All 50 questions from the West African Examinations Council (WAEC) Economics 2014 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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Human wants are unlimited because
Human wants are unlimited because human beings, having satisfied one want, always develop new wants continuously.
A basic economic problem of any society is
A basic economic problem of any society is the allocation of scarce resources to their best alternative uses, since resources are limited but wants are unlimited.
In a centrally planned economy, what to produce is
In a centrally planned economy, the state owns and controls the factors of production, and decisions on what to produce are made by the state bureaucrats.
Which of the following is related to resource allocation in an economy?
'For whom to produce' is the question that has to do with the best way of allocating the scarce resources of society.
Which of the following is not a feature of socialism?
There is no freedom of enterprise in socialism. The state controls the factors of production.
Households make economic decisions because they want to
The alternate goal of households, who are referred to as consumers, is to maximize satisfaction.
State owned enterprises are more common in
In a centrally planned economy, the state owns the majority of the factors of production and controls and owns many enterprises.
A normal supply curve has a positive slope which indicates that
A normal supply curve slopes upward, and this shows that more is offered for sale at higher prices.
To control inflation, the central bank of a country may adopt
Restrictive monetary policy is the policy that can be used to reduce excess cash from circulation. This will reduce the money supply and reduce people's purchasing power.
Disposable income is the income
Disposable income is the income left at the disposal of individuals after the personal income tax has been deducted. This income is left to be spent or saved.
Livestock production in West Africa is hindered mainly by
Pests and diseases attack many livestock firms and destroy them. They are difficult to control because of low medical knowledge or facilities in developing countries.
The components of a three-sector economy are
A three sector economy has three components, namely: households, firms and government.
A declining population is one in which the population is
A declining population is an ageing population. The proportion of the old people is increasing.
Which of the following agencies helps to stabilize farmers' income?
Marketing boards are agencies set up by the government to regulate the marketing of agricultural produce. They buy the excess and store it up during periods of bumper harvest and supply when there is scarcity, helping to smoothen out price fluctuations.
Other things being equal, an increase in supply will lead to
As a result of a change in supply from S0 to S1, the price falls from P0 to P1, and quantity increases from Q0 to Q1.
Joint stock banks simply refer to banks that are
Joint stock banks are commercial banks owned by shareholders.
Which of the following is not a characteristic of a developing country?
Developing countries do not have high real per capita income; this is a feature of developed countries.
Goods consumed out of habit have
When it has become a habit to consume a commodity, demand for such a commodity is usually inelastic.
Which of the following items is not a recurrent expenditure?
Building of schools and colleges are capital projects which are grouped under capital expenditure. Recurrent expenditures are spending at regular intervals; capital expenditures are spending on permanent projects.
If the coefficient of price elasticity of demand is 0.1, demand is
When the coefficient of price elasticity of demand is 0.1, the demand is inelastic.
The profit of a producer is the difference between
Profit is the difference between total revenue and total cost: π = TR − TC.
The rate of increase in utility is
The rate at which the total utility is increasing is the marginal utility added as quantity increases. Therefore, the marginal utility curve is the slope of the total utility curve.
The supply of tea is linearly presented as P=0.2Q, where P is the price and Q is the quantity. What is the P when Q=25?
When Q=25, P=0.2Q=0.2(25)=$5.00.
Increase in supply due to changes in plant size will take place only in the
It is only in the long run that the firm can change the entire plant size. In the short run, all inputs cannot be varied — at least one must be held constant.
The long run average cost curve is made up of several short-run
The long run average cost curve (LAC) is made up of several short-run average cost (SAC) curves. This is the reason why it is called an envelope curve.
The table (X: 2,3,4,5; F: 2,5,2,1) shows a frequency distribution. From the table, the mean of the distribution is
Mean = Σfx/Σf = (2×2+3×5+4×2+5×1)/(2+5+2+1) = (4+15+8+5)/10 = 32/10 = 3.2.
What is the median of the distribution?
