50 questions. Try each one, then open the answer to check yourself and read the explanation.
The production possibility curve can be used to explain the underlying concepts of
Answer: B (opportunity cost and choice)
The PPC shows the choices open to a society with scarce resources, and the amount of one good given up to get more of the other is the opportunity cost.
The deregulation of telecommunication services in Nigeria is a characteristic of
Answer: C (market economy)
Deregulation removes government controls and lets private firms compete, which is a feature of a market economy.
If the increase in the price of yams is used to estimate the inflation rate, this is an example of
Answer: B (inductive reasoning)
Inductive reasoning moves from a particular observation, here yam prices, to a general conclusion about prices as a whole.
If the standard deviation of a given data is 8.2, find its variance
Answer: B (67.2)
Variance = (standard deviation)² = 8.2² = 67.24 ≈ 67.2.
Use the data below to answer questions 5 and 6.
54, 36, 62, 79, 83, 36, 62, 42, 62, and 42.
Calculate the mean.
Answer: C (55.8)
The ten scores add up to 558, so the mean = 558 ÷ 10 = 55.8.
Use the data below to answer questions 5 and 6.
54, 36, 62, 79, 83, 36, 62, 42, 62, and 42.
What is the modal score?
Answer: D (62)
62 appears three times, more often than any other score, so it is the mode.
A major determinant of the demand for a luxury good is
Answer: C (the income of consumers)
People buy luxuries only when their income allows, so demand for a luxury rises and falls strongly with income.
If 100 units and 120 units of commodity X are supplied at ₦80 at different times, it means that there is
Answer: A (a change in supply)
The price stayed at ₦80 but the quantity offered changed, so something other than price shifted the supply curve; that is a change in supply.
If income rises from ₦2 000 to ₦4 000 and quantity demanded increases from 80 units to 120 units, find the income elasticity of demand.
Answer: A (0.5)
% change in quantity = 40/80 = 50%; % change in income = 2 000/2 000 = 100%; income elasticity = 50 ÷ 100 = 0.5.
If the demand elasticity coefficient of cars is 0.5, it implies that the demand for petrol is
Answer: C (inelastic)
A coefficient between 0 and 1 means quantity changes proportionately less than price, which is inelastic demand.
As long as marginal utility is positive, total utility must be
Answer: B (increasing)
Each extra unit adds something to satisfaction while MU is positive, so total utility keeps rising.
Diminishing marginal utility implies that
Answer: C (marginal utility deceases as consumption increases)
The law says each additional unit consumed gives less extra satisfaction than the one before.
The excess benefit derived from the purchase of goods over the amount paid for them is referred to as consumer
Answer: B (surplus)
Consumer surplus is the difference between what a buyer is willing to pay and what he actually pays.
An upward movement along the same supply curve results in
Answer: D (an increase in quantity supplied)
Moving up a supply curve means a higher price, at which producers offer a larger quantity.
Use the information below to answer questions 15 and 16. Given that Qd = 20 − 4P and Qs = 6P + 12.
Determine the equilibrium quantity
Answer: B (16.8)
Set 20 − 4P = 6P + 12, so 10P = 8 and P = 0.8. Then Q = 20 − 4(0.8) = 16.8.
Use the information below to answer questions 15 and 16. Given that Qd = 20 − 4P and Qs = 6P + 12.
If price is increased to ₦3, how much is the excess supply?
Answer: B (22)
At P = 3: Qd = 20 − 12 = 8 and Qs = 18 + 12 = 30, so excess supply = 30 − 8 = 22.
One of the factors affecting the supply of manufactured goods is
Answer: B (technology)
Better technology lowers production costs, so firms can supply more manufactured goods at each price.
Individual markets differ from each other according to
Answer: A (the degree of competition)
Markets are classified (perfect competition, monopoly, oligopoly…) by how much competition there is among sellers.
In the diagram above, there is an excess
Answer: D (supply of 20 units)
At the price shown, which is above equilibrium, buyers take 20 units but sellers offer 40, giving an excess supply of 40 − 20 = 20 units.
To protect farmers during a bumper harvest, the government usually
Answer: D (set a minimum price)
A bumper harvest pushes prices down; a guaranteed minimum price stops farmers' incomes from collapsing.
The use of modern weaving machines in the production of local fabric will result in
Answer: B (a decrease in the demand for labour)
Machines take over work done by hand, so fewer workers are needed.
In a perfectly competitive condition, a firm uses 10 units of labour at ₦25 and 11 units at ₦36, what is the marginal cost of labour?
Answer: D (₦146)
Total cost rises from 10 × 25 = ₦250 to 11 × 36 = ₦396, so the marginal cost of labour = 396 − 250 = ₦146.
From the graph above, point M shows that MC
Answer: A (cuts AC at its minimum point)
M marks where the rising MC curve crosses the U-shaped AC curve, which happens at AC's minimum point.
