60 questions. Try each one, then open the answer to check yourself and read the explanation.
Economic activities are undertaken to solve the problem of
Answer: D (scarcity.)
People work, produce and trade because resources are scarce compared with their wants.
Farming, mining and fishing are
Answer: A (primary production)
These activities extract resources directly from nature, which is primary production.
A list of consumers' wants arranged in order of priority is known as
Answer: C (a scale of preference)
A scale of preference ranks wants from the most to the least pressing.
The 150.00 Naira which Olu would have used to purchase a textbook was used to buy a T-shirt. This implies that
Answer: C (Olu's opportunity cost is the textbook)
The opportunity cost is the alternative given up, which is the textbook, not the T-shirt bought.
The remuneration of the entrepreneur as a factor of production is called
Answer: D (profit.)
The entrepreneur's reward is profit.
The production factor, whose entire world supply is fixed is
Answer: A (land)
Land is a free gift of nature and its total supply cannot be increased.
When all factor inputs are reduced by half, the production possibility curve will shift
Answer: B (inwards)
Fewer resources mean less can be produced of both goods, so the PPC shifts inwards towards the origin.
When a worker changes from one type of job to another, it is called
Answer: B (occupational mobility of labour)
Moving from one occupation to another is occupational mobility.
Which of the following determines the size of a country's population? (I) Birth rate (II) Death rate (III) Migration rate (IV) Importation rate (V) Unemployment rate
Answer: C ((I), (II) and (III))
Population changes only through births, deaths and migration.
Age distribution is important because it helps the government to
Answer: D (undertake effective planning.)
Knowing how many children, workers and old people there are helps government plan schools, jobs, health care and pensions.
A group of firms producing similar commodities for the same market constitute
Answer: B (an industry)
An industry is all the firms producing similar products.
A factor that has slowed down the rate of industrial development in West Africa is
Answer: A (inadequate technology)
Lack of modern technology and technical know-how holds back industrial growth.
To achieve an equilibrium position, the consumer must buy so much of each commodity whose price is equal to its
Answer: A (marginal utility)
A consumer is in equilibrium when, for each good, the price paid equals the marginal utility of the last unit (MU = P).
Price control refers to
Answer: B (a policy of ensuring stable price in the market)
Price control is government fixing of prices to keep them stable and fair.
The desire for goods without the ability to pay is called
Answer: D (wants.)
A desire not backed by the ability to pay is only a want; effective demand needs the ability to pay.
Amount of goods offered to the market at respective prices and presented in a table is called
Answer: B (supply schedule)
A table of quantities offered for sale at various prices is a supply schedule.
At the equilibrium price, quantity demanded is
Answer: B (equal to quantity supplied)
Equilibrium is where quantity demanded equals quantity supplied.
If the government fixed a price of a commodity above the equilibrium price, the quantity supplied will be
Answer: C (greater than quantity demanded)
A price above equilibrium makes sellers offer more and buyers want less, giving a surplus.
One of the factors determining price elasticity of demand for a commodity is the
Answer: A (availability of close substitutes)
The more close substitutes a good has, the more elastic its demand.
If elasticity of demand for a commodity is less than one, demand is
Answer: B (inelastic)
PED below 1 means quantity changes proportionately less than price: inelastic demand.
The transfer of ownership of a public enterprise to individuals and firms is called
Answer: C (privatization)
Privatisation is selling government enterprises to private owners.
Wholesalers are often criticized because they
Answer: C (increase prices)
Each middleman adds his profit, so wholesalers are blamed for raising the final price.
In which of the following business units are the owners mostly the customers?
Answer: A (Co-operatives)
In a consumers' co-operative the members who own it are also its customers.
Information about new goods is passed on to buyers through
Answer: A (advertising)
Advertising informs buyers about new products.
In the figure above, PN equals average revenue or the marginal revenue cure of
Answer: C (a perfectly competitive firm)
A horizontal line where AR = MR = price is the demand curve of a perfectly competitive firm, which is a price taker.
The profit of the producer can be calculated as
Answer: C (total revenue less total cost)
Profit = total revenue − total cost (AR − AC gives only profit per unit).
The direct exchange of one goods for another without the use of money is known as
Answer: D (barter.)
