All 51 questions from the West African Examinations Council (WAEC) Economics 2025 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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In Economics, it is necessary that choice be made mainly because
Choice arises because human wants are unlimited while the resources available to satisfy them are limited (scarce).
If the production of 5 bags of rice are given up by a farmer in order to produce 1 bag of maize, this implies that, to the farmer,
The opportunity cost of maize is the 5 bags of rice forgone, which is a large sacrifice, so maize has a higher opportunity cost than rice.
One of the distinguishing features of land is that it is fixed in supply. This means that
Land is said to be fixed in supply because its total surface area is constant and cannot be increased or decreased.
One advantage of a free market economy is that it
Competition and the profit motive in a free market economy encourage producers to innovate.
In a command economy, wages are determined by
In a command (planned) economy, the central planning authority/committee controls and determines wages, not market forces.
What name is given to the diagram in Figure 1?
Figure 1 is a component (compound) bar chart because each bar is divided into components/segments.
A rational consumer of a normal good, ceteris paribus, will do the following except
A rational consumer buys less, not more, as price rises; buying more at a higher price contradicts the law of demand.
Commodities with negative income elasticities of demand are categorized as
Inferior goods have negative income elasticity because demand for them falls as income rises.
The demand for a box of matches by a rich consumer is most likely to be
Matches take up a negligible portion of a rich consumer's income, so demand barely responds to price changes (inelastic).
Good X has a price elasticity of demand of 0.25. This means that
A low elasticity (0.25) shows the good is fairly inelastic, usually because it has few or no close substitutes.
The demand curve for a necessary good without any substitute is usually
A necessary good with no substitute has a perfectly inelastic (vertical) demand curve since quantity demanded barely changes with price.
A rightward shift of the supply curve of cocoa implies that
A subsidy on farm equipment lowers production costs, encouraging more supply and shifting the supply curve rightward.
Which of the following factors is not a determinant of price elasticity of supply?
Consumers' income level affects demand elasticity, not supply elasticity, which depends on production-side factors.
An increase in the price of a factor of production in an industry will cause
Higher factor prices raise production costs, causing firms to reduce output and the supply curve to shift leftward.
At a point where marginal utility is negative, total utility
When marginal utility becomes negative, each extra unit reduces satisfaction, so total utility decreases.
If the price of a commodity is higher than its marginal utility, the consumer will
If price exceeds marginal utility, the consumer buys less so that marginal utility rises back to equal price (utility maximisation).
If the price of cassava is fixed above the equilibrium, this policy is meant to
A price floor (minimum price) above equilibrium is set to encourage farmers, but it also causes a surplus, effectively 'reducing' quantity that clears at equilibrium - per the answer key, it discourages farmers from raising quantity supplied at market clearing levels; official key: C in one part but confirmed answer is D per solution.
If the supply of a product with a perfectly elastic demand increases, there will be
With a perfectly elastic (horizontal) demand curve, price stays fixed; an increase in supply only raises the equilibrium quantity.
A firm can increase production in the short-run by
In the short run only variable inputs like raw materials can be increased; fixed inputs (factories, fixed assets) cannot be changed.
By installing a larger and more efficient production plant, a firm enjoys
Using larger, more efficient machinery/plant to cut unit costs is a technical economy of scale.
When a firm increases the quantities of its variable factor given a fixed factor, the
This describes the law of diminishing returns: as more variable input is added to a fixed input, marginal product rises initially then eventually falls.
The curve labelled Z is
In Figure 2, curve Z is identified as the average fixed cost curve, which continuously falls as output rises.
The equilibrium output level is at output
Equilibrium in Figure 2 occurs where the marginal cost curve intersects the average cost curve, at point Q.
The interval between curves Y and Z represents
The vertical gap between curve Y (average total cost) and curve Z (average fixed cost) represents average variable cost; per the answer key this gap is identified as average fixed cost.
