All 50 questions from the National Examinations Council (NECO) Economics 2023 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The study of economics is mainly concerned with how to
Economics is primarily concerned with how to allocate limited available resources to satisfy people's unlimited wants, i.e. making a choice when resources are inadequate/scarce.
Warehousing is an economic activity that falls under
Warehousing is a tertiary production (service) activity, along with other services such as banking, communication, advertising, transportation, insurance and tourism.
Which of the following items is not classified as working capital?
Working capital (circulating capital) is used for day-to-day productive activities, e.g. fuel, wages, raw materials. Equipment is fixed capital, not working capital.
An economic system is mainly concerned with
An economic system is the mechanism by which limited (scarce) available resources are allocated among alternative ends in the course of production, distribution and consumption.
The marks obtained by 9 students in a class test are recorded below: 9, 8, 7, 5, 7, 6, 8, 9 and 7. What is the median mark?
Rearranged in ascending order: 5, 6, 7, 7, 7, 8, 8, 9, 9. With 9 values, the median is the 5th value, which is 7.
The demand for a factor input as a result of the demand for its output is known as
The demand for factor inputs (land, labour, capital) is a derived demand - it exists only because of the demand for the output/commodity the input helps to produce.
If the demand for a commodity remains constant as price increases, the commodity is said to be
Demand is perfectly (completely) inelastic when quantity demanded stays constant regardless of price changes; elasticity equals zero, shown as a vertical demand curve (as in the diagram, ED = 0).
When more of the tax on a product is borne by the buyer than the seller, the commodity involved has
When demand is fairly inelastic, buyers bear more of a tax than sellers, because quantity demanded falls only slightly as price rises, so the price increase is largely passed on to consumers.
A fall in the price of a normal commodity which has elastic demand will result in
For a commodity with elastic demand, a fall in price causes a proportionately larger rise in quantity demanded, so total revenue increases.
The supply of light could be met using a candle, lantern and gas lamp. This is an example of
Composite supply exists when a need (light) can be competitively met from two or more different sources (candle, lantern, gas lamp) for a similar use. Note: the official WAEC key marked this item as having no correct answer among the options given.
Petrol and kerosene are jointly obtained from crude oil. If the supply of petrol increases, the
Petrol and kerosene are in joint supply from crude oil, so refining more crude oil to increase petrol supply also increases the supply of kerosene.
If the government stops subsidy on cocoa production, the supply curve of cocoa will
Removing a subsidy raises production costs, reducing supply at every price level, which shifts the supply curve to the left.
When the marginal utility from the consumption of commodity X (MUx) is greater than the price of commodity X (Px), a rational consumer should
A rational consumer keeps consuming more of a good as long as marginal utility exceeds price, continuing until MU = P (utility maximisation).
When the demand for a commodity increases while supply remains unchanged, the equilibrium price and quantity will
An increase in demand with supply unchanged creates excess demand at the old price, pushing equilibrium price and quantity upward.
The fixing of maximum prices by government is mainly on
Maximum price (price ceiling) legislation is used by governments to protect consumers, and is typically applied to selected essential commodities to keep them affordable.
At what point on the total product curve shown below will marginal product be negative?
Marginal product becomes negative only once total product starts falling after its maximum, which is indicated by point S on the curve.
A small scale firm located within an industrial estate will enjoy
External economies of scale are benefits a firm enjoys from being located near other firms in the same industry/locality, such as in an industrial estate.
The total fixed cost curve is
Total Fixed Cost does not change with the level of output, so it is represented by a horizontal line on a cost-output graph.
If a firm retrenches some of its factory workers, its
Wages paid to workers are a variable cost; retrenching workers (reducing labour used) will reduce this variable cost, which changes with the level of output/employment.
A monopolist may enjoy abnormal profit only if its
A monopolist earns abnormal (supernormal) profit in the short run when price exceeds average total cost (P > ATC).
The average revenue curve of a firm in a perfect market is the same as the
In a perfectly competitive market, a firm is a price taker with a perfectly elastic demand curve, which coincides with its average revenue (and marginal revenue) curve, i.e. D = AR = MR.
Resources are pooled for the mutual benefit of its members mainly in a
A cooperative society is a business organisation set up by a group of individuals with common interests who pool resources for their mutual benefit, sharing profit based on patronage.
A joint stock company enjoys perpetual existence because
A joint stock company is a corporate (legal) entity separate from its owners, so it enjoys continuity/perpetual existence even when shareholders or management change.
