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ECONOMICS OBJ
01-10: DCCBDCADBE
11-20: BCABCEEEBE
21-30: BBDDCACDED
31-40: BCDEEABBAD
41-50: EEDECCEDEA
51-60: DADEDABADB
COMPLETED
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SECTION A: ANSWER ONE(1) QUESTION ONLY
(1a)
Total number of students = 400 + 200 + 180 + 300 + 250 = 1330
Percentage for 2000: (400/1330) x 100 = 30.1%
Percentage for 2001: (200/1330) x 100 = 15.0%
Percentage for 2002: (180/1330) x 100 = 13.5%
Percentage for 2003: (300/1330) x 100 = 22.6%
Percentage for 2004: (250/1330) x 100 = 18.8%
(1b)
(1c)
Similarity:
-Both bar charts and histograms are used to display data visually, making it easier to understand and compare.
Differences:
(i) A bar chart is used to compare categorical data across different groups, while a histogram is used to display the distribution of continuous data.
(ii) In a bar chart, the bars are spaced equally apart, whereas in a histogram, the bars are adjacent to each other, with no gaps in between.
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(2ai)
Marginal Propensity to Consume (MPC):
MPC = Change in Consumption / Change in Income
= ₦1,200 / ₦10,000 (₦60,000 – ₦50,000)
= 0.12 or 12%
(2aii)
Marginal Propensity to Save (MPS):
MPS = Change in Saving / Change in Income
= (₦10,000 – ₦1,200) / ₦10,000
= ₦8,800 / ₦10,000
= 0.88 or 88%
(2b)
Multiplier:
Multiplier = 1 / (1 – MPC)
= 1 / (1 – 0.12)
= 1 / 0.88
= 1.14
(2c)
(i) Income: As income increases, consumption tends to increase.
(ii) Price: Changes in prices of goods and services affect consumption decisions.
(iii) Interest Rate: Changes in interest rates influence borrowing and consumption.
(iv) Consumer Preferences: Personal tastes, preferences, and attitudes towards saving and spending.
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SECTION B: ANSWER FOUR(4) QUESTIONS ONLY
(3)
(i) Marginal Cost:
Marginal cost is the additional cost of producing one more unit of a good or service. It is the change in total cost divided by the change in quantity produced. Marginal cost helps firms decide whether to produce more or less of a product. A low marginal cost may encourage a firm to increase production.
(ii) Wants:
Wants are desires or demands for goods and services that provide satisfaction or utility. They are unlimited and infinite, with new wants emerging as old ones are satisfied. Wants are different from needs, which are basic requirements for survival. People’s wants can change over time, and they often prioritize their wants based on importance. Firms try to satisfy people’s wants through their products or services.
(iii) Scarcity:
Scarcity is the fundamental economic problem of unlimited wants and limited resources. Resources are insufficient to satisfy all wants and needs, leading to rationing and choice. Scarcity affects individuals, businesses, and societies, forcing them to make choices. As a result, scarcity leads to innovation and efficiency in resource allocation.
(iv) Choice:
Choice is selecting one option over another due to scarcity. It involves trade-offs and opportunity costs. Consumers and producers make choices based on their preferences and resources. Choices can be influenced by factors like price, quality, and availability. Making choices wisely is essential in achieving goals and maximizing satisfaction.
(v) Opportunity Cost:
Opportunity cost is the value of the next best alternative forgone when choosing an option. It is the cost of choosing one option over another, representing the benefit that could have been obtained if resources were used differently. Opportunity cost helps individuals and firms evaluate their decisions. By considering opportunity costs, decision-makers can optimize their choices and minimize regrets.
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(4)
(i) What to Produce: What goods and services should be produced to meet the needs and wants of society? This problem arises because resources are limited, and society cannot produce everything that people want. The decision on what to produce affects the allocation of resources and the well-being of citizens. By choosing to produce essential goods and services, society can ensure basic needs are met.
(ii) How to Produce: How should goods and services be produced to maximize efficiency and minimize waste? This problem involves choosing the best technology, resources, and production methods. Efficient production helps reduce costs and increase output, leading to economic growth and development. By adopting innovative production techniques, societies can improve productivity and competitiveness.
