49 questions. Try each one, then open the answer to check yourself and read the explanation.
The basic problem that Economics attempts to solve is the
Answer: C (scarcity of resources)
Economics exists because resources are scarce relative to wants; every other problem flows from scarcity.
The ranking of a consumers' needs in order of importance is termed
Answer: C (a scale of preference)
A scale of preference is a list of wants arranged in order of importance.
Use the diagram below to answer questions 3 to 5. The total number of fruits consumed by a family in a year is 720, and this is represented by the pie chart below.
The quantity of banana consumed by the family is
Answer: B (120)
Banana = 60/360 × 720 = 120.
Use the diagram below to answer questions 3 to 5. The total number of fruits consumed by a family in a year is 720, and this is represented by the pie chart below.
The sum total of the quantity of mango and orange consumed by the family is
Answer: D (400)
Mango + orange = 80° + 120° = 200°; 200/360 × 720 = 400.
Use the diagram below to answer questions 3 to 5. The total number of fruits consumed by a family in a year is 720, and this is represented by the pie chart below.
The quantity of carrot consumed by the family is
Answer: A (200)
Carrot = 100/360 × 720 = 200.
If the price of a commodity rises from N2.00 to N4.00 and its supply increases from 100 to 125, then the co-efficient of elasticity of supply is
Answer: D (0.25)
% change in supply = 25/100 = 25%; % change in price = 2/2 = 100%; Es = 25 ÷ 100 = 0.25.
If as a result of a fall in the price of commodity X, the quantity demanded of commodity Y falls, then commodities X and Y are
Answer: E (substitutes)
When X becomes cheaper, people buy more X in place of Y, so demand for Y falls: X and Y are substitutes.
MUX/MUY = PX/PY (where X and Y = good X and good Y; MU = Marginal Utility; P = Price).
The above represents the
Answer: C (utility maximization equation)
A consumer maximises utility (is in equilibrium) when the ratio of marginal utilities equals the ratio of prices.
Subsistence agriculture means
Answer: D (cultivation for household consumption)
Subsistence farmers grow food mainly to feed their own households.
Farm produce are graded, packed and distributed by
Answer: D (marketing co-operatives)
Marketing (producers') co-operatives collect, grade, pack and sell members' farm produce.
Localization of industries is
Answer: B (the concentration of the firms of an industry in a particular area)
Localization is when many firms of the same industry concentrate in one area.
Which of the following correctly illustrates the chain of distribution?
Answer: A (Manufacturer → wholesaler → retailer → consumer)
Goods move from the manufacturer to the wholesaler, then to the retailer and finally to the consumer.
Decreasing returns to scale implies that if all factors of production are doubled, output will be
Answer: B (less than doubled)
With decreasing returns to scale, output rises by a smaller proportion than the inputs.
Rent and interest are rewards to
Answer: E (land and capital respectively)
Rent is the reward for land and interest is the reward for capital.
The process that leads to an agreement on the conditions of service between emmployers and employees is termed
Answer: C (collective bargaining)
Collective bargaining is negotiation between employers and trade unions on wages and conditions of service.
Diminishing returns occur in the short run when there is a reduction in the
Answer: D (marginal product of the variable factor)
Diminishing returns set in when each extra unit of the variable factor adds less output, i.e. its marginal product falls.
In production, factory buildings are regarded as
Answer: E (fixed costs)
The cost of factory buildings does not change with output in the short run, so it is a fixed cost.
The ownership of a Public Limited Company is made up of
Answer: B (a minimum of seven shareholders)
A public limited company needed at least seven shareholders, with no upper limit.
All the following are the economic reasons for establishing public enterprises except the provision of
Answer: A (an avenue for expressing national prestige)
National prestige is a political reason, not an economic one.
The unemployment associated with decrease in demand is referred to as
Answer: C (cyclical)
Cyclical unemployment occurs when aggregate demand falls during a depression or recession.
Monopoly can best be described as a market in which
Answer: A (a single seller sells a product which has no close substitute)
A monopoly has one seller of a product with no close substitutes.
Which of the following market structures are imperfect in competition? I. Monopoly II. Duopoly III. Oligopoly
Answer: E (I, II and III)
Monopoly, duopoly and oligopoly all have few sellers with some control over price, so all are imperfect.
Demand-pull inflation results when there is
Answer: B (excessive demand due to high purchasing power)
Demand-pull inflation is 'too much money chasing too few goods': aggregate demand exceeds supply.
Changes in the value of money can be measured by
Answer: B (a price index)
A price index shows changes in the general price level, and the value of money moves inversely with it.
The efficiency of a country's labour force depends on all the following except
Answer: E (frequent strikes and lock-outs)
Strikes and lock-outs reduce output; the other factors raise efficiency.
Which of the following is a bank's responsibility to its shareholders?
Answer: A (Making profits)
Shareholders own the bank and expect it to make profits from which dividends are paid.
