JAMB Economics Previous Year Questions: 2021 | Economics for JAMB PDF Download

Q1: A firm is at its optimum size when ___________
(a) It has a motive to increase output
(b) It produces the greatest output at a minimum cost
(c) Marginal cost equals marginal revenue
(d) Marginal cost is less than marginal revenue
Ans: (b)
At the optimum size, the firm achieves the highest level of efficiency by balancing the costs of production and the output level. It means that the firm is utilizing its resources efficiently, minimizing wastage, and maximizing productivity, resulting in the lowest possible average cost per unit of output.

Q2: Under the ECOWAS agreement, a Nigerian can enter and stay in Ghana without a Visa for a period of ________
(a) 100 days
(b) 30 days
(c) 90 days
(d) 14 days
Ans: (c)
The Economic Community of West African States (ECOWAS) is a regional economic union comprising several West African countries, including Nigeria and Ghana. As part of the agreement, member countries allow visa-free entry and temporary stay for their citizens within the ECOWAS region. In the case of a Nigerian citizen visiting Ghana, they can stay for up to 90 days without the need for a visa.

Q3: The petro-chemical industries are located in Rivers State of Nigeria due to ________
(a) Coal deposit
(b) Palm oil products
(c) Favourable soil
(d) Oil deposits
Ans: (d)
Rivers State, located in the Niger Delta region of Nigeria, is known for its abundant reserves of crude oil and natural gas. The presence of these oil deposits makes it an attractive location for the establishment of petrochemical industries. Petrochemical industries rely on oil and gas as raw materials to produce a wide range of chemical products, including plastics, fertilizers, and synthetic materials.

Q4: This table illustrates the law of _________

(a) Increasing returns
(b) Diminishing returns
(c) Diminishing marginal utility
(d) Increasing total utility
Ans: (c)
As the quantity consumed increases, the marginal utility tends to decrease. This principle suggests that as individuals consume more of a good, the satisfaction they derive from each additional unit decreases.

Q5: Pricing and Output decisions of sellers are highly inter-dependent in markets known as _________
(a) Monopoly
(b) Oligopoly
(c) Monopolistic competition
(d) Perfect competition
Ans: (b)
Oligopoly refers to a market structure characterized by a small number of large sellers or producers. In such markets, the actions and decisions of one seller can have a significant impact on the others. Due to the interdependence, firms in oligopolistic markets must consider the potential reactions of their competitors when making pricing and output decisions.

Q6: Full employment is a situation in which _______
(a) Every adult is employed.
(b) Only the disable are not employed.
(c) All adults who can work are employed.
(d) All those who are able and eligible can find employment
Ans: (d)
It means that there is no involuntary unemployment, and individuals who are willing and able to work can find suitable employment opportunities. Full employment is an ideal economic goal, but achieving it is often challenging due to various factors such as skill mismatches, changes in technology, and cyclical fluctuations in the economy.

Q7: Mono production economies are those that____
(a) Produce one main commodities
(b) Have a rich cultural heritage.
(c) Specialize in agricultural industries.
(d) Produce only raw materials.
Ans: (a)
These economies heavily rely on the production and export of a single primary commodity, which often serves as their primary source of revenue and foreign exchange earnings. This narrow focus on one commodity can make such economies vulnerable to price fluctuations and other risks associated with the specific industry.

Q8: Petroleum 'glut' in international trade means______
(a) Higher prices for the Consumption of petroleum.
(b) An Oversupply of petroleum.
(c) A fall in in petroleum production.
(d) A higher petroleum price offered by the buyer.
Ans: (b)
When there is a petroleum glut, the global supply of petroleum exceeds the demand, resulting in excess inventory and downward pressure on prices. A petroleum glut can occur due to various factors such as increased production, decreased consumption, or geopolitical events affecting supply and demand dynamics in the oil market.

Q9: Retailers in an economy perform the function of ______
(a) Distribution.
(b) Exchange
(c) Investment
(d) Production
Ans: (a)
Retailers are businesses that act as intermediaries between manufacturers or wholesalers and end consumers. Their primary role is to distribute goods and services to the final consumers through various channels, such as physical stores, online platforms, or direct sales. Retailers play a crucial role in making products available and accessible to consumers.