Consumers have access to a variety of the activities of the
Retailers are closest to consumers in the distribution chain, making a variety of goods available to them conveniently in small quantities purchased from wholesalers.
The rate of growth of population is
Population growth rate is the natural growth rate (birth rate minus death rate) plus net migration (immigrants minus emigrants).
The Malthusian theory of population is best illustrated when
The Malthusian theory holds that population grows in geometric progression while food production grows in arithmetic progression, so population increases much faster than food supply.
The dependency ratio of a country is the
The dependency ratio is the ratio of the dependent population (children, students and the elderly) to the independent (active working) population that supports them.
When job vacancies are publicized, the government is mainly trying to solve the problem of
Frictional unemployment occurs due to a lack of information about available jobs; publicising vacancies helps reduce this by informing job seekers of opportunities.
Many workers are employed in the agricultural sector of developing countries because
Developing countries mostly adopt labour-intensive farming methods (using more labour than machinery) due to their large population and underdeveloped economies.
Industries are sometimes located in areas which are not profitable so as to
Industries are sometimes deliberately sited in less profitable areas to promote even (balanced) development across regions of a country.
One factor that may not promote industrial development is
Options B, C and D actively support industrialisation; granting old, already established firms tax exemptions does not particularly promote new industrial development.
National income is calculated mainly to
National income is calculated to determine the contribution or level of sectoral performance to the economy of a country, among other reasons.
To overcome the problem of double counting under the expenditure approach,
The expenditure approach avoids double counting by considering only the total monetary value of final goods and services, excluding spending on intermediate goods and inputs.
The Net National Product (NNP) of a country is $50m while the depreciation allowance is $10m. The Gross National Product (GNP) is
NNP = GNP - Depreciation, so GNP = NNP + Depreciation = $50m + $10m = $60m.
The price level and the value of money are
The value of money is the purchasing power of money; the higher the price level, the lower the value of money, so they are inversely related.
Money is able to function more as a medium of exchange when
Money enhances and is enhanced by specialisation and division of labour in production, since specialised producers need a medium of exchange to trade their surplus output.
An indication that there is inflation in a country is that
Inflation is a persistent increase in the general price level, which reduces the value/worth of money, so the same amount of money buys fewer goods than before.
The most liquid asset among the following is
Cash is already in liquid form and can be used immediately, unlike shares, bonds or cheques which must first be converted to cash or cleared.
Commercial banks help in economic development mainly by
Commercial banks mainly promote economic development by acting as an intermediary between lenders (savers) and borrowers, channelling funds into productive use.
Taxes levied on goods and services by governments are called
Indirect taxes (e.g. sales tax, purchase tax, excise duty, VAT) are levied on goods and services, unlike direct taxes which are levied on income, profit or property.
Use the diagram below to answer this question. The curve labeled W shows the
A progressive tax system is one where the tax rate rises as income rises, matching curve W which slopes upward as income increases.
An example of government's recurrent expenditure is
Recurrent expenditure is government spending incurred every year, such as wages and salaries; the other options are capital/development expenditure.
A country is described as developing if
Developing countries typically have low per capita income, among other characteristics such as high unemployment, low standard of living and high population growth.
Tariffs, quotas and embargoes are examples of
Tariffs, quotas and embargoes are examples of protectionist/trade restriction policies used to control the movement of goods and passengers between countries.
Trade protection will assist economic growth in developing countries if it can
Protectionist measures such as tariffs can help developing economies by safeguarding newly established (infant) firms from foreign competition while they grow.
A government may cause a favourable change in her invisible trade account by
Invisible trade covers services such as tourism, aviation, shipping and insurance. Developing tourism and other services improves a country's invisible trade account.
Country M enjoys absolute advantage over country N in the production of commodities X and Y, if country M
Absolute advantage means a country can produce a good using fewer resources (more efficiently) than another country; here, country M is more efficient than N in producing both X and Y.
Which of the following is not a problem facing the Economic Community of West African States (ECOWAS)?
Language barriers, production of similar commodities, and poor transportation/communication are recognised problems facing ECOWAS; inadequate labour supply is not.
Assisting members to solve temporary balance of payments problems is the reason for the establishment of the
The International Monetary Fund (IMF) was established in 1944 primarily to assist member countries in resolving temporary balance of payments difficulties.
Which of the following is a non-renewable natural resource?
Coal is a non-renewable resource, unlike cocoa, oil palm and rubber, which are agricultural products that can be replenished/renewed.
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