WAEC Economics 2025 past questions and answers

One advantage of a free market economy is that it

1. A.gives incentives for innovation.
2. B.guarantees full employment of labour.
3. C.allocates resources to produce public goods.
4. D.guarantees income equality.

Good X has a price elasticity of demand of 0.25. This means it

1. A.is a luxury good.
2. B.has many close substitutes.
3. C.has few substitutes.
4. D.is not purchased out of habit.

The monopolist's price is always

1. A.lower than his production cost per unit.
2. B.lower than average revenue.
3. C.higher than marginal revenue.
4. D.higher than average revenue.

Which of the following items is not an asset to commercial banks?

1. A.Physical buildings and equipment
2. B.Shareholders' funds
3. C.Vehicle and office equipment
4. D.Loans granted to customers

A long-term adverse balance of payments can be corrected by

1. A.revaluing the domestic currency.
2. B.reducing or removing export duties.
3. C.receiving gifts from other countries.
4. D.using up foreign currency reserves.

A factor that positively influences the precautionary motive for holding money is

1. A.convenient system of payment.
2. B.high rate of interest.
3. C.high degree of uncertainty.
4. D.short interval between paydays.

When a firm increases the quantities of its variable factor given a fixed factor, the

1. A.marginal product of the variable factor rises and later falls.
2. B.marginal product of the variable factor will decrease continuously.
3. C.average product will decline and later increase.
4. D.total product will rise continuously.

An industry whose products lose considerable weight after processing must be sited close to the

1. A.source of raw material.
2. B.market.
3. C.skilled labour.
4. D.source of power.

The national income figure is limited as a measure of standard of living because the

1. A.value of money is constant.
2. B.prices of commodities remain stable
3. C.working conditions are uniform in all countries.
4. D.real composition of output is not fully known.

Other things being equal, a contraction in the amount of money in circulation will

1. A.lead to a fall in the value of money.
2. B.increase aggregate demand for commodities.
3. C.cause the value of money to rise.
4. D.result in an increase in price level.

A factor that may cause the national income to be overstated is the

1. A.inclusion of the output of subsistence producers.
2. B.inclusion of wages of house-keepers.
3. C.inclusion of pension payments to retirees.
4. D.use of value-added method for its calculation.

If a typist is laid-off because he is not computer literate then he is facing

1. A.seasonal unemployment.
2. B.cyclical unemployment.
3. C.frictional unemployment.
4. D.structural unemployment.

In a deficit budget, the expected revenue would be

1. A.lower than proposed expenditure.
2. B.higher than proposed expenditure.
3. C.falling as consumer's incomes increases.
4. D.equal to proposed expenditure.

The demand curve for a necessary good without any substitute is usually

1. A.negatively sloped.
2. B.vertically sloped.
3. C.positively sloped.
4. D.horizontally sloped.

If an individual refuses a lucrative job in another town because of ties to his family, this reason can be seen as an impediment to

1. A.occupational mobility of labour.
2. B.geographical mobility of labour.
3. C.horizontal mobility of labour.
4. D.vertical mobility of labour.

In a command economy, wages are determined by

1. A.trade unions.
2. B.the employers.
3. C.forces of demand and supply.
4. D.central planning committee.

The table below shows the percentage paid as tax on different income levels. Use it to answer the question.
Tax System | $100 | $500 | $1000
Q | 10% | 10% | 10%
T | 90% | 70% | 30%
S | 20% | 65% | 40%
R | 10% | 40% | 70%
Which tax system is progressive? Tax system

1. A.T.
2. B.Q.
3. C.R.
4. D.S.

A rightward shift of the supply curve of cocoa implies that

1. A.subsidy on farm equipment has increased.
2. B.the price of cocoa has increased.
3. C.the number of farmers has reduced.
4. D.the weather condition has worsened.

Capital intensive production method is least adopted in

1. A.plantation agriculture.
2. B.peasant farming.
3. C.commercial farming.
4. D.state farming.

A rational consumer of a normal good, ceteris paribus, will do the following except

1. A.buying more as income rises.
2. B.ensuring marginal utility is equal to its price.
3. C.buying more at a higher price.
4. D.maximizing his satisfaction.