Deficit financing means
Answer: D (borrowing to finance a budget)
Deficit financing is when government spends more than its revenue and borrows to cover the gap.
Development banks mainly provide
Answer: C (capital for development of specific sectors)
Development banks give medium- and long-term loans to specific sectors such as industry or agriculture.
In calculating the Gross National Product (GNP) by the income approach, all the following are included except
Answer: D (retirement benefits)
Retirement benefits (pensions) are transfer payments for no current production, so they are left out; incomes are counted before direct tax.
Exchange control is a weapon used in regulating
Answer: C (foreign trade)
Exchange control rations foreign currency, which regulates imports and other foreign transactions.
The current and capital accounts in Nigeria's balance of payments contain all the following items except
Answer: E (IMF Standard Drawing Right (SDR))
SDRs are reserve assets recorded in the official settlements (monetary movements) account, not the current or capital account.
Who bears the greater burden of the indirect tax when the demand for a commodity is inelastic? The
Answer: D (consumer)
With inelastic demand, buyers keep buying when price rises, so most of the tax is passed on to consumers.
Economic growth specifically refers to the
Answer: B (sustained increase in the output of goods and services per head)
Economic growth is a sustained rise in real output (GDP) per head.
The hourly wages of five employees of the Nigerian Ports Authority are N2.52, N3.96, N3.28, N9.20 and N3.75 respectively. The median hourly wage is
Answer: C (N3.75)
In order: 2.52, 3.28, 3.75, 3.96, 9.20; the middle value is N3.75.
The petroleum industry in Nigeria is an example of a
Answer: A (capital-intensive industry)
Oil exploration and refining use huge amounts of machinery and few workers, so the industry is capital-intensive.
The international cartel formed to stabilise the world oil market is the
Answer: C (Organization of Petroleum Exporting Countries)
OPEC coordinates its members' oil output and prices.
The United Nations Conference on Trade And Development (UNCTAD) is a forum designed specifically for discussing the
Answer: E (better terms of trade in the world)
UNCTAD discusses trade and development, especially better terms of trade for developing countries.
The International Monetary Fund (IMF) is an international organization which
Answer: B (assists countries to solve their balance of payments problems)
The IMF lends to member countries with balance of payments difficulties.
An economic system in which most means of production are owned and controlled by the State is known as a
Answer: A (socialist economy)
In a socialist economy the state owns and controls most means of production.
Section A: answer one question only from this section.
Utility Schedule
Quantity of goods consumed: 0, 1, 2, 3, 4, 5, 6
Total utility: 0, 10, 16, ?, ?, 23, 23
Marginal utility: 0, 10, ?, 4, ?, 1, ?
(a) Complete the above utility schedule (b) Draw the marginal utility curve (c) (i) At what quantity does TU equal MU? (ii) What is the value of MU when TU reaches the maximum? (iii) What happens to the values of TU as the quantity consumed increases? (iv) What happens to the values of MU as the quantity consumed increases?
(a) MU = change in TU
MU at 2 units = 16 − 10 = 6
TU at 3 units = 16 + 4 = 20
TU at 4 units = 23 − 1 = 22, so MU at 4 units = 22 − 20 = 2
MU at 6 units = 23 − 23 = 0
(b) Quantity on the horizontal axis, MU on the vertical axis: MU falls from 10 to 6, 4, 2, 1 and reaches 0 at 6 units (a downward-sloping curve)
(c)(i) TU equals MU at 1 unit (10 = 10) (also at 0 units)
(ii) MU is zero when TU is at its maximum
(iii) TU increases at a decreasing rate, reaches a maximum (23) and then stays constant
(iv) MU diminishes as more is consumed (law of diminishing marginal utility)
Fill the gaps using MU = change in TU, working forwards and backwards.
Section A: answer one question only from this section.
The daily sales of department store for one week are as follows
Days: Mon, Tue., Wed., Thu., Fri., Sat.
Sales N: 1,750, 1,000, 3,500, 2,250, 1,000, 2,500
(a) Present the above data in a bar graph. (The use of graph sheet is essential) (b) Calculate the average daily sales for the week.
(a) Title the graph; days on the horizontal axis, sales (N) on the vertical axis with a suitable scale (e.g. 1 cm = N500)
Six bars of equal width, equally spaced, with heights N1,750, N1,000, N3,500, N2,250, N1,000 and N2,500
Label both axes
(b) Total sales = 1,750 + 1,000 + 3,500 + 2,250 + 1,000 + 2,500 = N12,000
Average daily sales = N12,000 ÷ 6 = N2,000
Bars must be equal in width with gaps between them; heights follow the scale.
Section B: answer three questions only from this section.
In what ways can the government improve agricultural production in Nigeria?
