Economics 2025 Jamb Examination

A primary characteristic of a developing country is a low Gross Domestic Product (GDP) per capita, which translates to a low income per head. These nations often face challenges such as high levels of poverty, lower standards of living, and a heavy reliance on the primary sector (like agriculture) rather than the tertiary (services) or secondary (manufacturing) sectors. While population growth is often high in developing nations, it is the economic measure of income relative to the population size that typically defines its development status.

Double counting occurs when the value of the same product is included more than once in the calculation of national income—for example, counting the value of wheat, then the value of flour, and finally the value of bread. This leads to an overestimation of the total national output. To avoid this, economists use the 'Value Added' method, which only counts the value added at each stage of production, or the 'Final Product' method, which only counts the price of the finished good sold to the consumer.

When the government increases its spending on projects, salaries, or subsidies, it injects more money into the economy. This increased spending boosts the total demand (aggregate demand) for goods and services. If the supply of goods cannot keep up with this rapid increase in demand, prices begin to rise, leading to demand-pull inflation. While government spending can stimulate growth and reduce unemployment, excessive spending without a corresponding increase in production often results in higher inflation rates.

From the perspective of the entire economy, the supply of land is perfectly inelastic, meaning it is fixed in quantity. Unlike labour or capital, which can be increased through training or investment, the total surface area of the earth or a specific country remains the same regardless of changes in price or demand. While we can improve the 'quality' of land or change its use (e.g., from farming to housing), the physical amount available is constant, which is a unique characteristic among the factors of production.

In the long run, 'normal profit' is considered a cost of production; it is the minimum level of profit required to keep a firm in its current line of business. If a firm's total revenue is less than its total cost (meaning it earns less than normal profit), the owners are better off moving their capital and effort to a different industry where they can at least earn that minimum return. Therefore, any firm consistently making a loss or earning below normal profit will eventually exit the market in the long run.

According to the Law of Equi-Marginal Utility, a rational consumer allocates their limited income in such a way that the ratio of the marginal utility to the price is equal for all goods consumed. In other words, the last unit of currency (e.g., Naira) spent on any good should provide the same amount of satisfaction. When this state is reached, the consumer is in equilibrium and has successfully maximized their total satisfaction (utility) given their budget constraints.

Thomas Malthus, in his 'Essay on the Principle of Population,' famously argued that the human population tends to grow at a geometric rate (e.g., 2, 4, 8, 16...), while the food supply only increases at an arithmetic rate (e.g., 1, 2, 3, 4...). He believed this imbalance would eventually lead to widespread famine, disease, or war (positive checks) unless people practiced moral restraint (preventative checks) to slow down the birth rate.

In economics, 'utility' is a measure of the pleasure, satisfaction, or usefulness a consumer gains from consuming a good or service. Utility is subjective and varies from person to person. It is not the same as 'usefulness'; for example, a decorative item may have high utility for a collector even if it has no practical use. Economists use the concept of utility to explain how consumers make choices to get the most satisfaction possible from their limited income.

Geographical distribution refers to how people are spread across different areas. Environmental and climatic factors play a major role in this; people tend to settle in areas with moderate climates, fertile soil, and adequate water supply, leading to high population densities. Conversely, areas with extreme weather (like deserts or swamps) tend to be sparsely populated. While birth and death rates affect the 'size' of the population, climatic conditions are a primary driver of 'where' people choose to live.

During inflation, the purchasing power of money decreases. This benefits borrowers (debtors) because the money they pay back in the future is worth less than the money they originally borrowed. In real terms, they are returning a smaller amount of value. Conversely, lenders (creditors) lose out because they receive back money that can buy fewer goods. Fixed-wage earners also lose because their salaries usually do not rise as fast as the general price level of goods and services.