2002 - JAMB Economics Past Questions and Answers - page 1

The elasticity of supply for perishable goods is inelastic. This is because:

• Perishable goods spoil quickly. Producers of these goods cannot store them for long periods.
• Limited Storage: Since storage is limited, producers cannot significantly adjust the quantity supplied in response to price changes.
• Inelastic Supply: This means that the quantity supplied does not change much, even if the price changes significantly.

Opportunity cost is the value of the next best alternative foregone. In this scenario, the student only has N30.00. If he buys the exercise book for N25.00, he will have N5.00 left. He cannot afford the ruler, which costs N18.00. Therefore, the opportunity cost of buying the exercise book is the ruler because he had to give up the opportunity to buy the ruler.

A shift in the supply curve is caused by factors other than the good's own price. These factors include:

• Changes in input costs (e.g., wages, raw materials)
• Changes in technology
• Changes in the number of sellers
• Changes in seller expectations
• Changes in government policies (e.g., taxes, subsidies)

The exceptional demand curve, which slopes upwards, occurs in specific situations where the normal law of demand doesn't hold. One of the main reasons for this is the expectation of a future price change. If consumers expect the price of a good to increase in the future, they may increase their current demand for it, even if the current price is high. This leads to an upward-sloping demand curve.

A scientific approach in economic analysis uses both inductive and deductive methods:

• Deductive method: This involves starting with general principles or theories and then applying them to specific situations to derive conclusions.
• Inductive method: This involves gathering specific observations or data and then using them to formulate broader generalizations or theories.

In a centrally planned economy, the government (the state) makes all the economic decisions, including what goods and services will be produced, how they will be produced, and for whom they will be produced. This is done through state command or central planning, not by market forces like profit, cost, or relative prices.

The double coincidence of wants is a situation where two parties each want what the other has to offer, which is a requirement for a barter system. In this context, demands must be complementary. This means the goods or services being exchanged fulfill the needs of both parties involved.

The stock exchange is primarily a market for existing shares of publicly listed companies. While new shares are initially issued on the primary market, the stock exchange (secondary market) facilitates the trading of shares that have already been issued.