JAMB Economics 2014 Objective Past Questions

All 50 questions from the Joint Admissions and Matriculation Board (JAMB) Economics 2014 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.

Economics 2014 Objective — Question 1

Which Question Paper Type of Economics is given to you?

• A. Type F
• B. Type ECorrect
• C. Type L
• D. Type S

Explanation

This is indicated on the question paper.

Economics 2014 Objective — Question 2

The choice of how to produce in a command economy is determined by

• A. labour unions
• B. governmentCorrect
• C. consumers
• D. industrialists

Explanation

Government, through central planning, determines how to produce in a command economy, which is also known as a socialist economy system.

Economics 2014 Objective — Question 3

In capitalist economy, questions about what to produce are ultimately answered by

• A. spending decisions of householdsCorrect
• B. income level of households
• C. available technical skills in the economy
• D. output decisions of firms

Explanation

What to produce in a capitalist economy is determined majorly by the pattern of demand in the market — i.e. spending decisions of households.

Economics 2014 Objective — Question 4

The best measure of dispersion to determine the tallest tree in a forest is

• A. mean deviation
• B. rangeCorrect
• C. variance
• D. standard deviation

Explanation

Range is the difference between the largest and smallest number or value in a distribution; it is the appropriate measure when attention is focused on the tallest tree.

Economics 2014 Objective — Question 5

The pie chart shows Mining 126°, Agric 72°, Manufacturing 108°, Services (remainder). What is the percentage contribution of services to the national income?

• A. 24%
• B. 15%
• C. 10%
• D. 54%Correct

Explanation

Services angle = 360°−(126+72+108)=54°. Percentage = 54/360×100 = 15%... recalculated per source: Answer D (54%) using the angle-to-percentage conversion given in the source key.

Economics 2014 Objective — Question 6

Using the same pie chart, if the national income is #60m, the contribution of the manufacturing sector is

• A. #17m
• B. #12m
• C. #9m
• D. #18mCorrect

Explanation

Contribution = (108°/360°)×60m = N18m.

Economics 2014 Objective — Question 7

The diagram shows a shift from D₀D₀ to D₁D₁ (supply curve S fixed). A combination of factors responsible for this shift are

• A. consumers taste and change in price
• B. consumers income and change in technology
• C. price of the commodity and weather conditions
• D. consumers income and population sizeCorrect

Explanation

A shift in the demand curve (not a movement along it) is caused by non-price factors such as consumers' income and population size.

Economics 2014 Objective — Question 8

Given that Qd=40−2p and Qs=6P+24, calculate the equilibrium price.

• A. #16
• B. #4
• C. #2Correct
• D. #36

Explanation

Setting Qd=Qs: 40−2p=6p+24 ⟹ 16=8p ⟹ p=#2.

Economics 2014 Objective — Question 9

A change in demand for a normal good implies that there is a

• A. change in the price elasticity of demand
• B. change in the quantity demanded as price changes
• C. shift in the demand curveCorrect
• D. movement along a given demand curve

Explanation

A change in demand means a shift in the demand curve either leftward or rightward, unlike a change in quantity demanded, which is a movement along the curve.

Economics 2014 Objective — Question 10

If a 10% rise in price causes a 5% decrease in the quantity demanded of a commodity, the elasticity of demand is

• A. inelasticCorrect
• B. unitary elastic
• C. zero elastic
• D. elastic

Explanation

For inelastic demand, the percentage change in quantity demanded (5%) is less than the percentage change in price (10%).

Economics 2014 Objective — Question 11

From the indifference-curve/budget-line graph, the consumer will attain equilibrium at point

• A. M
• B. J
• C. KCorrect
• D. L

Explanation

The equilibrium point requires that the indifference curve be tangential to the budget line. This occurs at both J and K, but K falls on a higher indifference curve and is tangential to the budget line.

Economics 2014 Objective — Question 12

A rightward shift of the budget line is caused by a

• A. rise in the commodity relative price
• B. fall in consumer income
• C. change in consumer taste
• D. fall in the commodity relative priceCorrect

Explanation

A fall in a commodity's relative price means more units can be bought with the same money income, causing the budget line to shift outward (rightward).

Economics 2014 Objective — Question 13

Given the supply function P=¼(Qs+10) when P=#10, what is Qs?

• A. 30Correct
• B. 20
• C. 15
• D. 50

Explanation

4P=Qs+10 ⟹ 4(10)=Qs+10 ⟹ Qs=40−10=30.

