All 50 questions from the General Certificate of Education (GCE) Economics 2024 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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There is scarcity when
Scarcity can be defined as the limited available resources used in satisfying the unlimited human wants. It is important to note that the fundamental problem addressed by an economist is scarcity of resources.
Points within a Production Possibilities Curve (PPC) indicate
The points within or below or inside the production possibility curve indicates the waste of resources or inefficiency or widespread of unemployment. At this point, production is attainable but resources are not efficiently utilized.
Which of the following is not a feature of labour?
The efficiency of labour is an improvement in the service of labour which results in an increase in productivity and a decrease in the cost of production. Options A, B and C are all features of labour as a factor of production i.e labour efficiency does not depend on the size of labour.
The pursuit of private profits is a feature of
The capitalist economic system is an economic system in which most of the means of the production and distribution are owned and managed by the private individuals (private sector) and the production of government (public sector) is at minimum. However, in this case, maximization of profit is primary objective.
A major feature of the socialist economic system is
The socialist economic system is the opposite of the capitalist economic system. In this case, the means of production and distribution are substantially owned and managed by the government i.e public authorities. Also, there is equitable distribution of wealth or income.
If the budget on education is $ 50 m out of an annual national budget of $ 300 m. The sector of a pie chart representing education is
Given: Annual National budget = $300m. Budget on education = $50m. The sector of pie chart representing education is 60/360 × 360° = 60°.
Price elasticity of demand is the responsiveness of quantity demanded to a change in
The price elasticity of demand (PED) is the degree or extent of responsiveness of demand to a change in the price of a commodity. PED = %Δ in Qd / %Δ in P
When total revenue increases as price falls, the coefficient of price elasticity of demand is
For a commodity whose demand is fairly elastic, an increase in the price of the commodity will result in a decrease in the total revenue of the seller and vice versa. However, the PED is said to be fairly elastic when it is greater than one but less than infinity.
If the quantity demanded of rice decreased from 150 bags to 100 bags, the percentage range in quantity demanded is
Percentage change in quantity demanded = (New Qty−Old Qty)/Old Qty × 100% = (100−150)/150 × 100% = 10/1 × 100/1 = 33.3%.
The law of demand will not hold when
The normal law of demand states that the higher the price of a commodity, the lower the quantity demanded and vice versa. However, for rare commodities such as luxuries or article of ostentations, the law will not hold i.e the demand for those goods is abnormal or exceptional.
The movement from points x to z might have been caused by
The movement from point X to Z is known as an expansion (extension) of demand and this occurs as a result of a decrease in the price of the commodity itself. However, a contraction is the opposite and it occurs as a result of an increase in the price of the commodity.
If demand for postal services decline as a result of increased use of e-mails, then the two services are in a
Demand is said to be competitive when the demand for a commodity reduces the demand for another commodity. This is because commodities are close substitutes and one can be used in place of another.
Other things being equal, an increase in the demand for land in the short-run will cause an increase in the
All things being equal, an increase in the demand for a commodity in any market will lead to a rise in production and increased prices. When the demand for a commodity rises, its price rises and consequently its supply too. This is because every supplier is willing to supply more when the price rises and vice versa.
If the coefficient of price elasticity of supply of a commodity is 0.8, then
Elasticity of demand and supply is said to be fairly elastic when it is greater than one but less than infinity and it is said to be fairly inelastic when it is greater than zero but less than one or unity.
The negative slope of the demand curve is best explained by
A downward (negative) slope of the demand curve indicates an inverse or opposite relationship between the price of commodity and the quantity demanded. This is best explained by diminishing marginal utility, i.e. both have resemblance.
Minimum price legislation is used to protect the interests of
The minimum price legislation (price floor) is a price control type used by the government to protect the producers against an unreasonable decrease in their income and profit. However, maximum price legislation (price ceiling) is used to protect the buyers or consumers.
At what price is excess supply equal to 25?
