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Objectives Questions
Essay Questions
Objectives solutions
Essay solutions.
2022 WAEC ECONOMICS OBJECTIVES QUESTIONS
1. Scale of preference shows A. incomes of consumers in order of size. B. utilities enjoyed by consumers. C. opportunity cost of goods consumed. D. consumers wants in order of priority.
2. There is unemployment of resources when production is A. within the production possibility curve. B. outside the production possibility curve. C. along the production possibility curve. D. adequate to meet market demand.
3. A major characteristic of natural re-
sources is that they A. are unlimited in
supply. B. have high cost of production C. are free gifts of nature. D. do not command any price.
4. A major disadvantage of a capitalist economy is that it A.. leads to low production of goods and services. B.
requires large number of officials to
operate C. considers individual con-
sumers satisfaction. D. worsens in-
come inequality among the citizens.
5. The mining sector of an economy contributes 60% to the Gross Domestic Product (GDP). If the GDP is $540, what is the contribution of the mining sector? A. $90.00 B. S180.00 C. S324.00 D. $350.00
6. The increase in the demand for a commodity may lead to a decrease in the demand for another if both are A. in complementary demand. B. of the
Same quality. C. in composite demand. D. in competitive demand.
7. The demand curve for goods of ostentation is usually A. negatively sloped. B. positively sloped. C. vertical. D. horizontal.
8. Which of the following factors is not a cause of change in demand? A. Changes in taste and fashion B. income dis tribution C. price of the commodity D. the size of the population
9. If the quantity demanded of a comodity increases from 20 units to 30 mits when there is an increase in price trom S4.00 to S5.00, the elasticity of demand is A. 0.50. B. 0.65. C. 2.00. D. 2.50.
10. The supply curve of a locally-produced good may shift to the right if A. there is an increase in taxes on inputs. B. government increases subsidies. C. rural-urban migration is encouraged.
D. the price of the commodity increases.
11. In perfectly elastic supply, the supply curve A. is vertical. B. is horizontal. C. slopes upward. D. slopes downward.
12. An increase in the price of commodity X led to a fall ‘in the supply of commédityY. coamodities X and Y are A. competitive goods. B. composite goods. C.jointly supplied. . derived goods.
13. The production of rice and yam on the same farmland is an example of A.
joint supply. B. composite supply. C.
competitive supply. D. market supply.
14. A consumer of a single commodity is in equilibrium when A. he can equate his demand with price. B. he equates marginal utility and price. C. he can equate his marginal and total utilities. D. his marginal utility is equal to zero.
15. If the government imposes a mini-
mum price on a commodity A. market surplus occurs. B. the market will
be cleared in the short-run. C. excess
demand occurs D. governthent regulation is no longer needed.
16. A minimum price legislation is also
called A. price ceiling. B. price floor.
C. price control. D. price mechanism.
17. Which of the following factors is not a cause of diminishing returns? A. Increase in variable inputs B. Land fragmentation C. Constant technology D. Technological innovations
18. In manufacturing, division of labour may be hindered by A. excessive demand for the product. B. low level of technology. C. excess supply of labour. D. increase in the export of goods.
19. The production cost that varies in-
versely with output is the A. total fixed
cost. B. marginal cost. C. average
fixed cost. D. average cost.
20. A firm that closes down will still incur A. variable cost. B, fixed cost. C. total cost. D. marginal sost.
21. The sufficient condition for a firm to be in equilibrium is that the A. firm
must show that it is profitable. B. mar-
ginal cost must be equal to average
revenue. C. marginal revenue curve is
above the average revenue curve. D.
marginal cost curve cuts the marginal
revenue curve from below.
22. Cooperative societies are formed
mainly to A. assist producers to
maximize their profits. B. encourage
thrift and credit among members. C.
promote and maintain the welfare of
members. D. break the monopolies of
private companies.
23. A disadvantage of a joint-stock company is A. unlimited liability. B. limited liability. C. lack of continuity when a shareholder dies. D. limited control in management by shareholders.
