WAEC Economics 1993 past questions and answers

Economics is the study of how to

1. A.choose between alternatives, given limited resources
2. B.regulate the money that is in circulation in a country
3. C.be prudent in the use of available resources
4. D.improve the standard of living of the society at large
5. E.arrange our needs in order of usefulness before satisfying them.

Scarcity in Economics arises because

1. A.the resources available are adequate
2. B.individuals have limited time
3. C.resources are limited in supply
4. D.human beings have limited wants
5. E.individual wants are equal to the resources available.

The real cost of a commodity is

1. A.the cost of the alternative that has to be sacrificed for it
2. B.the alternative that has to be forgone in order to purchase it
3. C.its market price
4. D.the alternative cost involved when the opportunity of buying the commodity is missed
5. E.the sacrifice that is made after buying the commodity.

Public corporations in West Africa are set up to

1. A.make maximum profit
2. B.provide jobs for the people
3. C.provide welfare services for the people
4. D.show that the government can do business
5. E.compete with private enterprises.

An inferior good is one

1. A.that is too bad for consumption
2. B.whose price is lower than the prices of other goods
3. C.that is easily perishable
4. D.whose demand falls when the income of its consumers increases
5. E.that is not durable.

Price elasticity of demand is defined as the

1. A.responsiveness of demand to changes in price
2. B.responsiveness of price to changes in demand
3. C.increase in demand resulting from a rise in price
4. D.unit decrease in price resulting from a fall in demand
5. E.unit increase in quantity demanded when price rises.

The rural areas of West African countries lack industries because

1. A.rural people are not meant to work in industries
2. B.rural people are uneducated
3. C.of inadequate infrastructure
4. D.of low population density
5. E.they are not suitable for industries.

An entrepreneur will locate his industry in a place

1. A.nearest to his home town
2. B.where the cost of production will be minimized
3. C.nearest to his wife's hometown
4. D.where the government directs him to locate it
5. E.where there is no other industry.

Which important economic principle is illustrated by the graph above?

1. A.Law of Comparative Cost
2. B.Law of Diminishing Marginal Utility
3. C.Law of Diminishing Returns
4. D.Malthusian Law of Population
5. E.Law of Supply.

Which of the following reasons is mainly responsible for the inefficient distribution of goods in West African countries? The

1. A.large number of distribution companies
2. B.import and export restrictions by the government
3. C.narrow market for commodities produced
4. D.poor transport and communication systems
5. E.large influence of foreign traders.

Which of the following does not apply to private companies?

1. A.The number of shareholders is limited
2. B.The liability of shareholders is limited
3. C.Accounts have to be publicized
4. D.The companies are separate legal entities
5. E.Shares are not easily transferable.

In Economics, the reward for labour is in the form of

1. A.wages
2. B.profit
3. C.rent
4. D.dividends
5. E.interest.

A nation with a working population that is insufficient to exploit its resources is said to be

1. A.over-populated
2. B.under-populated
3. C.experiencing decreasing population
4. D.experiencing increasing population
5. E.having optimum population.

Which of the following may not be included in explaining the term production?

1. A.Provision of services
2. B.manufacture of goods
3. C.Changing raw materials to finished goods
4. D.Use of consumer goods
5. E.Making goods available where and when they are needed.

Which of the following business establishments are not motivated mainly by profit?

1. A.Public Limited Companies
2. B.Private Limited Companies
3. C.Holding Companies
4. D.Partnerships
5. E.Co-operatives.

Production is not complete until the

1. A.goods get to the wholesalers
2. B.goods reach the final consumer
3. C.factors of production are combined
4. D.goods are ready for transportation
5. E.wholesalers ask the firms to produce.

Which of the following is the correct way to calculated total cost?

1. A.Addition of fixed cost to variable cost
2. B.Division of total cost by total output
3. C.Multiplication of fixed cost by variable cost
4. D.Subtraction of ficed cost from total cost
5. E.Addition of marginal cost to average cost.

Robert T. Malthus postulated in his population theory that

1. A.the death rate may become so high that people may not survive
2. B.people will eventually stop having children
3. C.people will migrate from one place to another in search of food
4. D.positive efforts should be made to increase population
5. E.population growth rate may out-grow the means of subsistence.

Division of labour may be restricted when

1. A.an ailing economy has improved
2. B.producers live in villages
3. C.market is small
4. D.there is full employment
5. E.there is inflation.

Land is often distinguished as a factor of production because it

1. A.is a free gift of nature
2. B.constitutes one-third of the entire world
3. C.is unlimited in supply
4. D.is owned by individuals
5. E.is owned by government.

Which of the following is not an advantage of division of labour? It

1. A.saves time
2. B.makes possible the use of machines
3. C.is monotonous
4. D.leads to specialization
5. E.aids the development of skills.

The location of timber and plywood industries in West Africa is mainly influenced by the

1. A.availability of transport
2. B.good climate
3. C.availability of power supply
4. D.adequate labour supply
5. E.presence of a luxuriant forest.

