2024 - JAMB Economics Past Questions and Answers - page 8

The acceleration principle in income determination theory states that investment is the effect of a change in income. Therefore, investment is the result of changes in income.

Plantation farming is characterized by the cultivation of a single crop on a large scale, typically using a large area of land (hectares) for commercial purposes. This aligns with the description in the question.

Effective demand is defined as the desire for a commodity backed by the ability to pay for it.

• Desire: Represents the wish to have something but does not necessarily include the ability to pay.
• Demand: Refers to the quantity of a good or service that consumers are willing and able to purchase at various prices.
• Utility: The satisfaction or benefit derived from consuming a good or service.

The Production Possibility Curve (PPC) illustrates the concept of opportunity cost. Moving along the curve means producing more of one good and less of another. The trade-off represents the opportunity cost of producing more of one good, which is the amount of the other good that must be sacrificed.

Agricultural policies in Nigeria aim to achieve several objectives, including:

• Provision of food (ensuring food security)
• Provision of agricultural raw materials to industrial sectors
• Creation of rural employment

However, increasing the prices of agricultural inputs is not an objective, as policies aim to make inputs more affordable to farmers.

The transformation of cassava from a local food crop to an export crop will likely lead to an increase in the demand for cassava products, both domestically and internationally. This increased demand will drive up the prices of cassava products.

The correct answer is a precautionary motive.

• Precautionary motive: Holding money for unforeseen circumstances or emergencies.
• Transactions motive: Holding money for day-to-day purchases.
• Expansionary motive: Not a standard economic term related to holding money.
• Speculative motive: Holding money to take advantage of future investment opportunities.

Capitalism is characterized by:

• Free enterprise: Individuals are free to start and run businesses.
• Private ownership of property: Individuals own the means of production.
• Competition: Businesses compete for customers and resources.

Detailed economic planning is a feature of a command or socialist economy, not capitalism.

The African Development Bank (AfDB) is specifically created to finance projects that promote economic and social development in Africa.

The fundamental economic problem of "how to produce" addresses the efficient allocation of resources to produce goods and services, selecting the most effective production methods.

• Least cost method: Businesses minimize production costs using inputs efficiently, solving the "how to produce" problem.
• Combining capital and labor: Part of the solution, determined by the least cost method.
• Capital-intensive method: May be useful, but not always optimal; the best method depends on costs and resources.
• Employing a manager: Managers help, but the core problem is choosing the production method and resource allocation.