All 50 questions from the West African Examinations Council (WAEC) Economics 2023 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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The study of economics is mainly concerned with how to
Economics is fundamentally about knowing how to rationalise scarce resources among unlimited wants — i.e. making choices when resources are inadequate.
Warehousing is an economic activity that falls under
Warehousing deals with storage and distribution, which is a service — a tertiary production activity.
Which of the following items is not classified as working capital?
Equipment is a fixed/capital asset, not working capital; fuel, wages and semi-finished goods are consumed in the production cycle as working capital.
An economic system is mainly concerned with
An economic system deals with how resources of the economy are allocated in satisfying the various competing/alternative wants of the economy.
The marks obtained by 9 students in a class test are recorded below: 9,8,7,5,7,6,8,9 and 7. What is the median mark?
Arranging in order: 5,6,7,7,7,8,8,9,9 — the middle (5th) value is 7.
The demand for a factor input as a result of the demand for its output is known as
Derived demand is the demand for a factor of production because of the demand for the output it helps produce, e.g. demand for labour when building a house.
If the demand for a commodity remains constant as price increases, the commodity is said to be
When changes in price do not affect the quantity demanded of a commodity at all, demand is perfectly price inelastic.
When more of the tax on a product is borne by the buyer than the seller, the commodity involved has A. elastic demand. B. fairly inelastic demand. C. perfectly elastic demand. D. perfectly inelastic demand.
When the seller transfers a large tax burden to the buyer, the goods the seller sells can be said to be fairly inelastic in demand.
A fall in the price of a normal commodity which has elastic demand will result in
For a price-elastic good, a fall in price leads to a proportionally larger increase in quantity demanded, thereby increasing total revenue.
The supply of light could be met using a candle, lantern and gas lamp. This is an example of A. complementary supply. B. joint supply. C. composite supply. D. abnormal supply.
Since candle, lantern and gas lamp can all jointly meet a single need (light), this is an example of joint supply.
Petrol and kerosene are jointly obtained from crude oil. If the supply of petrol increases, the A. supply of kerosene will fall. B. cost of crude oil production has increased. C. supply of kerosene will rise. D. supply of kerosene will remain unchanged.
Since both petrol and kerosene come from a single raw material (crude oil), an increase in output of one will definitely lead to an increase in the output of the other (joint supply).
If the government stops subsidy on cocoa production, the supply curve of cocoa will A. shift to the right. B. become vertical. C. shift to the left. D. remain unchanged.
Removing a subsidy raises the cost of production, causing the price of the goods to rise; this is shown as a leftward shift in the supply curve, ceteris paribus.
When the marginal utility of the consumption of commodity X (MUx) is greater than the price of commodity X (Px), a rational consumer should A. consume more of commodity X. B. reduce consumption of commodity X. C. consume the same quantity of commodity X. D. strive to remain in disequilibrium.
When marginal utility exceeds price, a rational consumer is expected to consume more of the product until the marginal utility equals the price of the product.
When the demand for a commodity increases while supply remains unchanged, the equilibrium price and quantity will A. remain constant. B. decrease. C. increase. D. turn negative.
An increase in demand with unchanged supply raises both the equilibrium price and equilibrium quantity.
The fixing of maximum prices by government is mainly on A. inferior goods. B. luxury goods. C. imported capital goods. D. selected essential goods.
Governments intervene by fixing maximum price and minimum price on only essential products such as foods and drugs.
At what point on the total product curve shown below will marginal product be negative?
On the total product curve, marginal product becomes negative once the total product curve starts to fall — this begins at point S.
A small scale firm located within an industrial estate will enjoy a A. government protection and funding. B. technological economies of scale. C. external economies of scale. D. financial economies of scale.
When firms are located in the same industrial estate, they tend to enjoy shared external economies of scale.
The total fixed cost curve is A. vertical. B. horizontal. C. downward sloping. D. upward sloping.
Total fixed cost remains the same no matter the quantity of output, so it remains horizontal on a cost-output graph.
If a firm retrenches some of its factory workers its A. fixed cost is likely to increase. B. marginal cost may increase. C. average fixed cost may increase. D. variable cost will decline.
