All 50 questions from the West African Examinations Council (WAEC) Economics 2019 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The fundamental economic problem in every society is
Scarcity is the basic economic problem faced by every society, defined as the limitation in the supply of productive resources relative to unlimited wants.
A point X inside a production possibility curve indicates that
A point inside the PPC always indicates underutilization (idle/unemployed resources), while a point on the curve indicates optimal, fully efficient utilization of resources.
The major employer of labour in developing countries is the
The primary sector (farming, hunting, fishing, etc.) is the major employer of labour in developing economies.
The desire for profit is a major feature of
The market (capitalist) economy focuses mainly on enriching providers of capital, so profit maximization is the main driving focus of a market economy.
The wages of a group of workers in dollars are stated below: 40, 30, 70, 20, 60, 10, 10, 80, 30 and 10. What is the mean wage?
Mean = (40+30+70+20+60+10+10+80+30+10)/10 = 360/10 = $36.
If the coefficient of price elasticity of demand of a product is zero, then its demand curve will be
A zero coefficient of price elasticity means the product is perfectly inelastic — quantity demanded does not change however price changes — giving a demand curve that runs parallel (vertical) to the price axis.
If the demand function is Qd = – 0.5p + 20, calculate the quantity demanded when price is $15.00.
Qd = –0.5(15) + 20 = –7.5 + 20 = 12.5.
The interest rate to control the money supply is a
Using interest rates to regulate the money supply is a classic tool of monetary policy, typically implemented by the central bank.
If less of a good is bought as one's income increases, such good is
An inferior good has a negative relationship with consumer income — as income rises, quantity demanded of the good falls, and vice versa.
The demand for coffee and tea is
Coffee and tea are competitive (substitute) goods: if the price of one rises, the quantity purchased of that good falls while the quantity purchased of the other rises.
What effect will an increase in the supply of fish have on the meat market?
Fish and meat are competitive (substitute) goods. If the supply of fish rises, its price falls, causing consumers to switch from meat to fish; meat sellers must then reduce their price too, resulting in a fall in the equilibrium price and quantity of meat.
Which of the following factors is not a condition for a change in supply of a commodity?
A change in the price of the commodity itself causes a movement along the supply curve (change in quantity supplied), not a shift of the whole supply curve (change in supply), which is instead caused by technology, cost, or government policy.
Supply of agricultural product is likely to be elastic in the A. intermediate period B. long run C. market period D. short-run
In the long run, there are many farmers/producers able to adjust output significantly, so the supply of agricultural produce tends to be elastic.
Two commodities X and Y are in joint supply when
A joint supply is a situation where two or more products are produced together from a single process, such that one product is a by-product of the other (e.g. beef and hide from cattle).
[See Table 1: Units of quantity consumed 0–5, Total utility –,10,15,17,18,18, Marginal Utility –,10,5,2,1,0] Table 1 above illustrates the law of
As units consumed increase, marginal utility continually falls (10→5→2→1→0), illustrating the law of diminishing marginal utility.
When the price of a good is above the equilibrium, there will be
When price is above equilibrium, suppliers are willing to supply more while consumers are willing to buy less, creating excess supply (a surplus) in the market.
What happens when a minimum price is imposed in a market?
A minimum price is normally set above the equilibrium price, which results in a surplus, since suppliers are willing to sell more than consumers are willing to buy at that higher price.
When an increase in inputs leads to more than a proportionate increase in output, there is
When output increases at a larger proportion than the increase in inputs, the firm is experiencing increasing returns to scale.
The short-run in production is the time period when
The short-run is defined as a period of time in which at least one factor of production is fixed while other factors are variable.
[See Table II: short-run cost of a firm — Quantity(Kg) 1,2,3; Fixed costs($) 750,750,750; Variable cost($) 200,560,900; Total cost($) 950,1310,P; Marginal cost($) –,360,Q; Average cost($) 950,655,550] Calculate the value of Q.
Total cost at quantity 3 (P) = Fixed cost + Variable cost = 750+900 = $1650. Marginal cost (Q) = Total cost at Q3 − Total cost at Q2 = 1650 − 1310 = $340.
A cost of production that is positively related to output is the
Variable cost is directly related to the level of output: the higher the output produced, the higher the variable cost (and hence total cost) of production.
In perfect competition, the average revenue curve of a firm is
In perfect competition, price is fixed for the firm (a price taker), so the average revenue (AR) curve and marginal revenue (MR) curve coincide — AR is the same as the MR curve.
Which of the following means of funding a business is a very reliable and cheap?
Ploughing back profits (retained earnings) is the most reliable means of funding a business, since no external cost (interest) is involved.
