2024 - JAMB Economics Past Questions and Answers - page 7

Wages and salaries typically constitute the largest component of national income in developing countries. This is because a significant portion of the population is employed in various sectors, and their earnings in the form of wages and salaries contribute substantially to the overall national income.

The disadvantage of the localization of industries is the potential to create structural unemployment. Here's why:

• Localization and Structural Unemployment: When industries concentrate in a specific geographical area, it can lead to structural unemployment. If the industry declines or changes (e.g., due to technological advancements or a shift in consumer demand), the specialized skills of the local workforce may become obsolete, and job opportunities may disappear. Workers may find it difficult to transition to other industries, especially if those industries are located elsewhere.

Other options:

• B. Reducing cost of production: Localization can reduce production costs through economies of scale and the availability of specialized resources.
• C. Encouraging the growth of skilled labour: Localization often encourages the development of a skilled labor force as workers gain experience and training in the concentrated industries.
• D. Encouraging subsidiary industries: Localization stimulates the growth of supporting industries and services.

In a free market economy, the efficiency of producers is primarily driven by competition. Here's why:

• Competition: When multiple producers compete, they strive to offer better products or services at lower prices to attract consumers. This incentivizes them to:
• Reduce costs
• Improve quality
• Innovate
• Government regulation: Government regulation can sometimes stifle efficiency as it can lead to increased costs and decreased innovation.
• Few participants: A small number of participants can lead to a lack of competition and thus inefficiency.
• Shareholder commitment: While important, it's not the primary driver of efficiency. Competition is the key factor.

When total product (TP) starts to fall, it means that the additional output from the last unit of input (marginal product, MP) is negative. This occurs because the additional input is actually decreasing total output.

Problems of development planning in Nigeria include:

• Inadequate capital: Insufficient funds hinder project execution.
• Inadequate statistical data: Lack of reliable data makes it difficult to make informed decisions.
• Poor implementation of economic planning: Weak enforcement and corruption can derail plans.

Under-population is not a common problem in Nigeria; in fact, Nigeria is a highly populated country.

A price floor is a minimum price set by the government above which a good or service cannot be sold.

• Above Equilibrium: When a price floor is set above the equilibrium price, the quantity supplied exceeds the quantity demanded.
• Surpluses: This excess supply results in a surplus of the good or service.

A firm's average cost decreases in the long run due to increasing returns to scale.

• Increasing returns to scale: As the firm increases all inputs by a certain percentage, output increases by a larger percentage, lowering average costs.
• Diminishing average returns: A short-run concept; adding more of a variable input to a fixed input eventually leads to smaller increases in output, increasing average cost.
• Decreasing average fixed cost: While it decreases as output increases, it's not the primary reason for long-run decreases in average cost.
• Decreasing marginal returns: Short-run concept; adding more variable input leads to smaller output increases, increasing average costs.

The sum of the Marginal Propensity to Consume (MPC) and the Marginal Propensity to Save (MPS) is always equal to one, because any extra income earned must either be consumed or saved.

When the price of one commodity increases and the demand for another falls, it indicates that the two goods are substitutes or competitive. Consumers switch to the relatively cheaper alternative when the price of one increases.

To find the median, first arrange the numbers in ascending order: 12, 13, 13, 14, 15, 17, 29.

The median is the middle value. There are 7 numbers, so the 4th number is the median.

The 4th number in the ordered list is 14.