IJMB 2024 ECONOMICS QUESTIONS
IJMB 2024 ECONOMICS QUESTIONS AND ANSWERS
IJMB 2024 ECONOMICS PAPER I QUESTIONS BELOW
IJMB 2024 ECONOMICS PAPER I ANSWERS BELOW
2024 IJMB ECONOMIC ANSWERS
NUMBER FIVE
(5a)
The scale of preference refers to the ranking or ordering of wants and needs by individuals or entities according to their importance or satisfaction levels. It represents the prioritization of choices based on preferences, reflecting the relative importance of various* goods and services that an individual desires but cannot have all at once due to limited resources.
(5b)
Consumers:
Consumers seek to maximize utility, which refers to the satisfaction or benefit derived from consuming goods and services. This process involves making choices that offer the highest possible satisfaction given their budget constraints. Consumers achieve this through rational decision-making, where they allocate their limited income among various goods based on their preferences and the prices of those goods. For instance, a consumer might decide to purchase a combination of goods that offers the greatest total satisfaction (utility) given their budgetary limits. This decision-making process is guided by the law of diminishing marginal utility, which states that as a consumer consumes more of a good, the additional satisfaction derived from each additional unit decreases.
Producers:
Producers, on the other hand, maximize utility through profit maximization. Utility for producers can be seen as the satisfaction derived from achieving their business objectives, primarily profit. Producers seek to maximize profit by optimizing production processes, minimizing costs, and setting prices that consumers are willing to pay. They make decisions based on marginal analysis, where they compare the additional cost (marginal cost) of producing one more unit with the additional revenue (marginal revenue) that unit will generate. This ensures that producers allocate resources efficiently to maximize their profitability.
2024 IJMB ECONOMICS ANSWERS
NUMBER TWO
(2)
The Law of Diminishing Returns and the Law of Returns to Scale are both fundamental concepts in economics, particularly in the theory of production. Here’s how they differ
(i) Time Horizon: The Law of Diminishing Returns applies in the short run (at least one input fixed), whereas the Law of Returns to Scale applies in the long run (all inputs variable).
(ii) Inputs Considered: Diminishing Returns focuses on the effect of increasing one variable input on output, while Returns to Scale considers the impact of increasing all inputs together.
(iii) Scope of Analysis: Diminishing Returns pertains to the marginal output of additional units of a single input, while Returns to Scale examines the overall productivity change when all inputs are adjusted proportionately.
ECONOMICS
IJMB 2024 ECONOMICS QUESTIONS
Law of Diminishing Returns:
Applies to a single input (e.g., labor or capital) while holding other inputs constant.
States that as the quantity of the input increases, output will eventually increase at a decreasing rate. Marginal output of each additional unit of the input will decreases. The law Focuses on the relationship between a single input and output.
Law of Returns to Scale:
Applies to all inputs (e.g., labor, capital, and technology) being increased proportionally. The law examines how output changes when all inputs are increased together.
– Three possible scenarios:
(i)Increasing returns to scale: Output increases more than proportionally.
(ii)Constant returns to scale: Output increases proportionally.
(iii) Decreasing returns to scale: Output increases less than proportionally. The law also focuses on the relationship between all inputs and output, and how they affect productivity.
To illustrate the difference:
(i)Law of diminishing returns: Adding more laborers to a fixed piece of land will eventually lead to decreasing marginal output.
(ii) Law of returns to scale: Increasing all inputs (labor, capital, and technology) proportionally can lead to increasing, constant, or decreasing returns to scale.
In summary, the law of diminishing returns focuses on short-term scenarios with a fixed factor, while returns to scale consider long-term adjustments in all production variables. Both concepts impact production efficiency and can have positive or negative effects on businesses.
IJMB 2024 ECONOMICS PAPER III QUESTIONSÂ
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IJMB ECONOMICS PAPER III ANSWERS
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