Government in most cases influences location of a firm to
Government often influences where firms locate in order to ensure a more equitable distribution of industry and economic activity/benefits among its citizens.
Middlemen are made up of
Producers and final consumers themselves are never the middlemen. Middlemen are those who join the producers and consumers in the distribution chain — wholesalers, retailers and hawkers.
The Malthusian theory of population was proved wrong because
The Malthusian theory is considered myopic because it failed to forecast the advancement in technology and the discovery of new lands/methods of production, which have allowed food supply to keep pace with population growth.
Human development can be improved if
Human development is fundamentally about improving people's skills and abilities. Promoting general education and training directly improves the human development index.
Agricultural productivity may be increased if
Providing more infrastructural facilities (roads, storage, irrigation, etc.) in rural areas improves agricultural productivity; it also helps check rural-urban migration by making rural facilities comparable to urban ones.
A country is described as industrialized if
A country is industrialized when its industries make a significant/high contribution to national income (GDP), reflecting a shift away from dependence on primary production alone.
Which of the following is a major advantage of establishing a tomato-processing factory in a country?
When a local industry produces what would otherwise be imported/exported, foreign exchange is conserved since the country relies less on foreign sources for that product.
The total value of goods and services are produced within the borders of a country is
Gross Domestic Product (GDP) is the total value of all goods and services produced within a country's geographical/domestic territory.
Which of the following items is not considered as a transfer payment?
A transfer payment is income received without a corresponding good or service being provided in return (e.g. pensions, subsidies, grants). A doctor's salary, by contrast, is income that is earned through work.
Which of the following factors will not underestimate the national income?
Unpaid services are not captured in national income accounting, so increases in unpaid services worsen underestimation of national income; the WAEC key associates this specifically with option D.
Which of the following is true of the value of money? It
The value of money and the general price level move in opposite directions — as prices rise, the purchasing power (value) of money falls, and vice versa.
The motive for holding money to meet unforeseen events is termed
The precautionary motive for holding money is the desire to keep money on hand to meet unforeseen contingencies such as sickness, accidents, or emergencies.
An increase in the prices of factor inputs may result in
When the prices of inputs (factors of production) rise, producers pass on the higher cost to the price of output — this is cost-push inflation.
Insurance companies are similar to commercial banks in that they
Both insurance companies and commercial banks are financial institutions that help mobilize and channel savings into productive investment, contributing to monetary/financial stability.
What happens when the central bank increases the bank rate?
The bank rate is the rate the central bank charges commercial banks for loans. When it is increased, commercial banks reduce their borrowing (and pass on higher rates to the public), decreasing the overall amount of borrowing.
Citizens are protected from government's arbitrariness in taxation by the canon of
The canon of certainty ensures a taxpayer knows exactly what they are due to pay and when, protecting citizens from arbitrary/unpredictable taxation by government.
In a period of unemployment and falling prices, governments should adopt a
Unemployment and falling prices indicate deflation. To revive the economy, government must pump more money in by spending more than it earns — i.e. running a deficit budget.
In most developing countries, a large percentage of the labour force is engaged in
Agriculture remains the single biggest employer of labour in most developing economies.
In most underdeveloped countries, development plans do not achieve their objective due to
Excess rural-urban migration leads to over-dependence on city infrastructure and neglect of rural development, which undermines the achievement of national development plans.
Balance of trade involves exchange of
Balance of trade specifically measures the difference between a country's receipts from and payments for tangible goods (visible trade) only — not services.
An improvement in a country's term of trade means that
Terms of trade measures the rate at which a country's exports pay for its imports. An improvement means the country's exports have become more valuable relative to its imports.
Devaluation of currency may not correct a balance of payments deficit if the demand for export is
If export demand is perfectly elastic, price is essentially fixed by the world market and a change in price (from devaluation) has no effect on quantity purchased, so devaluation cannot correct the deficit in this case.
One measure for financing a country's balance of payments deficit is through
Short-term borrowing from the IMF acts like an inflow of income that can be used directly to finance/correct a balance of payments deficit.
The major achievement of the Economic Community of West African States (ECOWAS) is that it has
ECOWAS has widened the market for African (member states') products by promoting regional trade integration since its formation.
Which of the following institutions is concerned with expanding developing countries' commodity trade?
The Economic Commission for Africa (ECA) is aimed at expanding commodity trade for African countries.
Exploitation of forest resources becomes a major problem where
When there is a land/forest ownership tussle among communities, it becomes difficult to exploit the forest, since the dispute creates fear/uncertainty among those willing to invest in exploiting the resource.
Natural resources that are renewable are found in the
Per the WAEC answer key, renewable natural resources are associated with the traditional sector (e.g. traditional/subsistence farming, forestry and fishing activities that regenerate naturally).
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