Q10: In a sole proprietorship, the decisions are made by the ______
(a) Government
(b) Management
(c) Owner
(d) Board of Directors
Ans: (c)
A sole proprietorship is a business structure where a single individual owns and operates the business. As the sole owner, this individual has full control over decision-making, including strategic planning, financial management, and day-to-day operations.

Q11: Palm oil industry is located in Old Bendel State because the state______
(a) Land is suitable for oil
(b) Is a palm tree growing area
(c) Soil is unsuitable for other crops
(d) Imports raw materials for palm oil industry
Ans: (b)
The region's climatic conditions, fertile soil, and suitable agricultural practices make it conducive for the cultivation of palm trees, which are the primary source of palm oil. The availability of palm trees in the area makes it an ideal location for the palm oil industry.

Q12: Which of the following sets fully represents factors of production?
(a) Sunlight, machinery, man, land
(b) Land, water, weather
(c) Money, market, middlemen
(d) Land, labour, capital, enterprise, technology
Ans: (d)
These factors are essential inputs required for the production of goods and services. Land represents natural resources, labor refers to human effort, capital includes physical and financial assets, enterprise involves organizing and managing production, and technology represents the application of knowledge and innovation.

Q13: Which of the following countries is not a member of the Economic Community of West African States?
(a) Sudan
(b) Gambia
(c) Togo
(d) Nigeria
Ans: (a)
The Economic Community of West African States (ECOWAS) is a regional organization consisting of 15 West African countries, including Nigeria, Ghana, Togo, and Gambia. However, Sudan is not located in West Africa and therefore is not a member of ECOWAS.

Q14: Oligopoly means _________
(a) single buyer in the market.
(b) few buyers in the market.
(c) few sellers in the market
(d) None of these
Ans: (c)
In an oligopoly market structure, there are a limited number of firms or sellers that dominate the industry. These few sellers often have significant market power and can influence prices and competition. The actions and decisions of each firm in an oligopoly can have a substantial impact on the market as a whole.

Q15: Use the table below to answer the question below;
The international production set for Nigeria and Austria is;

The Opportunity cost ratio tor cocoa and lace Tor Austria and Nigeria is_______
(a) 1.5:2
(b) 2:2
(c) 2:1.5
(d) 0.5:1.5
Ans: (a)
The opportunity cost ratio represents the amount of one good that must be given up to produce an additional unit of another good. In this case, for every 1.5 units of cocoa produced in Austria, 2 units of lace are given up, according to the table provided.

Q16: Use the table below to answer the question below;
The international production set for Nigeria and Austria is;

From the table, it can be deduced that_______
(a) Nigeria should produce cocoa and lace
(b) Nigeria can benefit from producing lace only
(c) Austria should produce lace and Nigeria should produce cocoa
(d) Austria should produce cocoa and lace
Ans: (c)
Based on the comparative advantage principle, countries should specialize in producing goods for which they have a lower opportunity cost. In the table, Austria has a lower opportunity cost for producing lace, while Nigeria has a lower opportunity cost for producing cocoa. Therefore, Austria should focus on lace production, and Nigeria should specialize in cocoa production to maximize overall output.

Q17: The PAYE ( Pay As You Earn) in Nigeria is an example of ______
(a) Flat rate Tax
(b) Community tax
(c) Regressive tax
(d) Progressive tax
Ans: (d)
Progressive tax refers to a tax system where the tax rate increases as the taxable income or earnings of individuals or entities increase. PAYE is a form of income tax deducted by employers from their employees' salaries or wages, and the tax rate varies based on income levels.

Q18: A good measure of the standard of living usually used for international comparison is_______
(a) Per capita income (PCI)
(b) Gross national product (GND)
(c) Net national income (NNI)
(d) Gross domestic product (GDP)
Ans: (a)
Per capita income measures the average income per person in a particular country or region. It is often used to assess the overall economic well-being and living standards of a population. By comparing per capita incomes across different countries, analysts can gain insights into relative prosperity and economic development.

Q19: What is the most important factor influencing the location of the iron and steel industry at Ajaokuta?
(a) Availability of labour in the area
(b) Availability of power
(c) Nearness of raw material
(d) Access to transport facilities
Ans: (c)
Ajaokuta Steel Company, located in Kogi State, Nigeria, was established to utilize the abundant iron ore reserves in the region. The proximity of raw materials, such as iron ore, is a critical factor in determining the location of the iron and steel industry.