Exchanging goods directly for goods is barter.
Acceptability, durability, homogeneity and portability are all attributes of good
Answer: B (money)
These are qualities that good money must have.
The term demand for money means
Answer: C (willingness of people to hold money)
Demand for money is the desire to hold wealth in the form of cash (liquidity preference).
A persistent and appreciable rise in the general level of prices is known as
Answer: B (inflation)
Inflation is a persistent rise in the general price level.
In a commercial bank, deposits are
Answer: A (liabilities)
Deposits are owed to customers, so they are the bank's liabilities.
The lender of last resort in the banking system is the
Answer: D (central bank.)
The central bank lends to commercial banks when they cannot get funds elsewhere.
Discounting a bill of exchange means the bill is
Answer: C (bought for less than its face value)
A discounted bill is bought before it matures for less than its face value; the difference is the discount.
The central bank controls credit in the economy through the use of
Answer: D (open market operations.)
Buying and selling government securities (open market operations) changes banks' reserves and so credit.
Among principles of taxation propounded by Adam Smith was that
Answer: B (a tax should be convenient to pay)
Adam Smith's canons are equity, certainty, convenience and economy.
Mr. Bala's income is $800.00 per month while that of Mr. Jatau is $1,200.00. If Messrs. Bala and Jatau pay $80.00 and $120.00 respectively as taxes, the tax system is
Answer: C (proportional)
80/800 = 10% and 120/1,200 = 10%: the same rate for both, so the tax is proportional.
Government revenue from the groundnut industry is from
Answer: D (taxes.)
Government earns from groundnut through taxes such as export duties and produce taxes; royalties come from minerals.
The theory of comparative cost advantage is associated with
Answer: C (David Ricardo)
David Ricardo developed the theory of comparative cost advantage.
To improve the balance of payments position of West African countries, there must be
Answer: B (increases rate of exportation of goods and services)
More exports earn more foreign exchange and reduce the deficit.
The Economic Community of West African States (ECOWAS) is an example of
Answer: B (economic integration)
ECOWAS is a regional grouping of countries for economic integration.
One reason for the low agricultural production in West African countries is that
Answer: C (farmers lack the finance and technology required)
Most farmers are poor and use simple tools, so output stays low.
Mono-product economies are those that
Answer: A (produce one main commodity)
A mono-product economy relies on one main commodity, e.g. crude oil in Nigeria.
An essential characteristic of a market economy is
Answer: D (consumer sovereignty.)
In a market economy, consumers' spending decides what is produced: consumer sovereignty.
In a capitalist system goods are produced for those who
Answer: C (want them and can also pay for them)
Capitalist producers supply those with effective demand: people who want the goods and can pay.
An economy which exhibits features of both private and State enterprises is known as a
Answer: B (mixed economy)
A mixed economy combines private and state ownership.
In calculating the national income of a country x, the cost of both raw materials and the finished products were included. This is a case of
Answer: A (double counting)
Raw materials are already part of the value of the finished goods, so counting both counts them twice.
Economic development is defined as
Answer: C (growth accompanied by qualitative change in living standards)
Development is economic growth together with improvements in living standards (health, education, welfare).
Which of the following is not an objective of the Organisation of Petroleum Exporting Countries (OPEC)?
Answer: D (Stagnation of developed economies.)
OPEC aims to stabilise and co-ordinate oil prices, not to make other economies stagnate.
Section A (answer one question only from this section)
The diagram below illustrates the demand for and supply of maize. Use the information in the diagram to answer the questions that follow.
(a)(i) What is the total revenue of the farmer at the initial equilibrium? (ii) Calculate the total revenue of the farmer if the supply curve shifts to S1S1.
(b) What change occurs in the total revenue of the farmer when the price falls from 100 Dollars to 40 Dollars per tonne?
(c)(i) Use the figures in the diagram to determine the price elasticity of demand for maize. (ii) Interprete your answer.
(d) Give two reasons for the shift of the supply curve from SS to S1S1.
(a)(i) Initial equilibrium (DD and SS): price $100, quantity 30 tonnes; TR = 100 × 30 = $3,000.
(ii) New equilibrium (DD and S1S1): price $40, quantity 40 tonnes; TR = 40 × 40 = $1,600.
