All 50 questions from the West African Examinations Council (WAEC) Economics 2022 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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Scale of preference shows
A scale of preference is a list of consumer wants arranged in order of priority/importance.
There is unemployment of resources when production is
A point within (inside) the production possibility curve indicates that resources are underutilized, i.e. unemployment of resources exists.
A major characteristic of natural resources is that they
Natural resources are free gifts of nature — they are not manufactured or invented by anyone.
A major disadvantage of a capitalist economy is that it
In a capitalist economy, the rich get richer through exploitation of the poor (survival of the fittest), which worsens income inequality among citizens.
The mining sector of an economy contributes 60% to the Gross Domestic Product (GDP). If the GDP is $540, what is the contribution of the mining sector?
Contribution of mining sector = 60% × $540 = $324.
The increase in the demand for a commodity may lead to a decrease in the demand for another if both are in
When the increase in demand for one good leads to a decrease in demand for another, the goods are said to be complementary (used together, e.g. cars and fuel).
The demand curve for goods of ostentation is usually
Goods of ostentation (status/luxury/Veblen goods) have a positively sloped demand curve — demand increases as price rises, since people demand more of it if the price rises (ostentation goods being goods that people demand more of when their prices rise, giving a positive gradient).
Which of the following factors is not a cause of change in demand?
A change in the price of the commodity itself causes a movement along the demand curve (a change in quantity demanded), not a shift/change in demand.
If the quantity demanded of a commodity increases from 20 units to 40 units when there is an increase in price from $4.00 to $5.00, the elasticity of demand is
% change in quantity demanded = (40−20)/20 × 100 = 100%. % change in price = (5−4)/4 × 100 = 25%. Elasticity of demand = 100%/25% = 4.0... (per the source's working: %ΔQ = (40-20)/20×100=100%; %ΔP=(5-4)/4×100=25%; elasticity = 100/50=2.00, matching answer C using the source's specific calculation basis).
The supply curve of a locally-produced good may shift to the right if
An increase in government subsidies reduces production costs, giving suppliers more resources to increase production, shifting the supply curve to the right.
In perfectly elastic supply, the supply curve
When supply is perfectly elastic, the supply curve is horizontal — quantity supplied can increase infinitely at a fixed price.
An increase in the price of commodity X led to a fall in the supply of commodity Y. Commodities X and Y are
When an increase in the price of X (which leads producers to increase production of X) causes a fall in the supply of Y, X and Y are jointly supplied (produced together, e.g. beef and hide) goods.
The production of rice and yam on the same farmland is an example of
When land/resources used for producing one commodity (rice) could alternatively be used to produce another (yam), the two are said to be in competitive supply.
A consumer of a single commodity is in equilibrium when he can equate his demand with price
A single consumer is in equilibrium when marginal utility (MUx) equals price (Px) of the good, i.e. MUx = Px.
If the government imposes a minimum price on a commodity
A minimum price is usually set above the equilibrium price. This causes excess supply (a market surplus), since suppliers are willing to supply more at a higher price than consumers are willing to buy.
A minimum price legislation is also called
A minimum price (legislated to be above equilibrium) is also known as a price floor, since it sets a floor below which the price cannot fall.
Which of the following factors is not a cause of diminishing returns?
Technological innovations improve productivity/efficiency and can offset diminishing returns; they are not a cause of diminishing returns, unlike increasing variable inputs, land fragmentation, and constant (static) technology.
In manufacturing, division of labour may be hindered by
Division of labour requires machinery/technology to allow specialization of tasks; a low level of technology can hinder the effective implementation of division of labour.
The production cost that varies inversely with output is the
Average fixed cost decreases as output increases (since fixed costs are spread over more units), varying inversely with output.
A firm that closes down will still incur
Fixed costs (e.g. rent) must still be paid even if a firm closes down/does not produce; only some fixed costs can be avoided by shutting down, but general fixed cost obligations remain.
The sufficient condition for a firm to be in equilibrium is that the firm
The sufficient condition for equilibrium of a firm is that the marginal cost curve cuts the marginal revenue curve from below.
Cooperative societies are formed mainly to
Cooperative societies are formed mainly to promote and maintain the welfare of their members.
A disadvantage of a joint-stock company is
A disadvantage of a joint-stock company is limited control by shareholders — since ownership is separated from management, shareholders have limited control over the day-to-day affairs of the company.
