All 50 questions from the West African Examinations Council (WAEC) Economics 2013 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The action of government to forgo road construction in order to provide more health facilities denotes
Opportunity cost is the best alternative forgone. Here, road construction is forgone for health facilities.
In Economics, a market is defined as any
Any arrangement that brings buyers and sellers into contact is called a market. It is not limited to a geographical location.
Which of the following is not a function of an insurance company?
Insurance companies are not like commercial banks that collect deposits from the public. What they collect is premiums.
A debenture holder earns a
A debenture is a loan given to a company for an agreed period. It is repaid to the holder at maturity with a fixed interest on it.
All economic systems must decide what to produce because
The scarcity of resources makes it necessary for all economies to determine what to produce, to ensure resources are used in the most efficient way.
Trade between two countries is known as
Bilateral trade is trade between two countries.
In the balance of payments of a country, tourism is classified under
The balance of payments has a current account, which includes visible and invisible trade. Tourism is recorded as invisible trade.
General rise in the price level induced by increased price of inputs is referred to as
Cost-push inflation is caused by an increase in the cost of production, which producers pass on by raising prices.
Which of the following is a function of merchant banks?
Merchant banks, among other functions, underwrite and issue new shares on behalf of corporations.
Demand is elastic when percentage change in
Demand is elastic when the percentage change in quantity is greater than the percentage change in price. The elasticity coefficient lies between 1 and infinity.
A budget is balanced when expected total revenue is
A balanced budget is one in which the expected total revenue equals the expected expenditure.
A co-operative society is a
A co-operative society is a form of business organisation in which people pool resources together for their mutual benefit.
The value of money is affected by the
The value of money is greatly affected by the price level: the higher the price level, the lower the value of money, and vice versa.
Which of the following is a function of money?
Money serves as a store of wealth — people can sell goods and keep money as an asset for future use.
Which of the following is an asset of a commercial bank?
Treasury bills are short-term debt instruments bought by commercial banks. Holding a claim on cash, they are an asset to the banks that keep them.
An increase in the supply of a commodity X automatically results in an increase in the supply of another commodity Y. This is a case of
When an increase in the price of X leads to an increase in supply of Y, X and Y are jointly supplied — they are produced together, so more of X supplied brings more of Y too. This is joint supply.
Why would an individual increase his level of consumption during inflationary periods?
During inflation, saving is not advisable because money loses its value quickly, so people consume more.
The type of monopoly that develops as a result of uneven distribution of resources is called
A natural monopoly is one in which there is only one seller of a commodity because that seller alone is endowed with the natural resource required for production.
A major disadvantage of partnership form of business is that
In a partnership, decision making is not as fast or easy as in a sole proprietorship, since partners must be consulted before a decision is made.
Goods which have to be paid for are known as
Economic goods have prices and must be paid for; they are not free.
Goods are said to be in competitive demand when they are
Substitute goods have competitive demand — one can be used in place of the other, so demand for one reduces the need to demand the other.
In the long run, factors of production are considered to be
In the long run, all factors of production are variable. This is what differentiates the long run from the short run.
Which of the following will shift the demand curve for cocoa to the right?
An increase in consumers' income can cause a rightward shift of the demand curve (an increase in demand). A change in price only causes movement along the curve, not a shift.
An agricultural production process which uses more machinery relative to labour is referred to as
When machinery use exceeds labour use, it is called capital-intensive farming; when labour predominates, it is labour-intensive.
Which of the following will enhance productivity in an economy?
Productivity refers to output per unit of labour. Improved technology enables workers to become more efficient, increasing productivity.
Post harvest losses in West African countries can be reduced if
Post-harvest losses are wastage recorded after harvest, mostly due to poor storage. Better storage facilities help solve the problem.
Which of the following best explains what to produce?
‘What to produce’ is a basic economic problem concerned with determining which goods and services to produce.
The demand for money is described as a
Money is demanded not for its own sake but to obtain other goods/services that satisfy wants — this is derived demand.
Which of the following is the main outcome of a trade union's interference with the wage rate? Wages are
Trade union interference to raise wages increases the cost of labour, reducing demand for labour and so increasing unemployment.
The introduction of tariffs and quotas
Tariffs are an indirect tax on imported goods, making them costlier, so demand shifts towards (increases for) locally made goods.
A government that wants to get more revenue will increase the tax on commodities with a
A government seeking more revenue taxes commodities with low price elasticity of demand — since demand barely falls when price rises, people keep buying and revenue rises.
Which of the following is involved in the money market?
Commercial banks are involved in the money market because they give short-term loans. The money market deals in short-term funds, unlike the capital market (long-term loans).
Demand pull inflation can aptly be described as
Demand-pull inflation is caused by increased (aggregate) expenditure/demand in the economy.
In order to develop the banking habit of rural dwellers, the traditional money lenders should be
If traditional money lenders are proscribed (banned), villagers will have no choice but to use the bank.
All rates of interest in a country are influenced by the
The bank rate is the rate charged by the Central Bank on loans to commercial banks, and it determines other interest rates in the economy.
Exchange control is a weapon used in regulating
Exchange control regulates foreign trade, which involves the use of other countries' currencies and directly affects the exchange rate.
When the marginal product is negative, the total product will be
When marginal product is negative, additional labour contributes negatively, so total product decreases beyond its maximum point.
Physical productivity is affected by all the underlisted factors except the
The price of output does not affect physical productivity; it is determined by technology and the quantity/quality of inputs.
If a commodity has a high marginal utility, its market price will be
Marginal utility is the additional satisfaction from an extra unit consumed. When marginal utility is high, consumers are willing to pay a high price.
Price fluctuation is a feature of
In an imperfect market, price changes frequently because firms are not price takers.
Which of the following statements is not a feature of a monopoly?
A monopolist can set the price or determine the quantity supplied — monopolists are not price takers.
The following are advantages of sole proprietorship except
A sole proprietor faces a major challenge raising capital for the business — this is a disadvantage, not an advantage, of sole proprietorship.
Which of the following controls a limited liability company?
The board of directors manages the day-to-day affairs of a limited liability company, while the shareholders are the owners.
Given that Qd = 80-2p where Qd is quantity demanded and P is the price, what quantity would be demanded when the price (P) is $3?
Substituting P=3 into Qd = 80-2p gives Qd = 80-2(3) = 74 units.
Which of the following can be used to calculate the price elasticity of demand?
Price elasticity of demand = percentage change in quantity demanded ÷ percentage change in price.
The main advantage of large scale production is that
In large scale production, unit (average) cost falls as output increases — this is known as economies of scale.
Which of the following items is not included in measuring national income by the income approach?
Students' grants and scholarships are not direct rewards for participation in production and would cause double counting if included, so they are excluded from national income by the income approach.
Gold, diamond, iron ore and limestone are collectively referred to as
Gold, diamond, iron ore and limestone are all minerals, and are collectively referred to as mineral resources.
Points outside a production possibility curve indicate
Points outside the production possibility curve (PPC) represent unattainable production levels. They only become attainable when there is technological progress or new resources are discovered.
The International Bank for Reconstruction and Development (IBRD) is important to developing nations because
The IBRD, also known as the World Bank, gives long-term loans for development projects, making it important to developing countries.
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