(b) Total revenue falls by 3,000 − 1,600 = $1,400.
(c)(i) % change in quantity = 10/30 × 100 = 33.3%; % change in price = 60/100 × 100 = 60%; PED = 33.3 ÷ 60 ≈ 0.56.
(ii) PED is less than 1, so demand for maize is inelastic: the price fall raises quantity demanded proportionately less, which is why total revenue falls.
(d) Any two: good weather/bumper harvest; improved technology or high-yield seeds; fall in the cost of inputs (fertiliser, labour); government subsidies; more farmers entering maize production; fall in prices of other crops the farmer could grow.
Read both equilibrium points off the diagram; a supply increase shifts the curve to the right.
Section A (answer one question only from this section)
The Table below relates to the supply of labour in response to the given wage rates. Use the information in the Table to answer the questions that follow.
Wage rate ($ per hour) | Hours worked (per day) | Income per day ($)
10 | — | 10
20 | — | 60
30 | — | 150
40 | 6 | —
50 | 4 | —
60 | 2 | —
(a) Determine the number of hours of work per day if the wage rate is (i) $10 per day; (ii) $20 per day; (iii) $30 per day.
(b) Calculate the income per day when the wage rate is (i) $40 (ii) $50 (iii) $60.
(c)(i) Which wage rate per hour attracts the highest earnings? (ii) Name the type of supply curve that can be associated with the data in the table (iii) Explain the nature of the supply curve named in 2(c)(ii).
(a) Hours = income ÷ wage rate: (i) 10 ÷ 10 = 1 hour; (ii) 60 ÷ 20 = 3 hours; (iii) 150 ÷ 30 = 5 hours.
(b) Income = wage rate × hours: (i) 40 × 6 = $240; (ii) 50 × 4 = $200; (iii) 60 × 2 = $120.
(c)(i) $40 per hour (income $240 a day).
(ii) A backward-bending supply curve of labour.
(iii) From $10 to $40 an hour, hours worked rise (1 → 6) because the worker gives up leisure for the higher pay (substitution effect). Above $40, hours fall (6 → 2) because the worker can keep a high income with fewer hours and prefers more leisure (income effect). So the curve slopes upward at first and then bends back towards the wage (vertical) axis.
The table's 'per day' in (a) means the hourly wage rate.
Section B (answer four questions only from this section)
(a) What are capital goods?
(b) Explain the problems associated with the distribution of goods in your country.
(a) Capital goods are man-made goods used to produce other goods and services rather than for direct consumption, e.g. machines, tools, factory buildings, vehicles.
(b) Poor roads and transport facilities.
Inadequate storage and warehousing facilities, leading to losses of perishables.
Too many middlemen, raising prices.
Hoarding and artificial scarcity.
Inadequate finance/credit for traders.
Poor communication and market information.
Insecurity (armed robbery) on the roads.
Multiple levies and checkpoints.
Poor packaging and preservation facilities.
Explain each problem briefly.
Section B (answer four questions only from this section)
(a) Explain the term net migration.
(b) Describe any four economic effects of rural to urban migration in your country.
(a) Net migration is the difference between the number of people coming into a country (immigrants) and the number leaving it (emigrants) in a given period; it is positive if immigrants exceed emigrants.
(b) Any four: fall in agricultural output and food shortage in rural areas; overcrowding and slums in towns; pressure on urban amenities (water, housing, transport, schools); urban unemployment; rise in crime and social vices; higher urban cost of living; rural areas left with ageing people; supply of labour to urban industries.
Describe four effects, each in a sentence or two.
Section B (answer four questions only from this section)
(a) Outline any two differences between monopoly and perfect competition.
(b) State any four entry barriers that can prevent the emergence of competitive firms.
(a) Any two: a monopoly has one seller while perfect competition has many; monopoly has barriers to entry while perfect competition has free entry; the monopolist is a price maker while a competitive firm is a price taker; monopoly product has no close substitutes while competitive products are identical; monopolist can earn abnormal profit in the long run while a competitive firm earns only normal profit; monopolist's demand curve slopes downward while a competitive firm's is horizontal.