Labour cost is a variable cost; retrenchment will lead to a decrease in the variable cost of the company.
A monopolist may enjoy abnormal profit only if its A. marginal cost exceeds marginal revenue. B. demand curve is perfectly elastic. C. price exceeds average total cost. D. expenditure on advertisement increases.
When the price of a market exceeds its average cost, the firm enjoys abnormal profit for as long as that situation remains.
The average revenue curve of a firm in a perfect market is the same as the A. supply curve of the firm. B. demand curve of the firm. C. total revenue curve. D. average cost curve of the firm.
In a perfectly competitive market, the average revenue curve is the same as the demand curve facing the firm.
Resources are pooled for the mutual benefit of its members mainly in a A. joint stock company. B. partnership. C. private company. D. cooperative society.
A cooperative society pools resources for the mutual benefit of its members.
A joint stock company enjoys perpetual existence because A. it is formed by a minimum of seven members. B. it is a corporate entity. C. its shares are easily transferable. D. there is a higher degree of specialization.
The easy transferability of shares of a joint stock company is a key reason it enjoys perpetual/continuous existence even as owners change.
Consumers have access to a variety of goods through the activities of A. advertising agencies. B. wholesalers. C. retailers. D. mass media.
Retailers store varieties of products in their stores, giving consumers the opportunity to access a variety of products at a time.
The rate of growth of population is A. the difference between birth rate and death rate. B. birth rate less death rate plus net migration. C. initial population plus number of births and net migration. D. the number of immigrants plus number of births.
The growth rate of population is calculated as net migration plus birth rate minus death rate.
The Malthusian theory of population is best illustrated when A. both population and food supply increase at the same rate. B. population increases much faster than food supply. C. the size of the population and available resources are equal. D. food supply increases much faster than population growth.
Malthus's theory postulated that population grows at a geometric rate while food production grows at an arithmetic rate, so population growth will outgrow food production.
The dependency ratio of a country is the A. total active population who depends on government for survival. B. number of children who depends on their parents for survival. C. the children and aged who rely on the active population for support. D. people who are cared for by their extended families.
The dependency ratio is the ratio of the non-working population to the working population.
When job vacancies are publicized, the government is mainly trying to solve the problem of A. residual unemployment. B. frictional unemployment. C. technological unemployment. D. cyclical unemployment.
Publicizing job vacancies helps match job seekers with available jobs faster, which addresses frictional unemployment (the temporary unemployment during job transitions).
Many workers are employed in the agricultural sector of developing countries because they A. practice mechanized system of farming. B. labour intensive method is mostly adopted. C. wages in the sector is high. D. abnormal profits are made.
One of the major reasons the agricultural sector employs the largest number of labourers in developing countries is because they are basically labour intensive.
Industries are sometimes located in areas which are not profitable so as to A. encourage rural-urban migration. B. be able to reap internal economies of scale. C. be able to even-out development. D. bring about external economies of scale.
At times, government mandates businesses to situate in a particular area to even out the development of a country/region.
One factor that may not promote industrial development is A. granting old firms tax exceptions. B. local firms entering into partnerships with foreign firms. C. setting up industrial estates with modern amenities. D. granting capital to firms at reasonable interest rates.
When old firms are granted tax exceptions, it will not be easy for new firms to enter the industry, which does not promote industrial development.
National income is calculated mainly to A. determine how income is to be shared. B. help firms generate more funds. C. determine the level of sectoral performance. D. determine aid to be received from other nations.
National income calculation shows how the government spends, and the performance of the private as well as foreign sector; thus, it shows sectoral performance.
To overcome the problem of double counting under the expenditure approach, A. value added method is used. B. only spending on final goods are considered. C. proper accounting standards must be used. D. spending on intermediate goods and inputs are considered.
When the expenditure approach is used in computing national income, only expenditures on final goods will be considered to avoid the problem of double counting.
The Net National Product (NNP) of a country is $50 while the depreciation allowance is $10 m. The Gross National Product (GNP) is A. $30 m. B. $40 m. C. $60 m. D. $500 m.
