2018 - JAMB Economics Past Questions and Answers - page 3

A direct tax is a tax paid directly to the government by the person or entity on whom it is levied. Indirect taxes, on the other hand, are levied on one entity, but the burden is passed on to another. * **Capital gains tax**, **personal income tax**, and **capital tax** are all paid directly by individuals or companies to the government. * **Purchase tax** (also known as sales tax or value-added tax) is levied on the seller, but the consumer ultimately bears the burden of the tax through the increased price of the good or service. It is thus an indirect tax.

A limited liability company is a type of business structure where the company's owners (shareholders) are not personally liable for the company's debts. This means that the shareholders' personal assets are protected in case the company faces financial difficulties or legal issues.

Here's how to determine the correct answer: * **Price Elasticity of Demand:** The price elasticity of demand (PED) measures how much the quantity demanded of a good changes in response to a change in its price. A PED of 0.43 means the demand is relatively inelastic (less than 1). * **Inelastic Demand:** When demand is inelastic, consumers are not very sensitive to price changes. This means that if the price of a good increases, the quantity demanded will decrease, but by a smaller proportion. * **Impact on Revenue:** An increase in price will lead to a small decrease in quantity demanded. Since the percentage increase in price is greater than the percentage decrease in quantity demanded, total revenue (Price x Quantity) will increase. * **Profit:** Since total

Utility in economics refers to the satisfaction or benefit derived from consuming a good or service. Therefore, the power of satisfying a want is the most accurate definition.

Concentrating industries in one place leads to several benefits, primarily related to **external economies of scale**. These economies arise from the growth of an industry within a specific area. Here's why: * **External Economies:** These benefits accrue to all firms within an industry due to the industry's growth. Examples include: * **Specialized labor pool:** A concentration of firms attracts workers with specific skills. * **Improved infrastructure:** Local government may invest in better infrastructure (roads, transport, etc.) * **Supporting industries:** Suppliers and service providers locate nearby, reducing costs and improving efficiency. * **Other Options:** * **A. Cost economies:** This is too general, could apply to several different areas. * **B. Economies of

The effect on the demand for product A caused by a change in the price of product B is called cross-elasticity of demand. Cross-elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. * **Joint demand** refers to the demand for two or more goods that are used together (e.g., cars and gasoline). * **Elasticity of supply** measures the responsiveness of the quantity supplied of a good to a change in its price. * **Competitive demand** is a term that is sometimes used to refer to goods that are substitutes, but it is not a standard economic term.