24. The middleman is responsible for A. providing research facilities. B. pur-
chasing raw materials. C. designing
the product. D. breaking the bulk.
25. A major function of the retailer is to A. grant credit to the wholesaler. B.
break bulk and sell products in small
units. C. reduce cost of distribution. D.
generate demand for products through advertisement.
26. A positive effect of a rapid population increase is A. an excessive budget deficit. B. a reduction in standard of living. C. a wider market for goods
and services. D. a higher dependency
ratio.
27. Which of the following factors may
not affect the efficiency of labour? A.
education and training B. Provision of
welfare service C. Race and colour of
workforce D. Quality of other factor
inputs
28. The type of unemployment found
among workers who leave their jobs
in search of other jobs is teried A.
seasonal unemployment. B. structural
unemployment. C. frictional unemployment. D. cyclical unemployment.
29. The main objective of marketing
boards is to A. accumulate revenue
for government. B. educate farmers on pricing of cash crops. C. stabilize the incomes of cash crop farmers. D. provide warehousing facilities.
30. The use of mass advertising media will enable a firm to enjoy A, managerial economies. B. financial economies. C. marketing cconomies. D. welfare economies.
31. Which of the following industries will add more value to primary products?
A. Service industry B. Construction
industry C. Mining industry D. Processing industry
32. Gross National Product (GNP) less
the provision for the wear and tear of
assets is the A. net present value. B.
net national product. C. net factor in-
come. D. net indirect taxes.
33. An example of transter paynments in national income accounting is A. money transferred to another countrv B unemployment allowance paid to the citizens. C. the amount paid to a worker on transfer. D. transfer of fuids
from one bank to another.
34. Increasing national income without effective control of population size in a country can lead to A. higher per capita income. B. increase in poverty. C. increased outflow of aid. D. underutilization of resources.
35. An example of commodity money is A. currency note. B. mobile money. C. cheques. D. silver.
36. If inflation is anticipated, people may A. save more money. B. spend more money. C. give out more loans. D. spend less money.e
37. If the Central Bank increases its bank rate A. many banks will shut down their operations. B. customers will borrow more from banks. C. the supply of money may be reduced. D. interest charges by banks will fall.
38. Commercial banks are diferent from development banks in that the latter A. lend on short-term basis. B. pay interest on current accounts only. C. are mostly joint-stock companies. D. do not deal in foreign currencies.
39. The use of the bank rate, cash ratio
and open market operations constitute A. fiscal policy. B. monetary policy. C. import policy. D. export policy.
40. Fiscal policy measures imply a change in A. only taxation to control aggregate demand. B. bank rates to influence lending. C. only government expenditure to regulate an economy. D. government revenue and expenditure to regulate an economy
41. If demand is perfectly inelastic, a tax imposed A. is borne only by the producer. B. is borne only by the consumer C. will have greater impact on the seller. D. will have no impact on the buyer.
42. Deve’opment planning focuses mainly on A. illocation of resources by the entreprenurs. B. mapping out strategies by the government. C. developing some areas of the country by the government. D. deciding on which types of homes to build.
43. Political instability hinders economic growth because it A. scares many people from politics. B. prevents politicians from playing effective politics. C. discourages entrepreneurs generally. D. encourages urban-rural migration.
44. Foreign investment and long term
securities in the balance of payments
accounts are recorded as A. current
account transaction. B capital account
transaction. C. balance of trade ac-
count transaction. D. invisible balance
account transaction.
45. An argument for the use of commercial policy rest on the need to A, make imported goods affordable. B. reduce domestic unemployment. C. encourage the importation of non-essential goods. D. make a country enjoy absolute advantage in production of all goods.
46. Which of the following measures can lead to an increase in exports? A. Increase in export duties B. Increase in
excise duties C. Depreciation of cur-
rency D. Total ban on imports
47. Given that a country’s index of export price is 180 and that of import 200, the terms of trade is A. 0.09. B. 2.00. C. 90.00. D. 380.00.