NNP = GNP − depreciation, so GNP = NNP + depreciation = $50m + $10m = $60m.
The price level and the value of money are A. inversely related. B. directly related. C. not related. D. positively related.
The higher the price level, the lower the value of money — thus, price level and value of money are inversely related.
Money is able to function more as a medium of exchange when A. more people engage in subsistence production. B. there is a fall in production. C. there is specialization of labour. D. individuals and nations are self-sufficient.
Through specialisation, people will need money to exchange for goods to ensure production flow, thus money functions more as a medium of exchange.
An indication that there is inflation in a country is that A. there is a decrease in the demand for goods and services. B. there are too many goods in circulation. C. the same amount of money buys lower quantity of goods. D. people prefer to lend than to borrow.
When a large volume of money causes few goods to be bought/acquired in an economy, it is said to be inflation — the same money buys a lower quantity of goods.
The most liquid asset among the following is A. shares. B. bonds. C. cash. D. cheque.
The easier the acceptance of an asset, the more liquid it is; cash is generally acceptable by all, making it the most liquid asset.
Commercial banks help in economic development mainly by A. acting as intermediaries between lenders and borrowers. B. giving financial advice to the government. C. acting as trustees and executors of wills. D. serving as custodians of valuables.
Commercial banks help finance from one section of the economy to another where there is deficit finance, thereby promoting economic growth and development.
Taxes levied on goods and services by governments are called A. direct taxes. B. corporate taxes. C. indirect taxes. D. poll taxes.
Taxes on goods are considered indirect taxes because they are not imposed directly on the person paying it.
The curve labelled W shows the
Curve W is progressive because the higher the income, the higher the tax.
An example of government's recurrent expenditure is A. the cost of building a school. B. paying salaries of workers. C. purchase of new vehicles. D. electrification projects in rural areas.
Salaries are a recurrent expenditure because they appear in the budget from time to time.
A country is described as developing if A. the population is decreasing. B. there is low labour supply. C. the contribution of tertiary sector to national income is high. D. the income per head is low.
When the income per head of a country is low, such a country is regarded as developing.
Tariffs, quotas and embargoes are examples of A. foreign exchange policies. B. trade restriction policies. C. fiscal policies. D. monetary policies.
Tariffs, quotas and embargoes are some of the instruments used by government to regulate importation — trade restriction policies.
Trade protection will assist economic growth in developing countries if it can A. eliminate importation of all commodities. B. generate enough revenue through export duties. C. effectively safeguard newly established firms. D. allow the importation of cheaper goods people want.
Trade protection will be effective if the country can protect its infant firms and make them more productive.
A government may cause a favourable change in her invisible trade account by A. increasing the export of her primary products. B. imposing high tariff on exports. C. developing tourism and other services. D. encouraging people to go for medical treatment abroad.
If the government develops the tourism sector, more invisible trade will be experienced, and this will improve income generated from invisible trade.
Country M enjoys absolute advantage over country N in the production of commodities X and Y, if country M A. can produce only commodity Y cheaper than country N. B. is more efficient than country N in producing both commodities X and Y. C. is inefficient in the production of both commodities X and Y. D. and country N are efficient in the production of both goods.
A country is said to have absolute advantage over another if it can produce a product or more products more effectively/efficiently compared with its counterpart.
Which of the following is not a problem facing the Economic Community of West African States (ECOWAS)? A. Language barriers. B. Production of the same commodities. C. Poor transportation and communication. D. Inadequate supply of labour.
Labour supply is not a problem to ECOWAS; in fact, there is excess supply of labour among member states.
Assisting members to solve temporary balance of payments problems is the reason for the establishment of the A. World Bank. B. International Monetary Fund. C. African Development Bank. D. Economic Commission for Africa.
One of the major functions of the IMF is to assist member countries to mitigate against their temporary balance of payments deficiencies.
Which of the following is a non-renewable natural resource? A. Cocoa. B. Oil palm. C. Coal. D. Rubber.
Coal is not renewable because once used, it takes an entirely different, extremely long geological process to be replenished, unlike agricultural products like cocoa, oil palm, and rubber.
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