Give credit and loans to farmers at low interest (e.g. through agricultural banks)
Subsidise inputs such as fertilisers, improved seeds, chemicals and tractors
Improve extension services to teach farmers modern methods
Fund agricultural research institutes to develop high-yielding varieties
Provide rural infrastructure: feeder roads, storage, water, electricity
Guarantee prices / stabilise prices of farm produce
Provide irrigation and dams
Reform land tenure to allow large-scale farming
Encourage mechanisation and agro-based industries
Provide social amenities in rural areas to reduce rural–urban drift
Give at least six measures, each with a brief explanation.
Section B: answer three questions only from this section.
Define ageing population and explain its effects on an economy.
An ageing population is one in which the proportion of old people (usually 60/65 years and above) is increasing
Effects: high dependency ratio, as a smaller working population supports more old people
Government spends more on pensions, health care and old people's homes
The labour force becomes less mobile geographically and occupationally
Shortage of young workers and less innovation
Pattern of consumption shifts towards goods and services for the elderly
Lower savings and investment, possibly slower growth
Higher taxes on workers to support the elderly
Define clearly, then explain at least four effects.
Section B: answer three questions only from this section.
Explain any three weapons that can be used by a trade union and any two weapons that can be used by an employer's association during a trade dispute.
Trade union weapons (any three): collective bargaining/negotiation with employers
Strike: workers stop work completely
Work-to-rule: workers follow rules strictly so output slows
Go-slow: deliberately slowing down work
Picketing: striking workers stand at the gates to discourage others from working
Boycott / sit-in / ultimatum
Employers' association weapons (any two): lock-out: closing the factory to workers until the dispute is settled
Employing strike breakers (blacklegs) to keep production going
Blacklisting / dismissal of union activists
Collective bargaining / negotiation
Seeking court injunctions
Explain each weapon; don't just name it.
Section B: answer three questions only from this section.
Explain five sources of finance that are available to a Public Limited Company.
Sale of shares (ordinary and preference) to the public
Debentures: long-term loans from the public at a fixed interest rate
Bank loans and overdrafts
Ploughed-back (retained) profits
Trade credit from suppliers
Hire purchase and equipment leasing
Bills of exchange
Loans from development banks and other financial institutions
Five sources, each explained in a sentence.
Section B: answer three questions only from this section.
State any two ways by which monopolistic competition and perfect competition are similar and any three ways in which they are different.
Similarities (any two): both have a large number of firms
Free entry into and exit from the industry
Both maximise profit where MC = MR
Both can make supernormal profit in the short run but only normal profit in the long run
Differences (any three): products are homogeneous in perfect competition but differentiated in monopolistic competition
A perfect competitor is a price taker; a monopolistic competitor has some control over price
The demand curve is horizontal (perfectly elastic) in perfect competition but downward sloping in monopolistic competition
In equilibrium P = MR = MC in perfect competition; in monopolistic competition P is greater than MR and MC
Advertising is used in monopolistic competition but not needed in perfect competition
Monopolistic competition has excess capacity in the long run; perfect competition produces at minimum AC
Two similarities and three differences.
Section B: answer three questions only from this section.
(a) Explain the methods of measuring the national income of a country (b) State any three problems associated with measuring national income.
(a) Output (product) method: add the value of final goods and services produced by all sectors in a year, or the value added at each stage, to avoid double counting
Income method: add the incomes of all factors of production (wages, rent, interest, profits); exclude transfer payments
Expenditure method: add total spending on final goods and services: consumption + investment + government spending + (exports − imports)
(b) Any three: double counting
Inadequate/unreliable statistics and illiteracy
Large subsistence sector not recorded
Price changes (inflation)
Valuing depreciation and stocks
Treatment of transfer payments and unpaid services
Net income from abroad hard to estimate
Explain all three methods and how each avoids double counting.
Section B: answer three questions only from this section.
(a) What is meant by devaluation? (b) Explain the measures by which a country can correct its balance of payments deficit.
(a) Devaluation is the deliberate official reduction of the value of a country's currency in terms of other currencies
(b) Devaluation: makes exports cheaper and imports dearer
Import restrictions: tariffs, quotas and outright bans
Exchange control: rationing foreign exchange
Export promotion: incentives, subsidies, diversification of exports
Deflationary monetary and fiscal policies to reduce demand for imports
Borrowing from the IMF or other countries
Attracting foreign investment and loans
Using foreign reserves
Import substitution industrialisation
Define devaluation, then explain at least five measures.
Section B: answer three questions only from this section.
(a) Explain the term economic planning (b) Outline the problems of development plans in Nigeria.
(a) Economic planning is a deliberate effort by government to allocate resources to chosen sectors and projects over a stated period in order to achieve set economic goals (growth, employment, etc.)
(b) Inadequate and unreliable statistical data
Shortage of funds and dependence on oil revenue
Shortage of skilled manpower
Political instability and frequent changes of government
Corruption and mismanagement
Over-ambitious targets
Poor implementation, monitoring and evaluation
Dependence on foreign aid and imported inputs
Lack of participation by the people and private sector
Inflation raising project costs
Define planning, then outline at least five problems.