48. A benefit that is present in all forms of economic integration is that A. factors of production are free to move and be moved. B. Common currency is in use. C. common agricultural policy is in place. D. the size of the market is widened.
49. The main function of the African
Development Bank (ADB) is to A.
promote free trade and development
among members. B. provide loans to
finance balance of payments problems. C. provide loans to members to finance viable projects. D. help members overcome their internal problems.
50. If petrol is no longer needed to produce energy, then demand for crude oil A. will increase. B. will remain constant. C. may be limited to chemical industries. D. will make producing countries richer.
2022 WAEC ECONOMICS THEORY
QUESTIONS
SECTION A
1. A hypothetical national income data
for a country in a particular year is
presented below.
From the data above, answer the following questions.
Calculate the:
(a) Gross Domestic Product (GDP):
(b) Gross National Product (GNP):
(c) Net National Product (NNP).
The diagram below shows the effects
of the introduction of a subsidy on the
production of maize.
Study the diagramn and answer the
questions that follow.
2a(i) Identify the curves labelled X, Y and Z.
(ii) State the direction of change in price 2 and quantity with the introduction of subsidy.
(b) Calculate the total revenue of the producers:
(i) before the introduction of subsidy;
(ii) after the introduction of subsidy.
(c) Calculate the percentage increase or decrease in the total revenue of the
producers with the introduction of
subsidy:
(d) If the quantity demanded of maize increases from 20 to 40 bags as a result of a fall in price from S15 to S10, calculate the price elasticity of demand.
(e) State the type of elasticity of demand in 2 (d).
SECTION B
3(a)Define the term limited liability.
(b) Describe four differences between a public joint-stock company and a private joint-stock company.
(c) Outline three sources of finance available to sole proprietorship.
4(a)Distinguish between labour force and efficiency of labour
(b) Describe five factors which determine the size of the labour force in a country efficiency of labour.
5(a)What is a demand schedule?
(b) Explain each of the following terms:
(i) effective demand;
(ii) composite demand;
(ii) derived demand.
(c) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its:
(i) substitute;
(ii) complement.
6(a)Explain the following types of taxes:
(i) specific tax;
(ii) value-added tax.
(b) With the aid of diagramns, describe the effects of an indirect tax on a commodity when demand is:
(i) perfectly inelastic;
(ii) perfectly elastic,
7(a)Distinguish between a:
(i) mortgage bank and a merchant bank
(ii) commercial bank and a development bank.
(b) Explain any four functions of commercial banks.
8(a) What is economic integration?
(b) Outline any three short-comings of
the Bconomic Community of West Af-
rican States (ECOWAS).
(c) Highlight any three achievements of the Economic Community of West African States (ECOWAS).
2022 WAEC ECONOMICS OBJECTIVES
SOLUTIONS
1. D: scale of preference is a list of consumer’s wants in order of priority
2. A: a point within the production possibility curve indicates that there is under-utilization of resources
3. C: natural resources are free gifts of
natures because they are not invented
by anyone
5. C:
4. D: in a capitalist economy, the rich get richer because exploitation of the poor is the order of the day
Contribution of mining sector
=60% x $540 = $324
6. D: when the increase in demand for
one good lead to decrease in demand
for another goods, then, it can be said
that the goods are competitive
7. B: ostentation goods are goods that people demand more of it when their prices rise, Thus, it will have a positive gradient
8. B: income distribıtion does not de-
termine the demani for goods but income does.
9. C: Price elasticity of demand
10. B: a rightward shift in supply curve is an increase in supply. One of the factors that can lead to increase in supply is when government increase subsidy. This is because the supplier will have more resources to increase his/her production.
