Economics JAMB Questions and Answers 2027

Correct Answer: B. Scarcity of economic resources relative to unlimited human wants

Explanation/Tip: Scarcity is the central problem of economics because resources (land, labor, capital, entrepreneurship) are limited while human wants are insatiable.

Correct Answer: C. The alternative forgone when a choice is made

Explanation/Tip: Because resources are scarce, choosing one alternative requires sacrificing the next best alternative, which constitutes the real cost (opportunity cost).

Correct Answer: B. Inverse relationship between price and quantity demanded

Explanation/Tip: According to the law of demand, as price rises, quantity demanded falls, and vice versa, resulting in a negative (downward) slope.

Correct Answer: B. Price elastic

Explanation/Tip: When demand is elastic (Ed > 1), a price hike causes a proportionately larger drop in quantity demanded, leading to a fall in total revenue.

Correct Answer: B. The intersection of market demand and market supply curves

Explanation/Tip: Market equilibrium occurs where quantity demanded equals quantity supplied, represented graphically where the demand and supply curves intersect.

Correct Answer: B. Short run when at least one factor of production is fixed

Explanation/Tip: Diminishing marginal returns occur when variable factors (like labor) are added to a fixed factor (like land or plant size), eventually causing marginal product to decline.

Correct Answer: D. Monopoly

Explanation/Tip: A pure monopoly is defined by a sole producer controlling the entire market supply with insurmountable entry barriers for potential competitors.

Correct Answer: A. Net income from abroad

Explanation/Tip: GNP = GDP + Net factor income from abroad (income earned by citizens abroad minus income earned by foreigners domestically).

Correct Answer: B. Demand-pull inflation

Explanation/Tip: Demand-pull inflation occurs when aggregate demand outpaces aggregate production capacity (“too many dollars chasing too few goods”).

Correct Answer: B. Acting as banker to the government and lender of last resort

Explanation/Tip: The central bank manages monetary policy, issues currency, regulates commercial banks, and serves as the government’s banker and lender of last resort.

Correct Answer: B. Government taxation and public expenditure

Explanation/Tip: Fiscal policy is implemented by the government through the budget, adjusting taxes and government spending to influence economic activity.

Correct Answer: C. Progressive tax

Explanation/Tip: A progressive tax takes a larger percentage of income from high-income earners than from low-income earners (e.g., personal income tax).

Correct Answer: B. Comparative advantage and specialization

Explanation/Tip: Countries engage in international trade because of differences in factor endowments, specializing in goods where they have a lower opportunity cost (comparative advantage).

Correct Answer: B. Higher value of visible exports than visible imports

Explanation/Tip: Balance of trade refers strictly to visible goods. A trade surplus (favorable) occurs when export earnings exceed import expenditures.

Correct Answer: B. Make exports cheaper and imports expensive

Explanation/Tip: Devaluation lowers the exchange value of domestic currency, boosting international competitiveness of exports while discouraging expensive foreign imports.

Correct Answer: B. Structural changes, poverty reduction, and improved quality of life

Explanation/Tip: While economic growth measures quantitative increases in output, economic development encompasses qualitative improvements in human welfare, literacy, health, and equity.

Correct Answer: B. Rapid population growth and educational mismatch with job market needs

Explanation/Tip: Structural unemployment and youth joblessness in developing nations stem from rapid demographic expansion and curricula that do not match industrial requirements.

Correct Answer: B. Additional satisfaction derived from each extra unit declines

Explanation/Tip: The law of diminishing marginal utility states that the extra satisfaction a consumer gets from consuming successive units of a commodity diminishes as consumption increases.

Correct Answer: B. Falling long-run average costs as output expands

Explanation/Tip: Internal and external economies of scale enable large firms to reduce average production costs through specialization, bulk purchasing, and technological efficiency.

Correct Answer: B. They do not represent payment for currently produced goods or services

Explanation/Tip: Transfer payments (such as pensions, unemployment benefits, and scholarships) redistribute income without generating corresponding current economic output.

