49 questions. Try each one, then open the answer to check yourself and read the explanation.
Economics is the study of human behaviour as it relates to the
Answer: A (efficient allocation of resources)
Economics studies how people make choices to use scarce resources efficiently to satisfy their many wants.
The downturn in the prices of shares on stock markets is a highlight of
Answer: C (the regulatory nature of the market)
A sharp fall in share prices shows that markets can fail and need regulation by bodies such as the Securities and Exchange Commission.
If X̄ = 6 and N = 6, determine the value of Σfx.
Answer: A (36)
The mean X̄ = Σfx/N, so Σfx = X̄ × N = 6 × 6 = 36.
The standard deviation of a set of data is
Answer: D (a measure of dispersion.)
Standard deviation measures how widely the values spread around the mean, so it is a measure of dispersion, not an average.
The mean is the best measure of central tendency because it
Answer: C (is a balancing point in an observation)
The mean uses every value, so the deviations above and below it balance out to zero. It is affected by extreme values, and the midpoint is the median.
The most popular sizes of dresses and shoes are determined by the
Answer: C (mode)
The mode is the value that occurs most often, so it shows the most popular size.
If the demand for a good is more elastic than its supply, the tax burden is borne
Answer: B (more by producers)
The side of the market that is less elastic bears more of a tax. If demand is more elastic, sellers cannot pass much of the tax on, so producers bear more of it.
If the price of a commodity with elastic demand increases, the revenue accruing to the producer will
Answer: D (decrease.)
With elastic demand, quantity falls by a bigger percentage than price rises, so total revenue falls.
An excess demand for beans will result from
Answer: C (a decrease in the price of beans)
When the price falls below equilibrium, quantity demanded rises and quantity supplied falls, giving excess demand.
Consumer surplus tends to be higher when demand is
Answer: C (inelastic)
Consumer surplus is the gap between what buyers are willing to pay and what they pay. A steep (inelastic) demand curve leaves a large area above the price, so surplus is higher.
One of the assumptions of ordinal utility theory is that
Answer: B (utility can be ranked)
Ordinal theory says consumers cannot measure utility in units but can rank their preferences in order.
The law of diminishing marginal utility explains why
Answer: A (the slope of a normal demand curve is negative)
As each extra unit gives less satisfaction, a consumer will buy more only at a lower price, so the demand curve slopes downwards (negative slope).
If a consumer plans to spend 120k on four oranges but spent 80k, his consumer surplus is
Answer: B (₦0.40)
Consumer surplus = amount willing to pay − amount paid = 120k − 80k = 40k = ₦0.40.
A set of factors that can shift the supply curve are changes in
Answer: B (technology, weather and population)
A change in the good's own price only moves along the supply curve, and taste affects demand. B is the only set without price or taste.
If the coefficient of price elasticity of supply is greater than one, the supply is said to be
Answer: D (fairly elastic.)
A coefficient above one (but not infinite) means supply is elastic, i.e. fairly elastic.
If commodity X is a by-product of commodity Y, this implies that both commodities are
Answer: C (jointly supplied)
A by-product is produced together with the main product (e.g. beef and hide), so the two are in joint supply.
In perfect competition, price is determined by the
Answer: D (market.)
In perfect competition no single buyer or seller can influence price; it is set by the market forces of demand and supply.
In order to reduce hardship faced by consumers due to high prices, government can introduce
Answer: A (maximum prices)
A maximum price (price ceiling) is set below the market price to keep goods affordable for consumers.
Average product is less than marginal product when
Answer: B (there is increasing returns to scale)
When each extra unit adds more than the average, the average rises. That happens in the stage of increasing returns.
A firm enjoying economies of scale is said to be
Answer: A (reducing average cost as production increases)
Economies of scale are the cost savings a firm gets from growing, so its average cost falls as output rises.
The rising portion of the long-run average cost curve of a firm is an indication that it is experiencing
Answer: C (diseconomies of scale)
Long-run average cost rises when the firm grows too large and suffers diseconomies of scale.
An industry's supply curve is more likely to be elastic when firms are
Answer: A (enjoying free entry and exit)
With free entry, new firms can join quickly when price rises, so industry output responds strongly to price.
One of the characteristics of monopolistic competition is that
Answer: B (no single seller dominates the market)
Monopolistic competition has many sellers of slightly different products, so no single seller dominates the market.
The demand curve for factors of production
Answer: C (slopes downwards)
Because of diminishing marginal productivity, firms hire more of a factor only when its price falls, so factor demand slopes downwards.