11. B: when demand/supply is perfectly elastic, the curve will be horizontal because the price is fixed
12. C: since an increase in price of X wil lead to decrease in demand for X,
thus, there will be decrease in supply
of goods jointly produced with X such
as good Y
13. B: a composite supply is a type of supply when a single factory can produce more than one output
14. B: a single consumer is aid to be at equilibrium when MU, = P, where
MU, = marginal utility for good X
while P,= price of X
13. C: minimum price is usually set above the equilibrium price. Thus, excess supply will first occur in the market
16. A: minimum price regulation, since it occurs above the equilibrium price is referred to as price ceiling
17. B: if land is fragmented, it means it is fixed, Thus, will not lead to diminishing return
18. B: technology aid division of labour. Thus, low level of technology may hinder division of labour.
19. C: as output increases, average fixed cost decreases. Thus, number of out-put and average fixed cost have in-verse relationship
20. B: fixed cost will be incurred whether a firm produce or not. But some of the fixed cost can be eliminated when a firm shutdown
21. D: the sufficient condition for equi-
librium of a firmn is for the marginal
cost curve to cut the marginal revenue
curve from below
22. C: cooperative society is aimed at promoting the welfare of its members
23. D: in joint stock company, the owners have limited control of the company since the affairs of the company is entrusted to hired personnel
24. D: the middlemen break large quantities into smaller units for consumers
25. B: the retailer break bulk so as to sell to final consumers in units.
26. C: an increasing population will make the market of the economy to be wider
27. C: race and colour of labour does not determine the efficiency of the labour
28. C; frictional unemployment is those unemployed as a result of search for new job
29. D: one of the major objectives of marketing board is to provide storage facilities for farmers. Through this, the
income of the farmers can be stabilised
30. C: mass advertising media will marke the product of the firm. Thus, enjoying marketing economies of scale.
31. D: processing industry, having col-
lected the primary products from the
mining firms, will process it to make it
more valuable
32. B: GNP- depreciation = NNP
33. B: transfer payments are all payment made without a tangible economy value for it such as unemployment benefits
34. B: if the national income is increasing and the population is not checked, the increasing population will outweigh the effect of the increasing national income and that will lead to poverty
35. D: a commodity money is an object that has intrinsic value and which can also serve as money
36. B: if inflation is anticipated such as
hike in price of fuel, people will buy more now.
37. C: if the central bank increases the
bank rate, commercial banks will give
lesser loan, thus, that will reduce cre-
ation of money
38. B: development banks do not operate savings account
39. B: monetary policies are tools used by the monetary authority such as the central bank to regulate the volume of cash in the economy
40. D: iscal policy refers to all govern-
ment tools of spending and revenue
used to regulate the economy
41. B: if demand is perfectly inelastic, the) demand curve will be vertical. That means the consumers are ready to buy at any price. Thus, the producer feel relax to transfer all taxes to the consumer
42. B: development planning involves
mapping out strategies to be used by
the government to boost development of the state
43. B: political instability discourages
politicians from putting in the best
policies because they are not assured
of the future.
44. B: foreign investment and long-term securities are recorded in the capital account because they do not occur regularly
45. D:
46. C: when a country’s currency is depreciated in relation to other currency, the export become cheaper. Thus, that can lead to increase in export.
47. No answer. Term of Trade = export price index/import price index = 180/200 = 0.90
48. D: Economic integration creates the opportunity of wider markets for citizens
49. C: A/DB aims at providing loans for members to execute viable projects such as roads
50. C:
2022 WAEC ECONOMICS THEORY SOLUTIONS
SECTION A
1(a)Gross Domestic Product = wages and Salaries + Income from self-empioyment + Interest + Rent + Profits and dividends + Royalties – Stock appreciation
=S[(250+120+10+25+35+2)-5] million
=$ (442-5) million
=$ 437 million
(b) Gross
National Product = Gross Domestic Product + Income from abroad
– Income paid abroad
=$ (437 +50-75) million
= $412 million
c) Net National Product = Gross National Product – Depreciation allowance
=S(412 – 3) million
=$ 409 million
2a(i)X = Demand curve
Y= Old/Original/Initial supply curve/
Supply curve before subsidy/S1
Z= New supply curve/supply curve
after subsidy/final supply curve/S1
(ii) Price decreases from S 15 to $ 10.