Correct Answer: C. Petroleum profit tax

Explanation/Tip: Direct taxes (like personal income tax and petroleum profit tax) are levied directly on income or wealth and cannot be easily shifted to others, unlike indirect taxes.

Correct Answer: B. Government expenditure exceeds government revenue

Explanation/Tip: A deficit budget happens when projected spending outstrips tax and non-tax revenues, requiring borrowing or drawing down reserves.

Correct Answer: A. Buying and selling government securities to control money supply

Explanation/Tip: Selling securities reduces money supply by withdrawing cash from banks, while buying securities injects liquidity into the financial system.

Correct Answer: B. Population increases geometrically while food production increases arithmetically

Explanation/Tip: Thomas Malthus posited that unchecked population outstrips food supply, leading to poverty, famine, and preventative or positive checks.

Correct Answer: B. Changes in technology or shifts in consumer demand making certain skills obsolete

Explanation/Tip: Structural unemployment occurs when industrial restructuring or technological advancement creates a mismatch between worker skills and available jobs.

Correct Answer: B. Separate legal personality and limited liability

Explanation/Tip: A registered company is a legal entity distinct from its owners, protecting shareholders with limited liability up to their nominal share value.

Correct Answer: B. Provide essential services and welfare to citizens at affordable prices

Explanation/Tip: Unlike private profit-maximizing firms, state-owned public corporations prioritize social welfare, infrastructure delivery, and public utility access.

Correct Answer: B. Quantity supplied to a change in the price of the commodity

Explanation/Tip: Price elasticity of supply is defined mathematically as the percentage change in quantity supplied divided by the percentage change in price.

Correct Answer: B. A tax or duty imposed on imported commodities

Explanation/Tip: Tariffs are trade protection instruments used by governments to raise the domestic price of imports and protect domestic industries from foreign competition.

Correct Answer: A. The difference between what a consumer is willing to pay and what they actually pay

Explanation/Tip: Consumer surplus represents net economic benefit, occurring when buyers acquire goods at a market price lower than their maximum valuation.

Correct Answer: A. Dividing a production process into specialized sub-tasks assigned to different workers

Explanation/Tip: Pioneered by Adam Smith, division of labor increases productivity and efficiency through worker specialization and elimination of time wastage.

Correct Answer: C. World Trade Organization (WTO)

Explanation/Tip: The WTO oversees global trade agreements, provides a forum for negotiating tariff reductions, and arbitrates trade disputes among member nations.

Correct Answer: B. Appreciation of the local currency leading to neglect and decline of other tradable sectors

Explanation/Tip: Natural resource booms strengthen the domestic currency, making domestic agriculture and manufacturing uncompetitive on international markets.

Correct Answer: B. Raw materials and components used up in the production of other goods

Explanation/Tip: To avoid double counting in GDP, intermediate goods are excluded, as their value is embedded in the final market price of finished goods.

Correct Answer: B. Interest rates are very low and monetary policy becomes ineffective as people hoard cash

Explanation/Tip: In a liquidity trap, nominal interest rates are near zero, and injections of money supply fail to stimulate economic activity because public preference for liquid cash is absolute.

Correct Answer: B. Payment to a factor of production above its transfer earnings

Explanation/Tip: Economic rent is any payment to a factor of production exceeding the minimum amount required to keep it in its present use (transfer earnings).

Correct Answer: B. Conserve scarce foreign exchange reserves and correct balance of payments deficits

Explanation/Tip: Exchange controls restrict citizens and businesses from freely converting local currency into foreign currency, protecting dwindling external reserves.

Correct Answer: B. Income inequality within a population

Explanation/Tip: The Lorenz curve plots cumulative percentage of income against cumulative percentage of population, from which the Gini coefficient is derived.

Correct Answer: A. Inflation rate and unemployment rate

Explanation/Tip: The short-run Phillips curve shows that lower unemployment is typically associated with higher rates of wage and price inflation.

Correct Answer: B. Enhance efficiency, reduce government fiscal burden, and encourage private investment

Explanation/Tip: Privatization transfers ownership from government to private investors to foster market competition, operational efficiency, and relieve treasury subventions.