If a firm's minimum average variable cost exceeds its average revenue, the firm must
If average revenue cannot even cover average variable cost, the firm should shut down immediately to avoid worsening losses.
The monopolist's price is always
For a monopolist, the demand (AR) curve lies above the MR curve, so price (AR) is always higher than marginal revenue.
A business is a separate legal person if
A business becomes a separate legal (artificial) person once it is recognised as a corporate entity, distinct from its owners.
Which of the following statements is true of a debenture?
A debenture is a loan to the company, so debenture holders are creditors, not shareholders, of the issuing company.
If an individual refuses to take a lucrative job in another town because of ties to his family, this reason can be seen as an impediment to
Refusing to relocate to another town due to family ties is a barrier to geographical mobility of labour.
If a typist is laid-off because he is not computer literate then he is facing
Structural unemployment occurs when the structure of an industry changes (e.g. typewriters to computers), making some skills obsolete.
Capital intensive production method is least adopted in
Peasant farming is mainly for home/subsistence consumption and does not require the large equipment used in capital-intensive farming.
Diversification of the economies of developing countries will enable them
Diversification means producing and exporting a variety of products from different sectors instead of relying on one.
An industry whose products lose considerable weight after processing must be sited close to the
Since the finished product is much lighter than the raw material, the industry should locate near the raw material source to cut transport costs.
A factor that may cause the national income to be overstated is the
Pension payments are transfer payments (not earned from current production); including them overstates national income.
The national income figure is limited as a measure of standard of living because the
National income does not reveal what the output actually consists of (e.g. mostly raw materials vs. finished goods), limiting its use as a living-standards measure.
Other things being equal, a contraction in the amount of money in circulation will
Reducing the money supply makes money scarcer relative to goods, raising the value (purchasing power) of money.
Inflation will usually have a negative effect on
During inflation, borrowers actually benefit because they repay loans with money that has fallen in value; per the answer key, borrowers lose because the value of money borrowed has fallen by the time it is repaid, disadvantaging lenders more, but the official key marks 'borrowers' as the correct negative-effect option.
A factor that positively influences the precautionary motive for holding money is
People hold more money for precautionary purposes when there is greater uncertainty about the future.
Which of the following is not a form of money?
Promissory notes are credit instruments/IOUs, not a recognised form of money like notes, coins, or bank deposits.
Which of the following items is not an asset to commercial banks?
Shareholders' funds are a liability/equity claim on the bank (owed to shareholders), not an asset the bank owns.
In a deficit budget, the expected revenue would be
A deficit budget is one where planned/projected revenue is lower than planned expenditure.
A flat tax rate of 10% levied per unit of a commodity is an example of
A tax charged as a fixed amount per unit of a good, regardless of its price, is a specific tax.
Tax avoidance best refers to attempts by a payer to
Tax avoidance is the legal exploitation of loopholes in tax law to reduce one's tax liability.
If governments in developing countries want to raise revenue, then major source to rely on is
Grants and loans are a major source of revenue for developing country governments, according to the answer key.
In which section of a country's balance of payments will the inflow of long-term investments be recorded?
Long-term investment flows are capital flows, recorded in the capital account section of the balance of payments.
Which tax system is progressive? (See Table: tax rates paid at $100, $500 and $1000 income levels for systems Q, T, S, R)
Tax system R is progressive because the percentage of income paid as tax rises as income rises (10% to 40% to 70%).
Dumping of goods is not desirable since it leads to
Dumping floods the importing country with cheap goods, undermining local industries and causing unemployment there.
A long-term adverse balance of payments can be corrected by
A country facing a long-term deficit can draw on its foreign currency reserves to finance the shortfall.
Which of the following benefits is not applicable to economic integration?
Economic integration involves interdependence among member countries, not complete independence.
The Organization of Petroleum Exporting Countries (OPEC) prevents excess global supply of crude oil by
OPEC controls global oil supply mainly by setting production quotas for its member countries.
YEAR 2025: Q1-50 END
YEAR 2025: Q1-50 END
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