(iii) For Whom to Produce: Who should receive the goods and services produced? This problem involves deciding how to distribute resources and goods to meet the needs and wants of different individuals and groups in society. The distribution of goods and services affects social welfare and equality, with fair distribution promoting social justice. By ensuring equal access to essential goods and services, societies can reduce poverty and inequality.
(iv) How to Allocate Scarce Resources: How should society allocate its limited resources to produce goods and services? This problem involves making choices about how to use resources in the most efficient way possible to meet the needs and wants of society. Resource allocation affects economic growth, stability, and overall well-being. By allocating resources efficiently, societies can maximize output and improve living standards.
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(5a)
Utility refers to the satisfaction or pleasure that a consumer derives from consuming a good or service.
(5b)
(i) Form utility: This type of utility is created by changing the form or appearance of a product, such as cutting and polishing diamonds to increase their value. Form utility can also be created through product design, packaging, and branding. For example, a company like Apple creates form utility by designing sleek and user-friendly products.
(ii) Place utility: This type of utility is created by making a product available at a convenient location, such as a store near a consumer’s home. Place utility can also be created through online shopping platforms that offer home delivery or in-store pickup. For instance, companies like Amazon and Walmart offer place utility by allowing customers to order products online and pick them up at their convenience.
(iii) Time utility: This type of utility is created by making a product available at a convenient time, such as delivering groceries to a consumer’s doorstep. Time utility can also be created through services like same-day delivery, next-day delivery, or 24/7 access to products or services. For example, companies like Domino’s Pizza and GrubHub create time utility by delivering food to customers quickly.
(5c)
(i) Total utility is the total satisfaction or pleasure derived from consuming a certain quantity of a good or service, while marginal utility is the additional satisfaction or pleasure derived from consuming one more unit of the same good or service.
(ii) Total utility increases as consumption increases, but at a decreasing rate, while marginal utility decreases as consumption increases.
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(6a)
Public finance is the study of how governments raise funds through taxes and other means, and how they allocate these funds to provide public goods and services while managing expenditures.
(6b)
(i) Economic Growth: To promote economic growth by increasing aggregate demand, encouraging investment, and creating jobs. This can be achieved through government spending, tax cuts, and investment in infrastructure and human capital.
(ii) Stabilization: To stabilize the economy by smoothing out fluctuations in income, output, and employment, and maintaining economic stability. This can be achieved through automatic stabilizers like unemployment insurance and progressive taxation, as well as discretionary fiscal policy measures.
(iii) Redistribution of Income: To reduce income inequality by redistributing income from the rich to the poor through progressive taxation and social welfare programs. This can be achieved through policies like progressive taxation, social security benefits, and minimum wage laws.
(iv) Price Stability: To control inflation and maintain price stability by reducing demand, increasing supply, and managing expectations. This can be achieved through monetary policy, price controls, and supply-side policies that improve productivity and efficiency.
(v) Fiscal Sustainability: To ensure long-term sustainability of public finances by maintaining a stable debt-to-GDP ratio, reducing debt, and building fiscal buffers. This can be achieved through prudent fiscal management, structural reforms, and building fiscal institutions that promote transparency and accountability.
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(7a)
Price legislation, also known as price control, refers to government regulations or laws that limit or dictate the prices of goods and services to protect consumers, promote fair competition, and achieve economic stability.
(7b)
(i) Protection of Consumers: To prevent exploitation of consumers by businesses, especially in markets with monopolistic tendencies, and ensure fair prices for essential goods and services. This objective is particularly important for basic necessities like food, water, and healthcare.
(ii) Promotion of Fair Competition: To encourage competition among businesses by preventing predatory pricing practices, such as price-fixing and price-gouging, which can harm smaller businesses and innovation.
(iii) Inflation Control: To reduce inflation by limiting price increases, especially in sectors with high inflation rates, and maintaining price stability to protect the purchasing power of consumers.
(iv) Social Welfare: To ensure access to essential goods and services, like food, housing, and healthcare, at affordable prices, especially for vulnerable populations, such as low-income families and seniors. By achieving this objective, price control policies can help reduce poverty and income inequality.
