equilibrium price. At this higher price, quantity supplied exceeds quantity demanded, resulting in excess supply or surplus.
This surplus often leads to wastages of resources as unsold goods accumulate, and can also create unemployment in affected sectors.
Excess demand, however, occurs when price is set below equilibrium (a price ceiling), not above it. Therefore, excess demand is not associated with minimum price legislation.

The chain of distribution describes how goods move from the point of production to the final consumer. In a typical commercial structure, goods move from the producer to the wholesaler, then to the retailer, and finally to the consumer.
This flow ensures large-scale distribution, breaking of bulk by wholesalers, and final availability to consumers through retailers.
Only the sequence "Producer → Wholesaler → Retailer → Consumer" reflects this logical and economic distribution pathway.

The economic problem of "how to produce" concerns the selection of the most efficient combination of factors of production. The objective is to minimise cost while maintaining desired output quality.
Economies choose between labour-intensive or capital-intensive techniques based on cost efficiency. Hence, adopting the least-cost method is the fundamental solution to this economic decision.
The least-cost rule ensures optimal utilisation of scarce resources and avoids waste.

In perfect competition, firms hire labour based on the marginal productivity principle. A firm maximises profit when it employs labour up to the point where the marginal revenue product (MRP) of labour equals the marginal cost (MC) of hiring that labour.
Since MRP represents the addition to total revenue (TR) from employing one more unit of labour and MC represents the addition to total cost (TC), profit maximisation occurs when the extra revenue generated equals the extra cost incurred.
Therefore, the last unit of labour must add as much to TR as to TC.

Government influences economic activity either through monetary tools (interest rates, money supply) or fiscal tools (taxation and public spending).
When the government adjusts its taxation levels and expenditure programmes to influence aggregate demand, income levels, employment, and overall economic performance, it is applying fiscal policy.
This distinguishes it clearly from monetary policy, which involves the central bank's control of the money supply.