JAMB Economics Past Questions & Answers - Page 166

826.

If a 10% rise in price causes a 5% decrease in the quantity demanded of a commodity, the elasticity of demand is

A.

Unitary elastic

B.

Zero elastic

C.

Elastic

D.

Inelastic

Correct answer is D

Elasticity of demand refers to how sensitive the demand for a good is to changes as prices and consumer income change. 

From the question above, the demand is inelastic. An inelastic demand is one in which the change in quantity demanded due to a change in price is small. From the question, price changed by 10%, but quantity demanded only changed by 5%.

827.

A change in demand for a normal goods implies that, there is a

A.

Change in the quantity demanded as price changes

B.

Shift in the demand curve

C.

Movement along a given demand curve

D.

Change in the price elasticity of demand

Correct answer is B

A normal good is a good that experiences an increase in its demand due to a rise in consumer's income. In other words, if there's an increase in wages, demand for normal goods increases while conversely, a wage decline leads to a reduction in demand.

From the above option, B is correct. A shift in the demand curve happens when other determinants of demand apart from price cause demand to change.

828.

The best measure of dispersion to determine the tallest tree in a forest is

A.

Range

B.

Variance

C.

Standard deviation

D.

Mean deviation

Correct answer is B

Variance is the expectation of the squared deviation of a random variable from its mean. Informally, it measures how far a set of (random) numbers are spread out from their average value. 

829.

In capitalist economies, questions about what to produce are ultimately answered by

A.

Income level of households

B.

Available technical skills in the economy

C.

Output decisions of firms

D.

Holding decision of households

Correct answer is C

Capitalism is an economic system in which private individuals or businesses own capital goods. The production of goods and services is based on supply and demand in the general market—known as a market economy—rather than through central planning—known as a planned economy or command economy.

830.

The choice of how to produce in a command economy is determined by

A.

Government

B.

Consumer

C.

Industrialists

D.

Labour unions

Correct answer is A

A command economy is a system where the government, rather than the free market, determines what goods should be produced, how much should be produced, and the price at which the goods are offered for sale. It also determines investments and incomes. The command economy is a key feature of any communist society.