(b) Any four: patents and copyrights; government licences/legal monopoly; control of essential raw materials; very large capital requirement (economies of scale); exclusive franchise; heavy advertising/brand loyalty; price-cutting by existing firms; tariffs and trade restrictions.
Two differences, four barriers.
Section B (answer four questions only from this section)
(a) Distinguish between a public company and a public corporation.
(b) What are the problems of public corporations in your country?
(a) A public (limited) company is privately owned by shareholders, formed under the Companies Act, sells shares to the public on the stock exchange, has a minimum of seven members and aims at profit. A public corporation is owned and financed by government, set up by an Act or decree, has no private shareholders, is run by a board appointed by government and aims mainly at providing essential services.
(b) Inadequate funding by government; political interference; poor management and inefficiency; corruption and embezzlement; over-staffing; frequent changes of board members; bureaucracy and slow decisions; lack of profit motive; poor maintenance of equipment; continued dependence on subsidies.
Compare ownership, formation, finance, control and aims in (a).
Section B (answer four questions only from this section)
(a) What is trade by barter?
(b) Highlight the problems posed by trade by barter.
(a) Trade by barter is the direct exchange of goods and services for other goods and services without the use of money.
(b) Double coincidence of wants is needed.
No common measure of value to fix exchange rates between goods.
Indivisibility of some goods.
Difficulty of storing wealth (perishability).
Difficulty of deferred payments.
Bulky goods are hard to carry (non-portability).
It discourages specialisation and large-scale production.
Time and effort wasted in finding trading partners.
Each problem should be explained.
Section B (answer four questions only from this section)
Outline the role of development banks in the economic development of West African countries.
They give medium- and long-term loans for industrial, agricultural and infrastructural projects.
They help implement government development policies.
They provide technical and managerial advice to entrepreneurs.
They carry out feasibility studies and supervise projects they finance.
They take equity shares in new enterprises.
They finance manpower training.
They encourage indigenous entrepreneurs and small and medium enterprises.
They attract foreign capital and guarantee loans.
Link each role to development.
Section B (answer four questions only from this section)
Describe any four ways by which industrial development can promote agricultural productivity in your country.
Any four: industries produce machines and tools that mechanise farming; supply of fertilisers, pesticides and improved inputs; industries provide a ready market for agricultural raw materials; agro-processing and storage reduce waste; higher incomes from industry increase demand for food; industry absorbs surplus labour, reducing pressure on land; research by industries provides better seeds; industrial development brings infrastructure (roads, power) that benefits farmers.
Describe four ways clearly.
Section B (answer four questions only from this section)
(a) Define the term taxation.
(b) In which four ways can the government of your country use taxation to improve the economy?
(a) Taxation is the compulsory levy imposed by government on individuals, firms and goods and services to raise revenue, without a direct benefit to the taxpayer in return.
(b) Any four: raise revenue to provide social services and infrastructure; redistribute income through progressive taxes; discourage consumption of harmful goods; protect infant industries with import duties; control inflation by raising taxes; correct balance of payments deficits by taxing imports; encourage investment with tax holidays and reliefs; influence location of industries with tax incentives.
Explain how each use improves the economy.
Section B (answer four questions only from this section)
(a) Distinguish between personal income and national income.
(b) Describe any four uses of national income data.
(a) Personal income is the total income actually received by individuals/households from all sources, including transfer payments, before personal taxes. National income is the total money value of all goods and services produced in a country in a year (plus net income from abroad), less depreciation.
(b) Any four: measuring standard of living (per capita income); comparing living standards between countries; measuring economic growth over time; economic planning and policy making; showing the contribution of each sector; guiding income distribution and tax policy; helping international organisations fix contributions and aid; guiding investors.
Four uses, each explained.
Section B (answer four questions only from this section)
(a) Explain the term balance of payments deficit.
(b) What four measures can be taken to reduce the balance of payments deficit of a country?
(a) A balance of payments deficit occurs when a country's total payments to the rest of the world (imports, services, capital outflows) exceed its total receipts from the rest of the world in a given period.
(b) Any four: export promotion; import restriction through tariffs, quotas or bans; devaluation of the currency; exchange control; deflationary fiscal and monetary policies to cut demand for imports; import substitution industrialisation; attracting foreign investment; reducing government spending abroad.
Four measures, each explained.