Excess supply implies that the quantity supplied is greater than the quantity demanded. At $30, the quantity supplied was 45 units and quantity demanded was 20 units. Therefore, there is excess supply of 25units i.e 45-20units.
Which of the following best explains diseconomies of scale? Increase output causes the
Diseconomies of scale is when a firm produces more and the associated cost (AC) of producing a unit of output increases as output increases. This can be as a result of competition, mismanagement, real conflict or environmental hazard. The opposite of this is Economies of scale.
In the short-run, a firm can increase its output by
The short-run is a production planning period or output by increasing the variable factors of production e.g labour, capital, raw material etc. In the short-run, at least a factor of production is fixed.
The fixed 100 units of a good is $600. If the variable cost is $400, the average total cost of one unit of the good is
Given: Fixed cost (FC)=$600, Variable cost (VC)=$400, Output (Q)=100 units. Total cost TC=FC+VC=$600+$400=$1000. ATC=TC/Q=$1000/100=$10.00.
Firms in perfect competition break even in the long-run because
A perfect competition is a market structure where neither the buyer nor the sellers can influence the prices of goods and services sold in the market because they are many in number and identical goods are sold in them. However, in this market, abnormal profit is realized in the short-run and break-even (Normal profit) in the long-run.
The government policy that encourages public corporations to operate profitably is
Commercialization is the government policy of industrialization which encourages the running of government owned enterprise for the primary objective of making profit. In this case, the objective of providing essential or welfare services has been changed to pursuit of profit.
Separation of ownership from control is more pronounced in a
A joint stock company is also known as public limited liability company, in this case, there is separation of ownership from management or control. However, in the case of small businesses such as sole proprietorship and partnership, the ownership of the business and its control are not separated i.e not a legal entity business ventures.
Warehousing of goods in the process of distribution is the function of
One of the major functions of the wholesalers is warehousing of goods in large quantity and sell in small quantity to the retailers and retailers sell in units to the final consumers.
The supply of labour to an occupation will tend to rise when
The supply of labour can be defined as the total number of workers or employees or people who are willing and able to offer themselves for employment at a particular wage rate and at a particular period of time. However, this tends to increase if there is an improvement in welfare packages or conditions of work.
Malthus' predictions did not come to pass mainly because
Reverend Thomas Robert Malthus' predictions did not come to pass because of technological advancement and discovery of new land for settlement of human. It is important to note that the theory is said to be pessimistic in nature.
In determining the growth of a country's population, infant mortality is a component of
Mortality is another name for death while fertility is another name for birth. However, infant mortality is a component of death rate. The factors that determine the population growth rate includes birth rate, death rate, immigration, emigration etc.
The low productivity per worker in agriculture experienced in West African countries is due to
There is low productivity or output per worker in the agricultural sector of West African countries because of the adoption of labour-intensive method of production and the use of crude implements such as hoes, cutlasses etc.
What will be the likely effect if agriculture is fully mechanized in West Africa?
Mechanized agriculture is a system of agriculture which involves the use of modern equipments or tools in carrying out agricultural activities. However, this falls under a method or techniques of production known as capital intensive technique. When the capital intensive technique is adopted, less labour will be required.
Locating firms in urban areas may A.
When many firms are located in an urban centre, this may result in external economies of scale i.e the benefits enjoyed by a firm from another firm as a result of their relationships or closeness to each other in the same locality or industry.
An advantage of a small firm has over a large firm is that
An advantage of a small firm has over a large firm is in the area of meeting the specific needs of consumers individually. A small firm maintains a good and cordial relationship with the consumers thereby their needs and other related commodities, advertising etc.
National income estimates will be understated as a result of the activities of
Substance farming or small scale production is a limitation in the calculations of the national income accounting other limitations include transfer payment, inflation and deflation, difficulty in defining income, double counting etc.
The value of Net National Product is
The net national Product (NNP) is the difference between the Gross National Product (GNP) and Depreciation i.e NNP = GNP − Depreciation = $400m − $100m = $300m.