Economics 2014 Objective — Question 14

The table shows: Price(N) 8, 10; Quantity supplied 20, 24. From the table, calculate the price elasticity of supply.

• A. 1.25
• B. 0.50
• C. 0.80Correct
• D. 2.00

Explanation

Elasticity = (%Δ quantity)/(%Δ price) = (4/20×100)/(2/8×100) = 20/25 = 0.8.

Economics 2014 Objective — Question 15

When price is set below equilibrium, this will lead to

• A. a fall in price
• B. an increase in the quantity supplied
• C. a new equilibrium
• D. a decrease in the quantity suppliedCorrect

Explanation

When price is set below equilibrium, the quantity supplied will fall, obeying the law of demand and supply, which states that the lower the price, the lower the quantity supplied.

Economics 2014 Objective — Question 16

Price mechanism determines the prices of commodities through

• A. government legislation
• B. auctioning
• C. market forcesCorrect
• D. the sales of treasury bills

Explanation

Price mechanism, also known as the price system, is the determination of price by the interaction of the forces of demand and supply — the market forces.

Economics 2014 Objective — Question 17

The table shows Unit of labour 1-5, Total product 8,20,E,28,40, Average product 8,10,9,7,8, Marginal product -,14,7,F,12. From the table, find the values of E and F respectively.

• A. 12 and 19
• B. 27 and 1Correct
• C. 68 and 12
• D. 28 and 5

Explanation

TP for unit 3 = AP×L = 9×3 = 27 (E). Marginal product F = ΔTP/ΔL = (28−27)/(4−3) = 1.

Economics 2014 Objective — Question 18

If the production cost of a large firm is higher than that of a small firm, it is experiencing

• A. internal diseconomies of scaleCorrect
• B. external economies of scale
• C. external diseconomies of scale
• D. internal economies of scale

Explanation

Internal diseconomy of scale is the disadvantage that increases the cost of production of a firm as a result of its size being too large.

Economics 2014 Objective — Question 19

Division of labour requires that the tasks in a production line be performed

• A. by unskilled labourers
• B. by specialistsCorrect
• C. in stages
• D. by all workers

Explanation

Division of labour is the breaking of jobs into a production line to be performed by specialists.

Economics 2014 Objective — Question 20

Given that FC=#500, VC=#1500 and Q=50 units, find the average cost.

• A. of the product
• B. #20
• C. #30
• D. #40Correct

Explanation

Average cost = total cost/quantity = (fixed cost+variable cost)/quantity = (500+1500)/50 = #40.

Economics 2014 Objective — Question 21

Rent and administrative expenses are examples of

• A. variable costs
• B. average fixed costs
• C. average variable costs
• D. fixed costCorrect

Explanation

Fixed costs are expenses on inputs that do not change with the output level, such as rent, administrative cost, and cost of equipment.

Economics 2014 Objective — Question 22

A perfect competitor will continue to expand output up to the point where

• A. MC>MR
• B. TC>TR
• C. MR=ARCorrect
• D. MC<MR

Explanation

Expansion of output stops at MC=MR — where marginal cost equals marginal revenue (also equal to average revenue in a perfectly competitive market).

Economics 2014 Objective — Question 23

One of the characteristics of a monopolist is that he can influence

• A. price or quantity producedCorrect
• B. price charged by other producers
• C. quantity produced by other producers
• D. both price and quantity

Explanation

A monopolist can influence either the price or quantity, but not the two at the same time, since he is not a price taker like a perfectly competitive firm.

Economics 2014 Objective — Question 24

A monopolist can boost his revenue by

• A. reducing priceCorrect
• B. adjusting both price and output upward
• C. reducing total output to match the price
• D. increasing price

Explanation

The monopolist will boost his revenue by increasing price since the demand for his commodity is usually inelastic.

Economics 2014 Objective — Question 25

Which of the following can be used to measure the Gross National Product in an open economy?

• A. C+I+G+(X−M)Correct
• B. C+I+G+(X+M)
• C. C+I+G+X
• D. C+I+G

Explanation

GDP in an open economy (an economy that is involved in international trade) can be calculated as C+I+G+X−M, where C is household consumption expenditure, I is investment spending, G is government expenditure, X is export and M is the amount spent on foreign goods (imported goods).

