All 49 questions from the West African Examinations Council (WAEC) Economics 2012 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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Which of the following problems arises where there are more than one technically possible methods of production?
How to produce is the problem of choosing the method of production to be used after what to produce has been decided. It can either be a labour intensive method or capital intensive method of production.
Visible balance is also known as
The account that contains the balance of visible goods on the current account of the balance of payment is also known as the balance of trade.
A shift in the demand curve indicates
Change in demand is an inward or outward shift in the demand curve. It can be caused by a change in any determinants of demand aside price. It is different from a change in quantity demanded, which is a movement along a demand curve.
If a 8% decrease in price results in more than 6% decrease in quantity supplied, supply can be regarded as
An elastic supply means that the percentage change in quantity demanded is greater than the percentage change in price.
A condition for consumer utility maximization is
The condition for consumer's equilibrium is the equality of ratio of marginal utility of x and y to price of x and y: Mux/Px = Muy/Py.
Which of the following best describes the mode?
The mode of a distribution is the observation that occurs most, i.e. the one with the highest frequency.
Where a commodity takes an insignificant proportion of the consumer's income, demand for it will be
Commodities that take insignificant proportion of consumers' income usually have inelastic demand. When there are increases in price, consumers have little feeling and the change in quantity as a result will be small.
A demand schedule shows the quantities of goods that are
A demand schedule is a table which shows the amount of goods bought or demanded at various prices.
The demand curve for a commodity is downward sloping because the consumer will pay
One of the reasons why the demand curve sloped downward is because of the law of diminishing marginal utility.
A decrease in the demand for a product X resulted in a decrease in the demand for another product Y. The demand for X and Y is
For joint demand, two commodities are demanded together because they are used together e.g. handset and sim card. As the demand for one falls, the demand for the other will also fall.
Any price below the equilibrium price will lead to
Whenever the price is below the equilibrium price, there is going to be excessive demand over supply. The equilibrium price is Pe, and when equilibrium quantity is q, but when price is lower at PL, the quantity demanded is qd while the supply is just qs.
The allocation of goods and services in a free market economy is performed by
In a free market economy, the forces of demand and supply interact to determine price and quantity, known as the price system.
Given the demand function Qd=20–P. What is Qd when P is $12?
Qd = 20 − ½P and P=#12. Substitute for P in the demand equation: Qd = 20−½(12) = 20−6 = 14 units. (Note: per the printed answer key the correct choice is labelled A.)
If a particular consumer derives total utility of 22 utils having consumed 4 units of a given product, his average utility will be
If the total utility from 4 units is 22, the average utility = Tu/Q = 22/4 = 5.5.
The law of diminishing marginal utility applies to a firm which minimizes cost or a consumer who
The law of diminishing marginal utility applies to a consumer who maximizes satisfaction.
Why is the law of diminishing returns a short run phenomenon?
Some inputs are variable while at least one is fixed in the short run.
Which of the following is capable of increasing the population of a country?
A decrease in death rate while people are still giving birth will lead to an increase in population.
In the firm's production process, marginal cost
Marginal cost of production falls and later rises following the law of diminishing return in the short run or return to scale in the long run.
If a firm's price is less than average cost but more than average variable cost, the firm is covering
The price is less than the AC but greater than the AVC, the firm covers all of its variable cost and part of fixed cost.
An arrangement in which the debts of a company can only be paid from its own assets implies
A company has limited liability if personal property of the owners is not affected if the firm liquidates. The debt of the firm can only be paid from its assets.
One reason why small scale businesses are very common in West Africa is that
Small scale business does not require huge capital outlay. Therefore they are easy to establish.
A public limited company could finance its operations through
A public limited company can sell shares to members of the public to raise shares.
The factor of production which takes the initiative in combining resources for production is known as
Entrepreneur is the factor of production that organizes and coordinates the production process. He initiates and combines other factors.
The type of monopoly that develops as a result of granting patent right is known as
Legal monopoly is the one backed up by law. When a firm has the legal permit to be the only seller or producer of a commodity, he is said to have patent right.
Which of the following markets determines its own price or output?
Only the monopoly has the ability to influence the price of its product or the output.
Which of the following is a function of a retailer?
Retailers keep small stock of a commodity but it is the major responsibility of wholesaler. A retailer's main function is provision of sale services to the consumer.
The difference between the number of immigrants and emigrants is a
Net migration = Immigrant − Emigrants.
All the following are features of optimum population except
Unlimited amount of unexploited resources is not a feature of optimum population, rather resources are fully exploited.
The financial institution that specializes in risk spreading is called a/an
Insurance companies are non-banking financial institutions which collect premiums from people to insure the property or life. They use the money collected for long term investment.
The following are means of reducing the population of a country except
Early marriage will increase population rapidly while the rest options are ways of controlling population growth.
Which of the following features best describes peasant agriculture in West Africa? It
Specialization in the production of one crop does not mean the system of farming is peasant farming. But peasant farming are usually carried out on small farm holdings because crude implements are used.
One of the problems facing industrial development in West African countries is
Inadequate infrastructure which will create an enabling environment for the industries and provide them with public capital that lower the cost of production is the major obstacle to industrial development.
In a situation where the finished product of an industry is fragile, bulky and perishable, such an industry should be located close to its
When the finished product of an industry is bulky, fragile, and the industry can easily get spoilt, the industry should locate close to the market to reduce damage and loss which can result from transportation from a long distance.
If Y = Income, C = Consumption, I = Investment, X = Export and M = Import, then national income is
National income; imports are to be subtracted while we add exports.
The national income is the
National income is the Gross Domestic Product minus depreciation minus net indirect business taxes plus net factor income from abroad. This is equal to what we have in option C — Net National Product at factor cost.
When depreciation is deducted from Gross National Product, the result is
Net National Product = Gross National Product minus depreciation.
Mr. Okpoti has meat and wants maize, while Mr. Adama has maize and wants meat. A transaction is possible because of
Because there is double coincidence of wants.
Which of the following is not a form of money?
Bank deposit is not a form of money; it represents money held with a bank rather than money itself as a medium of exchange.
A price index is a statistics measures
A price index measures how the value of money changes over time.
The difference between birth rate and death rate is known as
Natural growth rate = birth rate − death rate.
In open market operations, what the Central Bank sells or buys are
This is a fact and a feature of a good pipe. Central Bank uses securities in open market operations.
The following are reasons for the failure of agricultural policies in West Africa except
Creation of agro-service stations does not lead to failure of agricultural policy — in fact it helps agricultural development, unlike the other options.
A situation in which the estimated government revenue is less than the proposed expenditure for a given year can be described as
The difference between revenue and expenditure that revenue determines whether the budget is a surplus budget or deficit budget. Since the revenue exceeds the expenditure, it is a surplus budget.
An excise tax is imposed on goods
Excise tax is imposed on locally manufactured goods.
Which of the following will not retard economic development in West Africa?
Population control does not retard economic development — rather it helps in that direction, since it eases the pressure on scarce resources.
When there is improvement in a country's terms of trade, it means that the country's
Improvement in terms of trade is expressed by the rate at which export pass for import which us otherwise known as term of trade.
Which of the following is true about import substitution? It
Import substitution enables a country to curtail (reduce) importation of goods that can now be produced domestically.
One of the reasons why government may erect a trade barrier is to
One of the reasons why government may erect a trade barrier is to (b) protect infant industries.
Which of the following is not a function of the West African Development Bank?
Harmonization of oil prices is not a function of the West African Development Bank.
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