Quantity ifereases from 20 bags to 40
bag
b (i) Total revenue before the subsidy:
TR = P xQ
=$15 x 20
=$ 300.00
(ii) Total revenue after the subsidy:
TR =P x0
=S 10 x 40
=$ 400.00
(e) Demand is elastic.
SECTION B
3(a) Limited liability exists where the financial obligations of a firm’s owners, in case it fails, is limited to the amount of capital invested in the enterprise.
b (i) Ownership: A private joint-stock company is made up of between 2 and 50 members while a public Joint-stock company is made
up of between 7 and infinity.
(ii) Finance: The private company raises shares privately while the public company raises capital through the stock market.
OR
Shares for the private conpany are not
quoted on the Stock exchange but public companies have their shares listed on the Stock exchange.
(iii) Publishing of accounts:
Private companies are not mandated to publish their annual accounts, but public companies are compelled by law to publish their accounts.
(iv) List of directors: Private companies are not under obligation to submit the list of directors to the Registrar of Companies, but public ones are requested by law to do so.
(v) Transfer of shares/ownership: Members of private companies cannot
easily transfer shares, but shareholders
of public companies can easily do so
through the stock market.
(vi) ln public companies ownership is separated from management, while in private companies ownership may not be separated from management.
(vii)The name of a public company must end with Plc’ and that of a private company “ltd”.
c (i) Personal savings.
(ii) Borrowing from family and friends.
(ii) Loans from financial institutions.
(iv) Plough back profits.
(v) Trade credit.
(vi) Grants/loans from government.
(vii)lnheritance.
(vii)Sale of assets.
(ix) Hire purchase.
(x) Leasing of assets.
(xi)A ssistance from family and friends.
4a (i) Labour force refers to the proportion of a couniry’s population in the working age group who are employed or are seeking employment, while Efficiency of labour refers to the ability of labour to achieve the highest output possible without compromising quality in a given period of time.
b (i) The total population of the country If the total population is large, labour force will be large and vice versa.
(ii) The age distribution of the couniry’s popuiation. If the population is youthful, labour force will be large and vice versa.
(iii) The officiał retirement age of workers.
If this is low. labour force will be reduced and vice versa.
(iv) The number of women who take un paid jobs. If this is large, labour force will be also large and vice versa.
(v) Schooi leaving age of students. If this is low, labour force will be large and Vice versa.
(vi) The number of people pursuing further studies after the school leaving age. If this is large then labour force will be small.
(vii)Th number of people who retire voluntarily before the official retirement age. If more People retire before the official retirement age, labour force will be small and vice versa.
(vii)The number of disabled persons of
working age. If this is quite large, labour force will be small and vice versa.
(viii) The number of disabled persons of working age. If this is quite large, labour force will be small and vice versa.
(ix) The number of persons in voluntary unemployment. If this is large, labour force will be small and vice versa.
(x) The net migration. If the number of
immigrants is higher than the number
of emigrants the labour force will be
large and vice versa.
5 (a) A demand schedule is a table showing the quantities of a commodity demanded at various prices.
b(i) Effective demand refers to the desire for a commodity backed by the ability to pay at a particular price and time.
(ii) Composite demand refers to the demand for a commnodity due to its various uses.
(iii) Derived demand refers to demand for a commodity, not for its own sake, but for the production of another commodity.
ci) In the case where two commodities are substitutes e.g. Margarine and butter.
When the price of margarine increases
from P1 to P2, its quantity demanded
will decrease from Q1 to Q2. When this happens, consumers being rational will switch increasing the demand for butter shown by a rightward shift of the demand curve from D1D1 to D2D2:
C(ii) In the case where the commodities are complement, e.g Torch and batteries
When the price of torch increases from P1 to P2, the quantity demanded will fall from Q1 to Q2. When this happens, the demand for batteries will fall. Shown by a leftward shift of the demand curve from D1 D1 to D2D2.