The characteristic of entry and exit ensures that firms
Answer: B (earn normal profit)
Free entry competes away supernormal profit and free exit removes losses, so in the long run firms earn only normal profit.
Which of the following producers is closest to being a monopolist?
Answer: D (An automobile plant)
Making cars needs huge capital, which keeps rivals out, so a car plant faces the fewest competitors; bakers, farmers and shops face many.
The output approach to measuring national income is based on the computation of
Answer: C (value added)
The output method adds the value added by each sector, which avoids counting intermediate goods twice.
An example of injection into the circular flow of income is
Answer: D (exports)
Exports bring foreign spending into the economy, so they are an injection; taxes and imports are leakages.
The theoretical relationship between money supply and prices is weakened by changes in the
Answer: C (velocity of money)
The quantity theory links money and prices only if the velocity of circulation stays constant, so changes in velocity weaken the link.
The high rate of inflation in Nigeria can be attributed to
Answer: A (increasing cost of production)
Rising costs of fuel, power, transport and imported inputs push producers to raise prices (cost-push inflation).
If the required reserves of a bank is 20% and ₦10 000 is paid into its demand deposit account, what is the excess reserves?
Answer: B (₦8 000)
Required reserve = 20% of ₦10 000 = ₦2 000, so excess reserves = ₦10 000 − ₦2 000 = ₦8 000.
Contractionary monetary policy is used to
Answer: A (control inflation)
Contractionary policy reduces money supply and spending, which brings down inflation.
The use of government revenue and expenditure to achieve set objectives is known as
Answer: B (fiscal policy)
Fiscal policy is government's use of taxation and spending to influence the economy.
An example of an indirect tax is
Answer: B (sales tax)
Sales tax is charged on goods and passed on to buyers in the price, so it is indirect; the others are paid directly by the taxpayer.
A good indicator of economic development is an increase in
Answer: D (real per capita income)
Real per capita income adjusts income for price changes and for population, showing whether the average person is actually better off.
Economic growth takes place when there is an increase in
Answer: D (output over time)
Economic growth is a sustained rise in the real output of goods and services over time.
One of the effects of instability in farmer's income in Nigeria is
Answer: B (rural-urban migration)
When farmers' incomes rise and fall unpredictably, farming becomes unattractive, so many young people leave the villages for towns in search of steady wage jobs: rural-urban migration.
A major impediment to the development of agriculture in Nigeria is
Answer: B (inadequate supply of farm inputs)
Many Nigerian farmers cannot get enough fertilizer, improved seeds and tools, which keeps output low.
A major consideration in locating a cement factory is the availability of
Answer: D (limestone)
Limestone is bulky and is the main raw material for cement, so cement factories are sited near limestone deposits.
The export-promotion strategy is aimed at producing
Answer: C (more goods for exports)
Export promotion encourages firms to produce more goods for sale abroad to earn foreign exchange.
The activities in the oil and gas industry are classified into
Answer: B (upstream and downstream)
The oil industry is divided into upstream (exploration and production) and downstream (refining, distribution and marketing).
The economic policy of privatization came up as a result of the poor performance of
Answer: C (public enterprises)
Government-owned enterprises were inefficient and loss-making, so they were sold to private owners.
Joint-stock companies can raise funds from
Answer: B (the capital market)
Joint-stock companies raise long-term funds by selling shares and bonds on the capital market.
The active population of a country determines the size of its
Answer: C (labour force)
The active population is the people of working age who are able to work, which is the labour force.
From the shaded area of the diagram above, an appropriate population policy will be to
Answer: A (encourage early marriages)
The shaded area lies before output per head peaks, so the country is underpopulated; more people would raise output per head, so early marriage should be encouraged.
The population of a country will decrease if
Answer: A (the death rate exceeds the birth rate)
If more people die than are born (with no net migration), the population falls.
The OPEC marketing policy of fixing minimum price allows members to
Answer: A (sell above minimum price)
A minimum price is a floor: members may not sell below it but can sell above it.
A major trading problem facing ECOWAS is
Answer: A (the absence of common currency)
Each ECOWAS country has its own currency, so traders must keep changing money, which makes trade within the region harder.
A high rent on land will affect the cost of producing maize
Answer: B (negatively)
Rent is a cost of production, so a high rent makes producing maize more expensive, which harms (negatively affects) the farmer.
If the active population is 50 million and unemployed is 5 million, what is the unemployment rate?
Answer: A (10%)
Unemployment rate = unemployed ÷ active population × 100 = 5 ÷ 50 × 100 = 10%.
A classroom teacher is promoted to the rank of a principal. This is an example of
Answer: A (vertical mobility)
Promotion moves a worker up to a higher grade in the same occupation, which is vertical mobility.