In a mixed economy, resource allocation is determined by
A mixed economy combines government intervention and market forces to allocate resources, balancing central planning with supply and demand.
In a market economy, the basic economic problem of what to produce is solved by
Consumer demand and preferences guide firms on what to produce in a market economy, as firms aim to meet market needs to maximize profits.
The measure of dispersion that shows the average deviation from the mean is
Mean deviation measures the average absolute deviation of data points from the mean, providing a straightforward measure of dispersion.
If the variance of a dataset is 16, what is the standard deviation?
Standard deviation is the square root of variance: √16 = 4.
A leftward shift in the supply curve of a commodity is caused by
Higher input prices increase production costs, reducing supply and shifting the supply curve leftward.
Given Qd = 50 - 3P and Qs = 5P + 10, what is the equilibrium quantity?
Set Qd = Qs: 50 - 3P = 5P + 10. Solve: 50 - 10 = 5P + 3P, 40 = 8P, P = 5. Substitute P = 5 into Qs: Q = 5(5) + 10 = 30.
A movement along the demand curve is caused by a change in
A change in the price of the commodity causes a movement along the demand curve, reflecting a change in quantity demanded.
If a 5% increase in price leads to a 10% decrease in quantity demanded, the elasticity of demand is
Price elasticity of demand = (% change in quantity demanded) / (% change in price) = 10% / 5% = 2.0, indicating elastic demand.
The marginal utility of a commodity diminishes as
The law of diminishing marginal utility states that as more units of a commodity are consumed, the additional satisfaction (utility) derived from each extra unit decreases.
A consumer’s budget line shifts inward due to
A decrease in income reduces purchasing power, shifting the budget line inward as the consumer can afford fewer goods.
If the supply function is P = 1/5(Qs + 20) and P = ₦12, what is Qs?
Given P = 12, substitute: 12 = 1/5(Qs + 20). Multiply by 5: 60 = Qs + 20. Solve: Qs = 60 - 20 = 40.
The price elasticity of supply for a commodity is 1.5 when quantity supplied increases from 100 to 130 units. What is the percentage change in price?
% change in quantity supplied = (130 - 100) / 100 = 30%. Elasticity = 1.5 = 30% / % change in price. Solve: % change in price = 30 / 1.5 = 20%.
A price ceiling above the equilibrium price will result in
A price ceiling set above the equilibrium price is non-binding, as the market naturally settles at the equilibrium, causing no change in market outcomes.
The price mechanism is least effective in
In a command economy, prices are set by the government rather than market forces, rendering the price mechanism ineffective.
In a production process, the marginal product of labour is 10 when 5 units are employed. If total product is 40, what is the total product when 6 units are employed?
Marginal product is the additional output from one more unit of labour. Total product at 6 units = Total product at 5 units + Marginal product = 40 + 10 = 50.
A firm enjoys economies of scale when
Economies of scale occur when average cost decreases as output increases, due to efficiencies like specialization or bulk purchasing.
Specialization in production leads to
Specialization increases efficiency but creates interdependence among workers or firms, as each relies on others for different tasks or goods.
If a firm’s total variable cost is ₦1,500 and output is 50 units, what is the average variable cost?
Average variable cost = Total variable cost / Output = 1,500 / 50 = ₦30.
Wages and raw material costs are examples of
Wages and raw materials vary with output, making them variable costs, unlike fixed costs which remain constant regardless of production levels.
In perfect competition, a firm maximizes profit when
In perfect competition, a firm maximizes profit where marginal revenue equals marginal cost, as this ensures the additional cost of producing one more unit equals the additional revenue gained.
A monopolist can maintain abnormal profits in the long run due to
Barriers to entry, such as patents or high startup costs, prevent competitors from entering the market, allowing monopolists to sustain abnormal profits.
A monopolist may practice price discrimination to
Price discrimination allows a monopolist to charge different prices to different consumers based on their willingness to pay, thereby maximizing profits.
The Gross Domestic Product (GDP) of a closed economy is calculated as
In a closed economy with no international trade, GDP is calculated as the sum of consumption (C), investment (I), and government spending (G): GDP = C + I + G.
If the marginal propensity to save is 0.2 and investment increases by ₦50 million, what is the change in national income?
The multiplier = 1 / MPS = 1 / 0.2 = 5. Change in national income = Investment increase × Multiplier = 50 × 5 = ₦250 million.
The transactions demand for money is primarily influenced by
The transactions demand for money depends on income levels, as higher income increases the need for money for daily transactions.
Demand-pull inflation is caused by
Demand-pull inflation occurs when excess aggregate demand in the economy drives up prices, as consumers compete for limited goods and services.
A major challenge to Nigeria’s financial sector is
Limited technological innovation hinders efficiency and access in Nigeria’s financial sector, slowing digital banking and financial inclusion.
Long-term financing for industrial projects is typically obtained from the
The capital market provides long-term funds for industrial projects through instruments like bonds and equity, unlike the short-term focus of the money market.
If the consumer price index rises from 100 to 120, the inflation rate is
Inflation rate = [(120 - 100) / 100] × 100 = 20%.
Open market operations by the Central Bank are used to
Open market operations involve buying or selling government securities to control the money supply, influencing interest rates and economic activity.
A key factor hindering Nigeria’s economic diversification is
Over-reliance on oil exports limits Nigeria’s economic diversification, as it reduces investment in other sectors like agriculture and manufacturing.
A characteristic of a developing economy is
Developing economies often exhibit high income inequality, with wealth concentrated among a small portion of the population.
The primary contribution of agriculture to Nigeria’s economy is
Agriculture provides raw materials for industries, such as cotton for textiles, supporting economic growth and industrial development.
Mechanized farming in Nigeria is limited by
Limited capital restricts investment in mechanized farming equipment, hindering modernization and productivity in Nigerian agriculture.
Industrial concentration in one region may lead to
Industrial concentration can cause environmental degradation, such as pollution and resource depletion, in the affected region.
The availability of raw materials is a key determinant for the location of
Manufacturing industries are often located near raw materials to reduce transportation costs and improve production efficiency.
Nigeria’s membership in OPEC primarily benefits the country through
OPEC’s coordination of oil prices helps stabilize Nigeria’s oil revenue, a major source of foreign exchange earnings.
Refining crude oil into petroleum products is an activity in the
Refining crude oil into products like gasoline is part of the downstream sector, which involves processing and distribution.
A firm’s average fixed cost decreases as
Average fixed cost decreases as output increases because fixed costs are spread over a larger number of units.
Horizontal integration occurs when a firm
Horizontal integration involves a firm merging with or acquiring another firm at the same level in the value chain, typically a competitor in the same industry.
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