The occupational distribution of population in most West African countries shows the highest concentration in

1. A.agriculture and allied industries
2. B.mining and manufacturing
3. C.the distributive trade
4. D.commerce and industry
5. E.mining and services.

The growth rate of population is the

1. A.annual increase in population
2. B.total population of a country at a given time
3. C.addition to the total population over a given period
4. D.increase in the working population over a given period
5. E.percentage increase in population in a given year.

A situation in which an increase in the demand for certain goods leads to a fall in the demand for other goods is known as

1. A.joint supply
2. B.derived demand
3. C.competitive demand
4. D.competitive supply
5. E.composite demand.

A market equilibrium exists when

1. A.demand and supply are equal
2. B.the market is large
3. C.the price is fluctuating
4. D.no buyer goes home empty-handed
5. E.no seller has an unsold stock.

The price system is

1. A.the market price of commodities
2. B.a market where a single price rules
3. C.a system of price allocation to the products of the same firm
4. D.a system of resource allocation through supply and demand interactions
5. E.a system which the market price is determined only through haggling.

The main objective of production by an entrepreneur is to

1. A.equate marginal revenue with marginal cost
2. B.provide employment opportunities
3. C.equate total revenue with total cost
4. D.equate average revenue with average cost
5. E.accumulate wealth for the nation.

If price falls below the equilibrium

1. A.demand will equal supply
2. B.demand will be greater than supply
3. C.supply will be greater than demand
4. D.price will become indeterminate
5. E.quantity supplied will be zero.

Which of the following is not a source of finance for a one-man business?

1. A.Money lenders
2. B.Inheritance
3. C.Loans from insurance companies
4. D.Loans from banks
5. E.Sale of shares.

Land is a most significant factor in terms of contribution to the economy because

1. A.it enables us to build industries
2. B.we build houses on it
3. C.all our highways are constructed on it
4. D.we get a lot of fishes from it
5. E.vital resources from it enrich the economy.

Capital as a factor of production is important because

1. A.it enables us to carry out tasks which cannot be done by human effort only
2. B.most tasks can be done with bare hands
3. C.people can work without capital
4. D.without capital, all other factors are useless
5. E.it provides money which is essential for the growth of business.

A firm's compulsory cost whether it is in production or not, is referred to as its

1. A.prime cost
2. B.variable cost
3. C.marginal cost
4. D.fixed cost
5. E.average cost.

A scale of preference is a list

1. A.of consumer's wants arranged in order of importance
2. B.that helps the individual to make a rational choice
3. C.that enables the consumer to make a wise decision about his choice
4. D.that is necessary because human beings are faced with competing wants
5. E.of all satisfied wants arranged in order of magnitude.

An economic system in which the state owns and controls the means of production is known as

1. A.free enterprise
2. B.socialist economy
3. C.mixed economy
4. D.capitalist economy
5. E.welfare economy.

Which of the following is not a middleman in the distribution channel? The

1. A.wholesaler
2. B.distributor
3. C.agent
4. D.consumer
5. E.retailer.

Division of labour gives rise to

1. A.the exchange of goods and services
2. B.the use of a barter system
3. C.the production of limited goods
4. D.unemployment
5. E.delay in production.

One-man business are popular in West Africa because of all the following, except the

1. A.ease of entry
2. B.small capital required
3. C.limited entrepreneurial skill needed
4. D.ease of decision making
5. E.tendency to become joint-stock companies.

Section A (answer one question only from this section)
(a) Explain each of the following measures of central tendency: (i) mean; (ii) median; (iii) mode
(b) Calculate the mean, median and mode of the following set of numbers: 21, 22, 23, 24, 25, 26, 27, 23, 28, 29, 30, 24, 31, 34, 23.

Section A (answer one question only from this section)
Cost schedule of a Firm
Output | TFC (N) | TVC (N) | TC (N) | AVC (N) | ATC (N) | MC (N)
0 | 100 | 0 | 100 | 0 | 100 | —
1 | 100 | 40 | 140 | ? | ? | ?
2 | 100 | 64 | 164 | ? | ? | ?
3 | 100 | 80 | 180 | ? | ? | ?
4 | 100 | 88 | 188 | ? | ? | ?
5 | 100 | 96 | 196 | ? | ? | ?
From the cost schedule above, calculate the Average Variable Cost (AVC), Average Total Cost (ATC) and Marginal Cost (MC) of the firm. Show your workings clearly.

Section B (answer three questions only from this section)
What are the factors that determine the price elasticity of demand for a commodity?

Section B
What are the likely reasons for government participation in the location of industries in Nigeria?

Section B
Outline the merits of a Joint Stock Company.

Section B
What functions do wholesalers perform for manufacturers?

Section B
Explain each of the following types of taxes:
(a) Proportional tax (b) Progressive tax (c) Regressive tax.

Section B
Highlight the economic effects of high population density in Nigeria.

Section B
How does the central bank exercise control over commercial banks?

Section B
Describe the problems facing agriculture in Nigeria.