If the supply of a product with a perfectly elastic demand increases, there will be

1. A.a fall in equilibrium price and an increase in equilibrium quantity.
2. B.an increase in equilibrium price and quantity.
3. C.an increase in equilibrium quantity while equilibrium price is fixed.
4. D.a fall in equilibrium quantity while equilibrium price remains constant.

Diversification of the economies of developing countries will enable them to

1. A.offer more than one product from various sectors for export.
2. B.lay emphasis on export of one primary agricultural product.
3. C.reduce domination of the economies by foreigners.
4. D.export only industrial products.

At a point where marginal utility is negative, total utility

1. A.increases.
2. B.is zero.
3. C.decreases.
4. D.is constant.

If the production of 5 bags of rice are given up by a farmer in order to produce 1 bag of maize, this implies that, to the farmer,

1. A.maize has a higher opportunity cost of production than rice.
2. B.rice has a greater opportunity cost of production than maize.
3. C.rice and maize have equal opportunity costs of production.
4. D.both rice and maize have no opportunity costs of production.

Which of the following benefits is not applicable to economic integration?

1. A.Free mobility of factors of production
2. B.Availability of a variety of commodities
3. C.Complete independence of each nation
4. D.Expansion of market size.

The Organization of Petroleum Exporting Countries (OPEC) prevents excess global supply of crude oil by

1. A.fixing production quotas for all member countries.
2. B.buying up the extra volume produced by members in the oil market.
3. C.taking legal actions against members at the world court.
4. D.expelling erring member countries from the organization.

In Economics, it is necessary that choice be made mainly because

1. A.goods have different prices.
2. B.goods are of various qualities.
3. C.consumers' wants differ.
4. D.resources are inadequate.

One of the distinguishing features of land is that it is fixed in supply. This means that

1. A.it can be put to unlimited uses.
2. B.its quality is the same everywhere.
3. C.its total surface area cannot be changed.
4. D.it is a free gift of nature.

Which of the following factors is not a determinant of price elasticity of supply?

1. A.Cost of production
2. B.Availability of labour
3. C.Government policy
4. D.Consumers' income level

An increase in the price of a factor of production in an industry may cause

1. A.more firms to enter the market.
2. B.supply of goods to decrease.
3. C.the quantity supplied of the factor input to decrease.
4. D.the government to increase taxes.

Use the diagram below (Figure 1) to answer the question. What name is given to the diagram in Figure 1?

1. A.Simple bar chart
2. B.Multiple bar graph
3. C.Three-column bar graph
4. D.Component bar chart

In which section of a country's balance of payments account will the inflow of long-term investments be recorded?

1. A.Current account section
2. B.Balance of trade section
3. C.Official financing section
4. D.Capital account section

Commodities with negative income elasticities of demand are categorized as

1. A.normal goods.
2. B.inferior goods.
3. C.complementary goods.
4. D.substitute goods.

Which of the following is not a form of money?

1. A.Current account deposits
2. B.Bank notes
3. C.Fiat coins
4. D.Promissory notes

The demand for a box of matches by a rich consumer is most likely to be

1. A.perfectly price elastic.
2. B.price elastic.
3. C.income elastic.
4. D.price inelastic.

If the price of cassava is fixed above the equilibrium, this policy is meant to

1. A.favour consumers of cassava.
2. B.discourage cassava farmers.
3. C.reduce the quantity of cassava supplied.
4. D.encourage cassava farmers.

A firm can increase production in the short-run by

1. A.buying more raw materials.
2. B.increasing its fixed assets.
3. C.building a new factory.
4. D.employing skilled managers.