An agreement among firms on price and segmentation is termed
Answer: B (collusion)
When firms agree among themselves to fix prices or share out markets instead of competing, it is called collusion.
In national income accounting, tax is determined by the
Answer: A (level of income)
In the income model, tax revenue depends on income: the higher the national income, the more tax is collected.
A decrease in aggregate spending in an economy will ultimately lead to
Answer: C (deflation)
When total spending falls, demand for goods falls and prices fall generally, which is deflation.
If MPC is 0.7 while government expenditure increased by ₦150m, the equilibrium national income is
Answer: D (₦500 million.)
Multiplier = 1/(1 − MPC) = 1/0.3 = 3.33. Change in income = 3.33 × ₦150m = ₦500m.
The function of money which makes division of labour possible is its
Answer: C (medium of exchange)
Because money is accepted in exchange, people can specialise in one job and use their income to buy everything else.
By buying treasury bills, the Central Bank of Nigeria intends to
Answer: A (increase money supply in the economy)
When the central bank buys securities in open market operations, it pays out money, so money supply rises.
The velocity of money is represented as
Answer: B (nominal GDP/money supply)
Velocity is how many times each naira is spent in a year: total spending (nominal GDP) divided by money supply.
One of the functions of commercial banks is
Answer: C (granting loans to customers)
Giving loans and overdrafts is a function of commercial banks; the other options are central bank duties.
A strategy for curbing unemployment is to
Answer: C (increase government expenditure and decrease taxes.)
More government spending and lower taxes raise total demand, so firms produce more and hire more workers.
In Nigeria, the huge public debt is as a result of
Answer: B (deficit budgeting)
A deficit budget spends more than revenue, and the gap is borrowed, which builds up public debt.
National development plans in Nigeria fail mainly because of
Answer: C (poor implementation strategies)
Nigeria's plans have usually been well drawn up but poorly carried out, so poor implementation is the main reason they fail.
The ultimate aim of agricultural policies in Nigeria is to achieve
Answer: A (food sufficiency)
Agricultural policies aim mainly to make the country produce enough food to feed itself.
Government can boost agricultural output in Nigeria primarily by
Answer: C (granting subsidies on farm inputs)
Subsidies make fertiliser, seeds and tools cheaper, so farmers can produce more.
Localization of industries refers to the
Answer: C (concentration of firms of an industry)
Localisation is when firms in the same industry cluster in one area.
In developing countries, governments influence the location of industries in order to
Answer: A (spread development)
Governments steer industries to different areas so that development is spread across the country instead of a few cities.
A disadvantage of Nigeria's dependence on imported petroleum products is the
Answer: C (instability in the supply of the product)
Imports can be delayed by shipping, foreign exchange or price problems, so supply of fuel becomes unstable and scarcities occur.
The maximum number of shareholders for a limited liability company is
Answer: D (infinite.)
A public limited liability company has no upper limit on its number of shareholders.
The primary motive for an individual engaging in production is to
Answer: B (satisfy basic human wants)
The basic purpose of production is to make goods and services that satisfy human wants.
Use the table below to answer the question.
Year | Population (000) | Working Population (000)
2000 | 25 | 13
2001 | 30 | 19
2002 | 40 | 32
2003 | 60 | 49
What is the population growth rate in 2003?
Answer: D (50.0%)
Growth rate = (60 − 40)/40 × 100 = 50%.
Use the table below to answer the question.
Year | Population (000) | Working Population (000)
2000 | 25 | 13
2001 | 30 | 19
2002 | 40 | 32
2003 | 60 | 49
The percentage of working population in 2002 is
Answer: D (80%)
Working population ÷ total population = 32/40 × 100 = 80%.
One of the characteristics of free trade zone is
Answer: D (harmonized trade among member countries.)
In a free trade area member countries remove trade barriers among themselves. A common external tariff belongs to a customs union, and free factor movement to a common market.
If Nigeria imports vehicles from Japan, the transaction will appear as a
Answer: B (credit on Japan's balance of payments)
Japan earns money from the export, so it is a credit for Japan (and a debit for Nigeria).
One of the objectives of ADB is to
Answer: C (promote economic and social development of member countries)
The African Development Bank exists to finance economic and social development in its member countries.
The choice of the method of production in an economy is determined by the
Answer: B (level of technical know-how)
How to produce (labour-intensive or capital-intensive) depends mainly on the technology and skills the economy has.
The amount of labour hired depends on the
Answer: C (marginal productivity of labour)
A firm keeps hiring workers as long as each extra worker adds at least as much to revenue as his wage, so hiring depends on labour's marginal productivity.