6a (i) Specific tax is an levied per unit of an output irrespective of its value.
ii. Value added tax is an indirect tax levied on value added to a good or service produced. It is levied on the difference between sales revenue and the cost of producing an output.
b(i) demand is perfectly inelastic if at every price level, quantity demanded remains the same. The market price of the commodity Will rise by the full amount of the tax and the whole burden of the tax rest on the consumer.
OP1 was the price before the imposi tion of an indirect tax and the initial
supply curve was SoSo. When the tax
was imposed, the suppły curve shifted
from SoSo, to S1S1 forcing the price to rise from 0P1 to 0P2. The full amount of the tax is P1E1E2P2, above and is borne by the consumer.
(ii) Demand is perfectly elastic if at a given price, consumers are willing to buy all the commodities that are available and none at any price above the market price.
Since the producer cannot increase the price of the commodity, price remains the same and the entire burden of the tax rests on the producer.
The impositionof an indirect tax results in a leftward shift of the initial
supply curve SoSo to a new supply
curve S1S1. Pice remains the same a
OP1 and the whole burden of the tax
P1E1E2P2 rests on the producer.
7ai) A mortgage bank is a fnancial institution that specializes in granting loans to individuals and corporate bodies for building purposes. Such loans are repaid by instalments spread over several years.
While a merchant bank is a financial
institution that provides specialized
services like acceptance of bills of exchange, coporate finance, portfolio
managenent, equipment leasing and
acceptance of deposits.
ii) Commercial banks are financial institutions that perform the services of accepting deposits and using such money to nmake loans and other financial services available to customers. The loans are usually for short and medium terms.
While a development bank is a financial institution set up to provide long term loans to group of individuals and governments for development projects. They provide financial assistance in high risk, low profit and long gestation period inyestments which are unattractive to commercial banks.
b(i)Acceptance of deposit- Customers’ money can be kept in any of the different of commercial banks’ accounts Savings, current or demand deposit and time or fixed deposit accounts etc.
(ii) Lending of money-Commercial Banks make available loans and over-draft.
iii) Commercial banks provide facilities
for the safe keeping of valuables.
(iv) Commercial banks provide facilities for domestic and foreign remittance
(v) Commercial banks provide trust services for individuals and organiza-
tions. Trust services include the management of trust funds.
vi) Commercial banks act as agents for
their customers in the purchase and
sale of securities.
vii)Money creation – Deposit received can be given out as credits to customers which in turn creates further deposits.
vii)Commercial banks offer advisory services to custoners.
ix) Commercial banks discount bills of exchange for their customers.
Comnnercial banks act as execntors of
will for their customers.
(xi) Commercial banks belp the Central Bank to implement governments nonetary policy
(xii)Commercial banks seil foreign ex-
change to their customers.
8a(i)Economic integration is a form of international cooperation among nations to achieve a greater efficiency in the production of goods and services for the social and economic welfare of their counries.
b (i) Divided loyalty of member states.
(ii) Ideological differences.
iii) Inability to create a common curency.
(iv) Differences in levels of development among member states/ fear of domination of small countries by big countries.
(v) Political/social sub-region.
(vi) Inability to differentiate her products.
Members produce similar primary
products.
(vii)Inadequate infrastructurai facilities in the sub-region.
(Viii)Lack of political will to implement
the policies/agreements of the union.
(ix) Non-payment of dues by some member states.
(x) Negative attitude towards member
countries because of language differences.
(xi) Differences in trade policies in member countries.
c(i) Removal of custom duties.
ii) Reduced administrative restrictions
e.g. on investment.
iii) Establishment of common fund for
co-operation, compensation and development.
iv) Mediation among member states.
v) Fornation of the Economic Community of West African States Monitoring Group (ECOMOG).
vi) Growth and expansion of markets.
vii)Unity in the sub-region.
vii)Cooperation in culture and sports.
ix) Free movement of labour.
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