Use Figure 2 (a firm's cost curves X, Y and Z with AR = MR at price P) to answer the question. The curve labelled Z is

1. A.marginal cost curve.
2. B.average cost curve.
3. C.average fixed cost curve.
4. D.average variable cost curve.

Use Figure 2 (a firm's cost curves X, Y and Z with AR = MR at price P) to answer the question. The equilibrium output level is at output

1. A.R.
2. B.Q.
3. C.T.
4. D.S.

Use Figure 2 (a firm's cost curves X, Y and Z with AR = MR at price P) to answer the question. The interval between curves Y and Z represents

1. A.average fixed cost.
2. B.total fixed cost.
3. C.total cost.
4. D.average total cost.

By installing a larger and more efficient production plant, a firm enjoys

1. A.financial economies.
2. B.managerial economies.
3. C.marketing economies.
4. D.technical economies.

If governments in developing countries want to raise revenue, then the major source to rely on is

1. A.grants and loans.
2. B.royalties and rent.
3. C.indirect taxes.
4. D.sale of government assets.

Inflation will usually have a negative effect on

1. A.balance of payments.
2. B.borrowers.
3. C.sales revenue of firms.
4. D.shareholders' dividends.

Tax avoidance best refers to attempts by a tax payer to

1. A.always seek for tax holidays during which he will not pay tax.
2. B.conceal income deliberately thereby paying no tax.
3. C.escape illegally from the tax net thereby paying no tax at all.
4. D.legally exploit the loopholes in tax laws to pay less tax.

Dumping of goods is not desirable since it leads to

1. A.unemployment in the importing country.
2. B.an increase in the wage bill of the importing country.
3. C.an increase in tax revenues from local industries.
4. D.production of more local goods.

If the price of a commodity is higher than its marginal utility, the consumer will

1. A.consume less to increase marginal utility.
2. B.consume more to increase total utility.
3. C.buy more to add to average utility.
4. D.buy more to minimise total utility.

Which of the following statements is true of a debenture?

1. A.Its holders are creditors to the company
2. B.It is a type of share with variable rate of dividend
3. C.its interest rate increases with profit.
4. D.It is available to all business organizations

If a firm's minimum average variable cost exceeds its average revenue, the firm must

1. A.increase its production capacity.
2. B.employ more labour.
3. C.pay new allowances to its workers.
4. D.shut down completely.

A business is a separate legal person if

1. A.it has all the features of a human being.
2. B.the business shares its liabilities with the owners.
3. C.it is recognized as a corporate entity.
4. D.it is governed by a Deed of partnership.

Figure 1 below shows the output, cost and revenue position of a business producing tissue paper. Study the diagram and answer the questions that follow.
(a) Determine the firm's equilibrium price and output.
(b) Which of the curves represents the market's demand curve?
(c) In what market is the firm operating? Give a reason for your answer.
(d) At the profit maximizing level of output, identify the area that represents: (i) total revenue; (ii) total cost; (iii) profit or loss.
(e) What is the implication of the profit or loss earned on the market in 1(d)(iii)?

The terms of trade position for Country X for the years 2020 and 2021 are stated in table 1 below. Study the table and answer the questions that follow.
Year | Price index of exports | Price index of imports
2020 | 180 | 150
2021 | 160 | 200
(a) Calculate the terms of trade for Country X in 2020 and 2021.
(b) In what year(s) is the terms of trade: (i) favourable; (ii) unfavourable? Give a reason for your answer in each case.
(c) State any two likely reasons for the terms of trade position identified in 2(b)(ii).
(d) If the balance of trade in 2022 is $4,062,500 and the current account balance is $812,500, determine the country's balance of invisible trade. Explain your answer.

(a) Distinguish between complementary goods and substitute goods.
(b) Using diagrams, explain how a decrease in the supply of meat, other things being equal, will affect the equilibrium price and quantity of: (i) meat; (ii) fish.

(a) Define minimum price control.
(b) Identify any three reasons governments should introduce minimum prices for agricultural produce.
(c) Outline any three disadvantages of imposing minimum price control on agricultural produce.

(a) Define production costs.
(b) Distinguish between real cost and explicit cost.
(c) With an example each, distinguish between fixed input and variable input.
(d) State any four types of short-run costs.

(a) Define monopoly.
(b) State any three factors that give rise to monopolies.
(c) With the aid of a diagram, explain the supernormal profit position of a monopolist.

(a) State any three instruments traded in the money market.
(b) With a relevant example each, explain the condition under which a manufacturer will seek for funds from the: (i) money market; (ii) capital market.
(c) Explain any three functions of Development banks.

(a) What is a regressive system of taxation?
(b) Explain the following principles of taxation: (i) equity; (ii) certainty; (iii) economy.
(c) Outline any three reasons why government imposes tax in a country.