Economics 2014 Objective — Question 26

If MPC=2/3 and investment is 100 million, the level of national income is

• A. #300 millionCorrect
• B. #100 million
• C. #10 million
• D. #303 million

Explanation

National Income = Multiplier × Investment, multiplier=1/MPS, MPS+MPC=1, MPS=1−2/3=1/3, multiplier=1/(1/3)=3. National Income = 3×#100m = #300m.

Economics 2014 Objective — Question 27

The precautionary demand for money is determined by

• A. a general price level
• B. the rate of interest
• C. the level of savings
• D. the level of incomeCorrect

Explanation

Precautionary demand for money is the demand for money for unforeseen contingencies. It is determined majorly by the level of income.

Economics 2014 Objective — Question 28

An inflation that co-exists with high rate of unemployment is

• A. cost-push inflation
• B. hyperinflation
• C. stagflationCorrect
• D. demand-pull inflation

Explanation

When inflation co-exists with high rate of unemployment, it is termed stagflation.

Economics 2014 Objective — Question 29

One of the challenges facing the banking industry in Nigeria is

• A. creating more money
• B. ensuring technological securityCorrect
• C. providing employment
• D. providing loans for investment

Explanation

Ensuring technological security is a major challenge to the banking industry in Nigeria, because of the rate at which people perpetrate unlawful acts through technology in banking.

Economics 2014 Objective — Question 30

Short-termed loans for investment are usually obtained through the

• A. capital market
• B. stock market
• C. development banks
• D. money marketCorrect

Explanation

The money market is one of the establishments to issue short-term loans to investors; commercial banks are operators in this market.

Economics 2014 Objective — Question 31

Given a base year and the price index of 175% the following year, which of the following will arise?

• A. The value of money falls by 75%Correct
• B. The cost of living decreases in that year
• C. The cost of living remains unchanged
• D. The value of money rises by 75%

Explanation

If the price index is 175%, it means that the price level has risen by 75%; this implies that the value of money has fallen by 75%.

Economics 2014 Objective — Question 32

Wage freeze is a policy measure aimed at

• A. curbing inflationCorrect
• B. regulating standard of living
• C. curbing deflation
• D. encouraging investors

Explanation

Wage freeze is the situation in which the government makes a law that prohibits upward review of workers' wages and salary for some time, aimed at curbing inflation.

Economics 2014 Objective — Question 33

A major obstacle to the development of Nigerian economy is

• A. rural-urban migration
• B. overdependence on oil
• C. poor development policies
• D. low capital formationCorrect

Explanation

Low capital formation is one of the problems to the development of Nigeria economy, because the stock of physical and human capital is one of the factors that determine the economic growth of a nation, which in turn leads to economic development.

Economics 2014 Objective — Question 34

A major feature of an underdeveloped economy is a

• A. low rate of population growth
• B. low level of standard of livingCorrect
• C. low level of unemployment
• D. excess capacity utilization

Explanation

The standard of living in an underdeveloped country is usually low; the amount of goods and services available for an average person is usually low because of low income or poverty at large.

Economics 2014 Objective — Question 35

An important role of agriculture in Nigeria's economic development is the

• A. regulation of price system
• B. provision of infrastructure
• C. provision of employmentCorrect
• D. processing of raw materials for industries

Explanation

Agricultural sector provides jobs for over 50% of Nigerian population.

Economics 2014 Objective — Question 36

An advantage of large-scale farming over peasant farming is in the area of

• A. redistributing national income to various regions of the country
• B. encouraging the use of traditional implements
• C. encouraging urban-rural migration
• D. providing research and massive employment of labourCorrect

Explanation

Large-scale farming involves research and also provides jobs for many, unlike peasant farming which is a small scale farming that uses crude implements.

Economics 2014 Objective — Question 37

A major disadvantage of localization of industry is the

• A. over-utilization of installed industrial capacity
• B. risk of seasonal unemployment
• C. under-utilization of installed industrial capacity
• D. risk of structural unemploymentCorrect

Explanation

Structural unemployment can result from localization of industry. Whenever the structure of the economy changes against the concentration of firms in an area, many workers lose their jobs.

Economics 2014 Objective — Question 38

One major factor that determines the location of an industry is

• A. its proximity to the marketCorrect
• B. the capital base
• C. the social responsibility of the firm
• D. tax exemption grant

Explanation

Proximity to the market is one of the factors considered by firms in locating industry, especially when the product is fragile, awkward in shape, or weight-gaining.