Q20: The Power Holding Company of Nigeria (PHCN) is a ________
(a) Public limited company
(b) Private authority
(c) Public Corporation
(d) Public Liability company
Ans: (c)
The Power Holding Company of Nigeria was a government-owned corporation responsible for electricity generation, transmission, and distribution in Nigeria. It was later restructured and privatized, but during its existence, it operated as a public corporation.

Q21: Which of the following is NOT a character of perfect competition?
(a) Supply and demand are equal
(b) Products are identical
(c) There is perfect knowledge
(d) There is no advertising
Ans: (a)
In perfect competition, supply and demand are determined by market forces and interact to establish an equilibrium price. However, in perfect competition, the individual firms are price takers, meaning they have no influence over the market price and simply adjust their output to match market conditions.

Q22: Inflation is likely to benefit_______
(a) Debtors
(b) Persons with back savings
(c) Creditors
(d) Persons who lived on fixed pension funds
Ans: (a)
Inflation erodes the purchasing power of money over time, which means that the value of debts decreases in real terms. Debtors who borrowed money at a fixed interest rate can repay their loans with money that is worth less due to inflation, effectively reducing the burden of their debt.

Q23: When a nation's exports are greater than its imports,_________
(a) The net foreign trade is zero
(b) A favourable balance of trade exists
(c) A favourable balance of payment exists
(d) An unfavourable balance of trade exists
Ans: (b)
The balance of trade represents the difference between the value of a country's exports and imports. When a country's exports exceed its imports, it is said to have a trade surplus, indicating a favorable balance of trade.

Q24: Surplus in balance of payments leads to ________
(a) Government budget surplus
(b) Increase in foreign reserves
(c) Decrease in foreign reserves
(d) None of the above
Ans: (b)
The balance of payments is a record of all economic transactions between a country and the rest of the world over a specific period. A surplus in the balance of payments means that the inflow of foreign currency from exports, investments, and other sources exceeds the outflow of foreign currency for imports, investments abroad, and other expenditures. This surplus increases a country's foreign reserves, which are held in various forms, such as foreign currencies or gold, and can be used to stabilize the country's currency or finance international transactions.

Q25: Economics may be defined as ________
(a) The study of human behaviour in the allocation of scarce resources
(b) The study of money and banking
(c) The study of markets and prices
(d) The study of production and distribution
Ans: (a)
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. It examines how individuals, businesses, and societies make choices to allocate limited resources to satisfy their unlimited wants and needs.

Q26: Money becomes a very poor store of value in a period of _______
(a) Harvest
(b) Deflation
(c) Recession
(d) Inflation
Ans: (d)
Inflation erodes the purchasing power of money over time. When prices rise, the value of money decreases, and as a result, the ability of money to retain its purchasing power or store value diminishes. In periods of high inflation, the value of money can decline rapidly, making it an ineffective store of value.

Q27: In Nigeria, cheques are not money because________
(a) Most Nigerians cannot identity them
(b) They are not legal tender
(c) There are no banks in rural areas
(d) They are not generally acceptable as a medium of exchange
Ans: (b)
Legal tender refers to the official currency or medium of exchange that a government has declared as acceptable for settling debts and transactions within its jurisdiction. While cheques are negotiable instruments that facilitate payment, they are not considered legal tender and require the mutual agreement of the parties involved for acceptance.

Q28: Division of Labour is limited by the________
(a) Size of labour firm
(b) Availability of raw material
(c) Size of the labour force
(d) Absolute size of the country's population
Ans: (c)
Division of labor refers to the specialization of tasks or jobs within a production process, where different workers perform specific tasks to improve efficiency and productivity. The extent of division of labor is influenced by the size of the labor force available. A larger labor force allows for more specialization and a greater division of labor.

Q29: The value of money depends primarily on _________
(a) The gold backing of the currency
(b) The general price level
(c) Government decree that it is legal tender
(d) None of the above
Ans: (b)
The value of money is influenced by various factors, including supply and demand, interest rates, and confidence in the currency. However, one of the key determinants of the value of money is the general price level in the economy. When prices rise (inflation), the value of money decreases, and when prices fall (deflation), the value of money increases.

