JAMB Economics Past Questions & Answers - Page 91

An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.

A change in the price of a good or service, holding all else constant, will result in a movement along the supply curve. A change in the cost of an input will impact the cost of producing a good and will result in a shift in supply; supply will shift outward if costs decrease and will shift inward if they increase.

A perfectly competition has the following characteristics:

• There are many buyers and sellers in the market.
• Each company makes a similar product.
• Buyers and sellers have access to perfect information about price.
• There are no transaction costs.
• There are no barriers to entry into or exit from the market.

FACTORS DISCOURAGING OR LIMITING DIVISION OF LABOUR

1. The nature of goods and services : Some goods and services are suitable for large scale production while others cannot produced on large scale.

2. Increase cost of production : If cost of production is increasing as a result of high cost of inputs, division of labour cannot be possible.

3. Managerial ability : Managerial ability must be duplicated as the firm expands .This causes difficulties to management in organizing and coordinating the factors of production employed.

4. The size of the market :

5. Low development of distribution.

6. Government policies.

7. Where standardisation is difficult to achieve.

8. The indivisibility of work into smaller process.

9. Technological advancement

Composite demand is where goods have more than one use. An increase in the demand for one product leads to a fall in supply of the other. An example is milk which can be used for cheese, yoghurts, cream, butter and other products.