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(8a)
A financial institution is an organization that provides financial services to individuals, businesses, and governments. Examples include banks, credit unions, investment firms, insurance companies, and pension funds.
(8b)
(i) Money Market:
The money market is a financial market that deals with short-term debt securities, typically with maturities ranging from overnight to one year. It provides a platform for borrowers and lenders to interact, facilitating the exchange of short-term funds. Money market instruments include commercial paper, treasury bills, certificates of deposit (CDs), and repurchase agreements (repos).
(ii) Insurance Companies:
Insurance companies are financial institutions that provide protection against various types of risk, such as death, disability, accident, health, property damage, and liability. In exchange for premiums, insurance companies offer financial compensation to policyholders in the event of a covered loss or damage. Insurance companies invest the premiums they receive in various assets, such as stocks, bonds, and real estate, to generate returns and build reserves.
(iii) Capital Market:
The capital market is a financial market that enables the buying and selling of long-term securities, such as stocks, bonds, and debentures, with maturities typically exceeding one year. It facilitates the allocation of capital from investors to businesses, governments, and other organizations, supporting long-term investments and economic growth. The capital market includes stock exchanges, bond markets, and other platforms that enable the trading of securities.
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(10a)
Human capital development is the process of enhancing the skills, knowledge, abilities, and health of individuals to improve their productivity, employability, and overall well-being.
(10b)
(i) Intangibility: Human capital is an intangible asset, meaning its value is not physical or tangible. It cannot be seen or touched, but its impact is evident in the skills and expertise individuals possess. Intangibility makes human capital difficult to measure, but its value is undeniable. As a result, human capital is often considered a valuable asset, even if it’s not reflected on a balance sheet.
(ii) Improveability: Human capital can be developed and improved through education, training, and experience. Investing in human capital can lead to significant returns, such as increased productivity and innovation. Moreover, human capital can appreciate in value over time, unlike physical assets that may depreciate. This appreciation can lead to better career opportunities and higher earning potential.
(iii) Mobility: Human capital is mobile, allowing individuals to move freely with their skills and knowledge. This mobility enables individuals to seek better opportunities, adapt to changing environments, and respond to labor market demands. Mobility also facilitates the transfer of knowledge and skills across organizations and industries. As a result, human capital can drive innovation and economic growth.
(iv) Flexibility: Human capital is adaptable to changing circumstances, technologies, and job requirements. This flexibility enables individuals to pivot in their careers, acquire new skills, and adjust to shifting market conditions. Flexibility also allows human capital to be reconfigured to meet new challenges and opportunities. By being flexible, human capital can stay relevant and valuable in a rapidly changing world.
(v) Non-Rivalry: Human capital is non-rivalrous, meaning one person’s skills and knowledge do not diminish the value of another person’s human capital. In fact, collaboration and knowledge-sharing can lead to increased productivity and innovation. Non-rivalry also enables human capital to be leveraged across multiple projects and applications, amplifying its value. As a result, human capital can create positive externalities that benefit organizations and society as a whole.
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(11a)
Economic growth refers to an increase in the production of goods and services in an economy over a period of time, typically measured by the increase in a country’s gross domestic product (GDP).
(11b)
(i) Political Stability: A stable political environment is crucial for attracting investment, promoting entrepreneurship, and fostering economic growth. A stable government ensures predictability, consistency, and a favorable business climate.
(ii) Human Capital Development: Investing in education, healthcare, and training is essential for building a skilled and productive workforce. Human capital development enhances innovation, productivity, and adaptability, driving economic growth.
(iii) Institutional Framework: A well-functioning institutional framework, including an independent judiciary, effective regulatory bodies, and strong property rights, is vital for promoting entrepreneurship, innovation, and investment. This framework ensures a level playing field, protects businesses, and encourages competition.
(iv) Investment in Physical Capital: Investing in infrastructure, such as roads, ports, and telecommunications, is critical for facilitating economic growth. Physical capital accumulation enhances productivity, reduces transaction costs, and increases economic efficiency.
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