Q30: In a free market economy. the rationing of scarce goods is done principally by_______
(a) Consumers
(b) The government
(c) The price mechanism
(d) All of the above
Ans: (a)
In a competitive market, the equilibrium price and quantity are determined by the point where the demand curve and the supply curve intersect. At this point, the quantity demanded by consumers equals the quantity supplied by producers, resulting in market equilibrium.

Q31: If the price of a commodity falls and the quantity purchased does not rise, the commodity can be described as________
(a) Scarce
(b) Normal
(c) Superior
(d) Inferior
Ans: (d)
In economics, an inferior good is a type of good for which demand decreases as consumer income increases. When the price of an inferior good falls, consumers may still prefer to purchase higher-quality substitutes or upgrade to a better alternative, leading to no increase in quantity purchased.

Q32: An economic problem arises when________
(a) Sellers are few
(b) Scarcity and choices are involved
(c) Buyers are many
(d) Money is in short supply
Ans: (b)
Scarcity refers to the limited availability of resources relative to unlimited human wants and needs. Economic problems arise because of this scarcity, which necessitates making choices about how to allocate resources efficiently to satisfy as many wants and needs as possible.

Q33: Which of these is not a cause of high population growth in Nigeria?
(a) Improved hygiene
(b) Reduction in death rate
(c) Family planning unit of Nigeria
(d) Increased birth rate
Ans: (c)
When the death rate decreases while the birth rate remains high, it leads to an increase in population growth. Improved healthcare, access to medical facilities, and advancements in medical technology have contributed to reducing mortality rates, resulting in population growth.

Q34: Inflation can be curbed by _______
(a) Deficit budget
(b) Paying higher wages
(c) Increased aggregate demand
(d) Reducing aggregate demand
Ans: (d)
When the overall level of prices in an economy is rising, it is often a result of excessive aggregate demand outpacing the economy's capacity to produce goods and services. To curb inflation, policymakers can implement measures to reduce aggregate demand, such as tightening monetary policy, increasing interest rates, or implementing contractionary fiscal policies.

Q35: A typical corporate form of business organization is owned by ______
(a) Shareholders
(b) A local government
(c) The president of a country
(d) Foreigners and citizens of the country.
Ans: (a)
In a corporate form of business organization, ownership is divided into shares of stock, and shareholders are the individuals or entities that own these shares. Shareholders have ownership rights and can participate in the company's decision-making process through voting and receive a share of the company's profits in the form of dividends.

Q36: The price mechanism______
(a) Rations the consumers
(b) Rewards the producers
(c) Regulates supply and demand
(d) Allocates scarce resources.
Ans: (c)
The price mechanism, also known as the market mechanism, is the process by which prices of goods and services are determined in a free market economy. Through the interaction of supply and demand, prices adjust to balance the quantity supplied and the quantity demanded, resulting in an equilibrium price that regulates the allocation of scarce resources.

Q37: If Mr. A earns N2.000 a year while Mr. B earns N8000 but Mr. A pays N200 in tax per annum while Mr. B pays N400, such tax is_______
(a) Progressive
(b) Proportional
(c) Indirect
(d) Regressive
Ans: (d)
Regressive taxation refers to a tax system where the average tax rate decreases as income increases. In this case, Mr. A, who earns less, pays a higher proportion of his income in taxes compared to Mr. B, who earns more.

Q38: Which of these is not usually the function of a wholesaler?
(a) Branding
(b) Storage
(c) Transport
(d) Advertising
Ans: (a)
Wholesalers typically engage in activities such as purchasing goods in bulk from manufacturers or producers, storing inventory, and distributing goods to retailers or other businesses. They facilitate the movement of goods in the supply chain but are not directly involved in branding or creating brand identities.

Q39: If the quantity demanded of a commodity increases from 20 to 30 when there is an increase in price from N4 to N5, the elasticity of deman is_______
(a) Zero
(b) 10
(c) 2
(d) 1
Ans: (c)
Elasticity of demand measures the responsiveness of quantity demanded to changes in price. In this case, the percentage change in quantity demanded (50%) is twice the percentage change in price (25%), indicating an elasticity of demand of 2.

Q40: By utility we mean________
(a) Uselessness
(b) Power of satisfying a want
(c) Beneficial
(d) Consumable
Ans: (b)
Utility refers to the satisfaction or value that individuals derive from consuming or using goods and services. It represents the power of a good or service to fulfill a person's wants or needs and is a fundamental concept in economics for understanding consumer behavior and decision-making.