Using (N+1)/2 = (10+1)/2 = 5.5th item. This falls in the class of 3, so the median is 3.
Co-operative societies formed to market the output of their members are called
Producers' co-operative society is formed to market the product of the members of the association.
Money will serve as a standard of deferred payment if it is
Stability of money means there are less frequent price changes. This will allow money to be kept as a store of value without losing its worth.
Due to an increase in price, a seller increases the quantity offered for sale from 400 units to 450 units. What is the percentage change in quantity supplied?
Percentage change = (new quantity−old quantity)/old quantity × 100 = (450−400)/400 × 100 = 12.5%.
Which of the following will increase the nominal value of national income?
A high rate of inflation will inflate/increase the value of national income nominally, since prices rise without necessarily reflecting real output growth.
Cyclical unemployment is associated with
Trade fluctuation is the cause of cyclical unemployment. When there is a boom, people get jobs, and when there is depression, unemployment level increases.
Which of the following best defines inflation?
Inflation is the persistence, not just one-time, general increase in price level, not just the price of one commodity.
Perfect knowledge of events in a perfect market will be made possible by the existence of
In a perfect market, the number of buyers and sellers is infinite. This allows for free flow of information in the market, aided by homogeneous products.
An increase in the price of a commodity from $10 to $15 leads to an increase in the quantity supplied from 10 units to 15 units. The price elasticity of supply is
Price elasticity of supply = (%change in quantity)/(%change in price) = ((15−10)/10×100)/((15−10)/10×100) = 50/50 = 1.
Economic development may be hindered if there is
Rapid population growth can hinder economic development because it increases the dependency ratio which retards economic growth; without economic growth there cannot be economic development.
Which of the following types of unemployment results from changes in the pattern of aggregate demand?
When the pattern of aggregate demand changes, people switch consumption from what they used to consume to another commodity. This will make demand for the old one fall and those who produce it may become jobless as a result — structural unemployment.
Which of the following is not a reason countries import goods?
Countries import goods from other nations because they do not have resources to produce or what they find costly to produce, or to have a taste of new products — not out of love for other nations.
Provision of short term loans to solve balance of payments problems is done by the
IMF provides short term loans to help countries that have Balance of payment problems.
West Africa countries are experiencing worsening terms of trade because
Many West African countries are primary producers, and the value of primary products is usually low, therefore the value of exports relative to imports is usually low.
Which of the following statements is correct?
The marginal utility is always zero whenever the total utility reaches its maximum, since the total utility is at maximum whenever marginal utility is zero — there is a relationship between total utility and the marginal utility.
A change in the quantity demanded of a commodity is caused only by the
A change in quantity demanded is caused only by the change in price of the commodity. This is different from change in demand, which is a shift in demand caused by a change in any other determinant of demand except the price.
The likely implication of the devaluation of a country's currency is that
When currencies are devalued, the export becomes cheaper while import becomes more expensive.
International trade is desirable because
The only advantage of international trade among the options provided is that it provides foreign market for local goods. With international trade, goods can be produced locally and sold abroad.
A financial institution established for the purpose of providing specialized services like acceptance of bills of exchange and equipment leasing is known as
Merchant Banks provide some services that make them different from commercial banks, such as acceptance of bills of exchange and equipment leasing.
Which of the following functions of money is mostly affected during inflation?
When there is inflation, the value of money is eroded away. It then becomes a poor store of value.
The precautionary motive for holding money is to
Precautionary motive for holding money is the demand to hold money because of unforeseen circumstances.
Which of the following measures will not encourage industrialization in West Africa?
Privatization, rather than government take-over/nationalization, which is transferring ownership of private firms to the government, will encourage industrialization.
The concentration of many firms of a particular industry in a particular area is known as
Localization of industry is the concentration of firms of a particular location. This may result in something like an industrial estate.
Which of the following is not an effect of the discovery of mineral resources in an area?
Under-population cannot result from the discovery of resources in an area. Discovery of resources will rather attract people to the area for trade and work in the mining site — an increase in population, not a decrease.
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