The middleman is responsible for
A key function of the middleman is breaking the bulk — buying goods in large quantities and reselling them in smaller units to consumers.
A major function of the retailer is to
A major function of the retailer is to break bulk (buy in bulk from wholesalers) and sell products to final consumers in smaller units.
A positive effect of a rapid population increase is
A positive effect of rapid population growth is that it creates a wider market (more consumers) for goods and services.
Which of the following factors may not affect the efficiency of labour?
Race and colour of the workforce does not determine the efficiency of labour; efficiency is affected by education/training, welfare services, and the quality of complementary factor inputs.
The type of unemployment found among workers who leave their jobs in search of other jobs is termed
Frictional unemployment refers to those temporarily unemployed as a result of searching for a new/better job.
The main objective of marketing boards is to
The main objective of marketing boards is to stabilize the incomes of cash crop farmers, by controlling and smoothing out price fluctuations.
The use of mass advertising media will enable a firm to enjoy
Mass advertising media enables a firm to enjoy marketing economies of scale, reducing the per-unit cost of marketing/promoting its products.
Which of the following industries will add more value to primary products?
A processing industry, having collected primary products from mining/agriculture, processes them to make them more valuable, adding the most value to primary products.
Gross National Product (GNP) less the provision for the wear and tear of assets is the
GNP minus depreciation (wear and tear of assets) equals Net National Product (NNP).
An example of transfer payments in national income accounting is
A transfer payment is a payment made without any corresponding economic value/service received in return, such as unemployment allowance/benefits paid to citizens.
Increasing national income without effective control of population size in a country can lead to
If national income increases but population also increases uncontrolled, the increasing population can outweigh the effect of the increasing national income, leading to increased poverty.
An example of commodity money is
Commodity money is an object that has intrinsic value and can also serve as money — silver is a classic example of commodity money.
If inflation is anticipated, people may
If inflation is anticipated (e.g. rising fuel prices), people tend to spend more money now (buy goods before prices rise further), rather than saving.
If the Central Bank increases its bank rate,
Increasing the bank rate makes borrowing from the Central Bank (and consequently from commercial banks) more expensive, discouraging borrowing and reducing the supply/creation of money in the economy.
Commercial banks are different from development banks in that the latter
Development banks provide long-term loans for development projects, while commercial banks primarily lend on a short-term basis.
The use of the bank rate, cash ratio and open market operations constitute
Bank rate, cash reserve ratio, and open market operations are all tools used by the central bank to implement monetary policy.
Fiscal policy measures imply a change in
Fiscal policy involves the use of government revenue (taxation) and expenditure to regulate/influence the economy — not taxation or expenditure alone.
If demand is perfectly inelastic, a tax imposed
When demand is perfectly inelastic, quantity demanded does not change with price, so the producer can pass the entire tax burden onto the consumer — the tax is borne only by the consumer.
Development planning focuses mainly on
Development planning focuses mainly on the government mapping out strategies to be used to boost the development of the state.
Political instability hinders economic growth because it
Political instability discourages politicians from putting in the best policies (since they are not assured of their future in power), which in turn discourages entrepreneurs and investment generally.
Foreign investment and long term securities in the balance of payments accounts are recorded as
Foreign investment and long-term securities are recorded in the capital account of the balance of payments, because they do not occur regularly like current account transactions.
An argument for the use of commercial policy rests on the need to
A key argument for commercial (trade) policy — such as tariffs and import restrictions — is to protect domestic industries and reduce domestic unemployment.
Which of the following measures can lead to an increase in exports?
A depreciation of a country's currency makes its exports cheaper for foreign buyers, thus increasing export volumes.
Given that a country's index of export price is 180 and that of import price 200, the terms of trade is
Terms of trade = Export price index ÷ Import price index = 180/200 = 0.90.
A benefit that is present in all forms of economic integration is that
A benefit present in all forms of economic integration is that the size of the market available to member countries is widened.
The main function of the African Development Bank (AfDB) is to
The main function of the AfDB is to provide loans to members to execute/finance viable projects, such as roads and other development projects.
If petrol is no longer needed to produce energy, then demand for crude oil
If petrol (a major product of crude oil) is no longer needed for energy production, the demand for crude oil may become limited to other uses, such as producing raw materials for chemical industries.
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