IJMB 2025 ECONOMICS PAPER I
IJMB 2025 ECONOMICS PAPER I QUESTION BELOW
SOLUTIONS BELOW
*IJMB ECONOMIC SOLUTIONS*
1.
Given:
Qs = 3(W – 50)
Qd = 2(650 – W)
i.
At equilibrium:
Qd = Qs
So:
3(W – 50) = 2(650 – W)
=> 3W – 150 = 1300 – 2W
=> 3W + 2W = 1300 + 150
=> 5W = 1450
=> W = ₦290
Now substitute W = 290 into either Qd or Qs:
Qd = 2(650 – 290) = 2(360) = 720 workers
or
Qs = 3(290 – 50) = 3(240) = 720 workers
ii.
Total wage bill = Wage × Quantity of workers
= ₦290 × 720 = ₦208,800
iii.
Qs = 3(350 – 50) = 3(300) = 900
Qd = 2(650 – 350) = 2(300) = 600
Excess supply = Qs – Qd = 900 – 600 = 300 worker
2. PICK ANY SIX
i. Large number of buyers and sellers – No individual buyer or seller can influence the price.
ii. Homogeneous products – All products are identical, with no brand differentiation.
iii. Free entry and exit – Firms can freely enter or leave the market without barriers.
iv. Perfect information – All buyers and sellers have full knowledge of prices and market conditions.
v. Price takers – Firms accept the market price without trying to influence it.
vi. No government intervention – Prices and output are determined purely by market forces.
vii. Perfect mobility of factors of production – Labour and capital can move freely across firms or industries.
viii. Profit maximization goal – All firms aim solely at maximizing profit.
3(a)
i. What to produce?
Deciding which goods and services should be produced and in what quantity.
ii. How to produce?
Choosing the method of production (labor-intensive or capital-intensive).
iii. For whom to produce?
Determining who gets the goods — how resources and output are distributed among people.
3(b)
In a traditional economy, solutions are based on customs, traditions, and beliefs passed down through generations:
i. What to produce?
Based on ancestral practices (e.g., farming, fishing, herding).
ii. How to produce?
Using simple tools and methods handed down (labor-intensive techniques).
iii. For whom to produce?
Goods are shared within families or the community, based on customs and social roles.
4a) PICK ANY FOUR
i.Human element – Labour involves human beings, unlike land or capital.
ii. Labour cannot be separated from the labourer – The person provides the service personally.
iii. Labour is mobile – Workers can move from place to place.
iv. Labour has feelings and rights, unlike machines.
v. Labour improves with training, unlike fixed capital.
vi. Labour cannot be stored – Unused labour is lost (e.g., idle time).
vii. Labour is influenced by motivation – Performance depends on morale.
viii. Labour has diminishing returns – More workers may reduce efficiency beyond a point.
b)
i. Specialization – People become skilled at a specific task.
ii. Increased productivity – Output per worker increases.
iii. Time saving – Less time switching between tasks.
iv. Use of machinery – Tasks are simplified for machines.
v. Higher quality products – Specialization leads to expertise.
vi. Employment generation – More roles are created.
vii. Reduced training time – Workers focus on limited skills.
viii. Interdependence – Workers rely on one another, encouraging cooperation.
5a)
i. Scarcity of resources – Resources are limited but wants are unlimited.
ii. Alternative uses – Each resource can be used in multiple ways.
iii. Opportunity cost – Choosing one means giving up another.
iv. Unlimited wants – Human desires are endless.
v. Efficient allocation needed – Resources must be wisely distributed.
b)
i. Basis of economics – Economics exists because of scarcity.
ii. Forces choice – Individuals must prioritize needs.
iii. Determines value – Scarce items are more valuable.
iv. Influences prices – Limited supply increases price.
v. Drives resource allocation – Directs how resources are used.
6.Highlights trade-offs – Every decision involves compromise.
c)
i. To explain economic relationships – E.g., law of demand.
ii. To predict outcomes – Anticipate effects of decisions.
iii. To aid decision making – Helps governments, firms, and individuals.
iv. To guide policy formulation – Framework for planning.
v. To allocate resources efficiently.
vi. To understand economic behaviour.
vii. To measure effects of scarcity and choice.
vii. To ensure equity and fairness in distribution.
6a)
i. Availability of substitutes – More substitutes → more elastic.
ii. Nature of the good – Necessities are inelastic; luxuries are elastic.
iii. Proportion of income spent – Expensive items are more elastic.
iv. Time period – Demand becomes more elastic over time.
v. Habit-forming goods – Addictive goods tend to be inelastic.
vi. Definition of the market – Narrowly defined goods have elastic demand.
6(b)
Given:
Initial price (P₁) = N40
New price (P₂) = N50
Initial quantity (Q₁) = 60 units
New quantity (Q₂) = 30 units
i. Point Elasticity of Demand (using initial point):
Formula:
E = (ΔQ / ΔP) × (P₁ / Q₁)
ΔQ = Q₂ − Q₁ = 30 − 60 = −30
ΔP = P₂ − P₁ = 50 − 40 = 10
E = (−30 / 10) × (40 / 60)
E = (−3) × (2/3) = −2
Point Elasticity = −2 (elastic)
ii. Arc Elasticity of Demand
Formula:
E = (ΔQ / Average Q) ÷ (ΔP / Average P)
ΔQ = −30
Average Q = (60 + 30)/2 = 45
ΔP = 10
Average P = (40 + 50)/2 = 45
E = (−30 / 45) ÷ (10 / 45)
E = (−2/3) ÷ (2/9) = (−2/3) × (9/2) = −3
Arc Elasticity = −3
Interpretation:
Since both elasticities are greater than 1 in absolute value, demand is elastic — consumers are sensitive to price changes.
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