2005 - JAMB Economics Past Questions and Answers - page 2

Here's how to solve this:

• Understand the Relationship: Population growth rate is determined by the difference between the birth rate and the death rate.
• Formula: Growth Rate = Birth Rate - Death Rate
• Rearrange and Solve: Birth Rate = Growth Rate + Death Rate = 12% + 52% = 64%

The distinction between onshore and offshore oil exploration operations lies primarily in the location of the exploration and extraction sites. Onshore operations take place on land, while offshore operations take place in the sea or ocean.

In the long run, all factors of production are variable. The concept that best describes the long-run production process, considering the ability to change all inputs, is returns to scale.

For a firm to break even in the long run, the following must be true:

• Break-even point: This is the point where the firm's total revenue equals its total costs, resulting in zero economic profit.
• Long-run equilibrium: In the long run, firms can adjust all inputs, including plant size.
• Relationship between MC and AC: The marginal cost (MC) curve intersects the average cost (AC) curve at its lowest point. This is because when MC is below AC, AC is falling, and when MC is above AC, AC is rising. Therefore, MC must equal AC at AC's minimum point.

Therefore, the marginal cost curve must cut the average cost curve at its lowest point for a firm to break even in the long run.

The long run is a period of time where all factors of production are variable. In the long run, a firm can adjust its plant size, which is a major investment decision.

• A. Fuel and maintenance costs are typically considered short-run costs as they vary with the level of output in the short term.
• B. The planned size of plant and equipment represents a long-run decision because a firm can alter its scale of production in the long run.
• C. The existing size of plant and equipment represents a short-run constraint.
• D. Rent on buildings can be either a short-run or long-run cost. However, the planned size of plant and equipment represents a bigger decision to be made in the long run.