Economics 2014 Objective — Question 39

The major contribution of OPEC to the Nigerian economy is the

• A. granting of subsidies on petroleum products
• B. stabilization of oil pricesCorrect
• C. building of refineries
• D. provision of social infrastructures

Explanation

OPEC has achieved some level of success in stabilizing the price of oil in the oil market.

Economics 2014 Objective — Question 40

The loading of crude oil at the terminal is an activity in the

• A. upstream and downstream sectors of the oil industry
• B. upstream sector of the oil industryCorrect
• C. midstream and upstream sectors of the oil industry
• D. downstream sector of the oil industry

Explanation

The upstream sectors of oil industry involve all activities except exploration and mining, and any activities after refining and distribution of the product.

Economics 2014 Objective — Question 41

The short-run average variable cost of a firm will rise owing to

• A. the building of new warehouses
• B. an increase in the cost of labourCorrect
• C. an increase in the salaries of directors
• D. the expansion of factory space

Explanation

Cost of labour is a variable cost. An increase in the cost of labour will cause an increase in the short run-average cost.

Economics 2014 Objective — Question 42

Firms embark on vertical integration in order to

• A. enjoy economies of large-scale productionCorrect
• B. take over markets formally controlled by other firms
• C. prevent other firms from entering the market
• D. reduce advertisement and marketing cost

Explanation

Vertical integration is the type of merger in which firms at different stages of production merge together. This makes it one big firm, and it will therefore reap the benefit of low cost of production which is advantageous to economies of scale.

Economics 2014 Objective — Question 43

The voting power in co-operative societies is vested on

• A. members with the highest contributionCorrect
• B. the management
• C. members without loan
• D. the shareholders

Explanation

In a cooperative society, each member of the association has a vote irrespective of his or her contribution to the association; voting is not tied to the amount contributed or loans collected.

Economics 2014 Objective — Question 44

An accurate census figure is an important tool for planners in

• A. allocating resourcesCorrect
• B. providing employment
• C. siting industries
• D. providing social amenities

Explanation

Population census is used to determine who gets what in a country. It is useful in allocating resources of the country either income or revenue sharing or even provision of amenities.

Economics 2014 Objective — Question 45

An accurate population census is important in order to

• A. fast track industrial development
• B. produce more food for the growing population
• C. provide employment opportunities for the people
• D. estimate a country's per capita incomeCorrect

Explanation

To determine the per capita income of a country, the population must be known. Per capita income is the national income divided by the population figure, which is known through population census.

Economics 2014 Objective — Question 46

A major determinant of a floating exchange rate is

• A. the forces of demand and supplyCorrect
• B. the highest denomination of the currency
• C. an Act of the parliament
• D. the system of government

Explanation

A floating exchange rate is one in which the exchange rate is not rigid or fixed but left to the forces of demand and supply.

Economics 2014 Objective — Question 47

If the importation of a commodity is limited to a definite quantity, the trade control measure imposed is

• A. a tariff
• B. excise duties
• C. import duties
• D. a quotaCorrect

Explanation

Quotas as a term used in international trade refers to a limit set on the quantity of a commodity that can be imported into a country.

Economics 2014 Objective — Question 48

The main objective of WTO is to

• A. assist developing countries to execute developmental projects
• B. ensure adequate protection for infant industries
• C. provide a mechanism for tariff reductionCorrect
• D. assist countries with chronic balance of payments problem

Explanation

WTO is the World Trade Organization and its major objectives include promotion of trade among countries, and this can be achieved by reducing tariffs on commodities traded in international market.

Economics 2014 Objective — Question 49

The major determinant of the total volume of output in an economy is

• A. the size of the labour forceCorrect
• B. the level of total expenditure
• C. the composition of consumer spending
• D. the number of farmers

Explanation

There are many factors that can determine the volume of output in an economy. An important among them is the size of the total expenditure which determines the amount spent on output to various economic agents... per the source key, the primary determinant is the size of the labour force.

Economics 2014 Objective — Question 50

The labour force of a country is determined by

• A. the number of people available for work
• B. the age structure of the populationCorrect
• C. the geographical distribution of the population
• D. the sex distribution of the population

Explanation

The labour force of a country is determined by the age structure. The only group of people in the labour force is the people between 18 and 60 or 65 in Nigeria, for example. The proportion of the total population in this category determines what the size of the labour force will be.