2017 - JAMB Economics Past Questions and Answers - page 5

where;
N = number of items in the distribution
X = is variable
x̄ = Arithmetic mean
∑ = sum of

A perfect market may be defined as one in which buyers or sellers cannot influence the price of goods and services. That is, the buyers or sellers are price taker since there exist a common price for commodities throughout the market.

Given C = 10 + 0.6Y when Y = 20
Substitute for the value of Y in the equation to calculate the actual value for C
Therefore, C = 10 + 0.6(20)
C = 10 + 12
C = 22.00

Money market can be defined as a market for short term loan. The market consists of institution
or individuals who either have money to lend or wish to borrow on a short term basis. The central
bank is the sole authority in the banking industry and act as banker to the government and the
commercial banks.
The stock market is an instrument for raising fund for limited liability companies which have
shares of the company to give out in exchange for fund.
Insurance company are financial institution that are concerned with insurance. Insurance company
indemnify the insured against loss which he may suffer in the future upon payment of a premium.

Opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. Opportunity cost helps the government in the preparation of budget, since it assists in the effective allocation of scarce resources to certain sector of the economy. It helps in making certain decision e.g. the priority areas that may require immediate attention.

Personal income, disposable income and transfer earnings are sources of individual income after
payment of taxes and charges left to be spent or saved as one wishes.
Source of Government revenue include Grants, aids, borrowings, taxes, fees, licences, fines,
dividends, profit and many others but not personal income. Disposable income and transferable income.

Limited partnership is one who has agreed to contribute a certain sum to a partnership in business and is prevented by law from taking any active part in the management and administration of the business. He is liable for debts and obligations of the partnership only up to the amount of capital he has contributed. A limited partner has limited liability.

Indirect tax refers to taxes which are imposed or levied on goods and services. The producers bear the initial burden of tax before shifting them to the final consumers in the form of higher price.

This is one of the reasons government participates in the location of industries. When such industries are located, goods are made available and the people get employment and earn income hence, their standard of living will be improved

Zero-Based budgeting and traditional budgeting are the two predominantly used budgeting techniques. Zero-based budgeting is a budgeting method where current year’s budget is prepared from the scratch i.e. taking the base as zero. The old and the new activities of the business are ranked according to their importance and based on that, resources are allocated to each activity without considering the past budgets or achievements.

Traditional budgeting is a method of preparation of the budget in which the last year’s budget is taken as the base. Current year’s budget is prepared by making changes to previous year’s budget by adjusting the expenses based on the inflation rate, consumer demand, market situation etc.

In case of zero-based budgeting, it is easy to eliminate an existing item or add a new item to the current budget, as zero-based budgeting is a creation of entirely new budget from the ground. In other words, zero-based budgeting is more flexible in nature.