Economics JAMB Past Questions And Answers (Objectives and Theory)
Section A: Multiple Choice Questions
What is the primary objective of economics?
a) Maximizing profits
b) Minimizing costs
c) Allocating resources efficiently
d) Generating revenue
Answer: c) Allocating resources efficiently
Which of the following is NOT a factor of production in economics?
a) Land
b) Labor
c) Capital
d) Goods
Answer: d) Goods
What does the law of demand state in economics?
a) As price increases, quantity demanded increases
b) As price increases, quantity demanded decreases
c) As price decreases, quantity demanded increases
d) As price decreases, quantity demanded decreases
Answer: d) As price decreases, quantity demanded decreases
What is the purpose of studying macroeconomics?
a) To analyze individual markets
b) To study the behavior of individual consumers
c) To study the economy as a whole
d) To analyze business cycles
Answer: c) To study the economy as a whole
Which of the following is NOT a measure of economic growth?
a) Gross Domestic Product (GDP)
b) Gross National Product (GNP)
c) Consumer Price Index (CPI)
d) Net National Product (NNP)
Answer: c) Consumer Price Index (CPI)
What is the purpose of fiscal policy in economics?
a) To control the money supply
b) To regulate interest rates
c) To manage government spending and taxation
d) To influence consumer behavior
Answer: c) To manage government spending and taxation
What does the term “inflation” refer to in economics?
a) A decrease in the general price level of goods and services
b) An increase in the general price level of goods and services
c) A decrease in the quantity of money in circulation
d) An increase in unemployment rates
Answer: b) An increase in the general price level of goods and services
What is the purpose of monetary policy in economics?
a) To regulate government spending
b) To manage interest rates and the money supply
c) To control inflation
d) To influence consumer spending
Answer: b) To manage interest rates and the money supply
What does the term “opportunity cost” refer to in economics?
a) The total cost of producing a good or service
b) The cost of resources used in production
c) The cost of forgoing the next best alternative
d) The cost of government spending
Answer: c) The cost of forgoing the next best alternative
Which of the following is a characteristic of a perfectly competitive market?
a) Many buyers and sellers
b) Product differentiation
c) Barriers to entry
d) Price setting by individual firms
Answer: a) Many buyers and sellers
Section B: Theory Questions
Define economics and discuss its importance in society.
*Answer: Economics is the study of how individuals, businesses, and societies allocate scarce resources to satisfy unlimited wants and needs. It examines the production, distribution, and consumption of goods and services, as well as the behavior of markets and economies. Economics is important in society for several reasons:
Resource allocation: Economics helps societies allocate scarce resources efficiently to maximize welfare and utility.
Decision-making: Economics provides individuals and policymakers with tools and frameworks to make informed decisions about resource allocation, production, consumption, and investment.
Understanding markets: Economics helps individuals understand how markets function, including supply and demand dynamics, pricing mechanisms, and market structures.
Policy formulation: Economics informs the design and implementation of policies to address economic issues such as unemployment, inflation, poverty, and inequality.
International relations: Economics influences international trade, finance, and development, shaping global relations and cooperation.*
Explain the concept of supply and demand in economics and discuss their relationship.
*Answer: Supply and demand are fundamental concepts in economics that describe the relationship between the quantity of a good or service supplied by producers and the quantity demanded by consumers at various prices.
Demand refers to the quantity of a good or service that consumers are willing and able to buy at different prices over a specific period. The law of demand states that as the price of a good or service decreases, quantity demanded increases, and vice versa, all else being equal.
Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at different prices over a specific period. The law of supply states that as the price of a good or service increases, quantity supplied increases, and vice versa, all else being equal.
The relationship between supply and demand determines the equilibrium price and quantity in a market. When supply exceeds demand, prices tend to fall, signaling producers to reduce output. When demand exceeds supply, prices tend to rise, signaling producers to increase output. Equilibrium occurs when supply equals demand, resulting in a stable price and quantity.*
Discuss the concept of elasticity in economics and its significance.
*Answer: Elasticity measures the responsiveness of quantity demanded or quantity supplied to changes in price, income, or other factors. It is calculated as the percentage change in quantity divided by the percentage change in price or income. Elasticity provides insights into consumer behavior, producer behavior, and market dynamics:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It helps determine how sensitive consumers are to price changes and whether changes in price lead to significant changes in quantity demanded.
Price elasticity of supply measures the responsiveness of quantity supplied to changes in price. It helps determine how easily producers can adjust output in response to price changes and whether changes in price lead to significant changes in quantity supplied.
Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. It helps classify goods as normal (positive income elasticity) or inferior (negative income elasticity) and assess consumer preferences and purchasing power.
Elasticity is significant in economics because it influences pricing decisions, production decisions, government policies, and market outcomes. It helps businesses set prices, forecast sales, and manage inventories, and it informs policymakers about the impacts of taxation, subsidies, regulations, and other interventions.