The value of per capita income is
Per capita income is calculated using the formula: PCI = GNP/population = $400m/$20m = $20.
One effect of inflation is that
Inflation is a persistent increase in the general price level of goods and services which occurs as a result of an increase in the supply of money without a corresponding increase in the production of goods and services. However, one of the major effects of inflation is that the purchasing power of money will fall.
The function of money that enables credit purchases of goods and services is
Standard of deferred payment as a function of money enables people to buy on credit and pay later. Other functions of money include measure of value, medium of exchange, input of account etc.
Supply of money is best defined as the
The supply of money can be defined as the total amount of all forms of money in the circulation and this also includes the demand deposit in all money deposit bank. It is important to note that the supply of demand is controlled by the central bank.
Capital market operators deal in the
The capital market is a type of market where the lending and borrowing of long-term loan is taking place for the purpose of investment. It is regulated by security and exchange commission (SEC) and the opposite is money market (short-term loan).
Money supply will increase when the Central Bank
The buying of security in the open market by the central bank is aimed at making more money available in the circulation (Expansionary monetary policy) while the opposite is the case for a contractionary monetary policy. This is a monetary policy tool known as Open Market Operation (OMO).
Expansionary fiscal policy implies
Fiscal policy is the use of fiscal policy instrument such as taxation, budget, government revenue, expenditure etc in regulating the economy. However, a decrease in tax rates is aimed at stimulating economic activities (Expansionary fiscal policy) while the opposite is the case for a contractionary fiscal policy.
A commodity with perfectly inelastic demand has the burden of tax borne by
A tax burden charged or imposed on a commodity whose demand is perfectly inelastic (zero elastic) is borne entirely by the consumers or buyers alone while that of perfectly elastic demand is borne by the sellers alone.
An increase in a country's production capacity usually leads to economic
Economic growth is an increase in output of goods and services produced in a country over a particular period of time usually a year. It is a quantitative increase in the amount of goods and services produced in an economy. Economic growth is an important step towards the economic development.
One indicator of the low level of capital formation in developing countries is
The per capita income is an indicator of the standard of living and economic development of a country. However, there is low per capita income in developing countries and this affects their capital formation or accumulation (vicious circle of poverty).
Balance of payments is defined as the
The balance of payment (BOP) is the comparison of a country's visible and invisible exports with her visible and invisible imports based on their monetary values. In other words, it records the financial transactions between a country and the rest of the world i.e other countries.
Devaluation of currency will help to correct a balance of payments deficit if a country's
Devaluation of currency is a reduction in the currency of a country in relation to another country's currency. However, this will be effective when the demand for the country's commodities i.e Export is fairly elastic. Devaluation will increase export and it will reduce import.
Terms of trade are favourable when
The terms of Trade (TOT) is the comparison of a country's visible and invisible exports with her visible and invisible imports using the price index. However, it is favourable (surplus) when the price of exports is greater than the price of imports. It is unfavourable (deficit) when the reverse is the case.
Short-term deficits in the current account of the balance of payments can be financed by balancing with the
The short term deficits in the current account of a country's balance of payment can be defined by balancing with that of the capital account. The current account shows the total income and expenditure of a country in a particular year while the capital account shows the movement of money and other credit facilities to and from a country.
Harmonised monetary and fiscal policies is a feature of
Economic Union is a form of Economic Integration which involves total coordination and harmonization of the fiscal and monetary policies of different countries in the same region. An example of Economic Union is ECOWAS. The advanced stage of this is political integration.
One major achievement of the Economic Commission for Africa (ECA) is the
One major achievement of the Economic commission for Africa (ECA) was the establishment African Development Bank (AFDB). It is important to note that ECA is a specialized agency of the United Nation.
Exploitation of solid minerals in developing countries can stabilize their revenue base mainly because it helps in
Diversification of the economy is also known as Balanced Growth Strategy. It is the best strategy of industrialization. It involve the development of all or almost all the sectors of the economy. Solid minerals are needed by many sectors of economy for their various activities.
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