In the long run, as individuals receive higher wages, it causes

D. supply of labour to decrease

B. demand for leisure to decrease

C. supply of normal goods to decrease

D. supply of labour to decrease

One feature of the average fixed cost is that it

A. falls continuously but is never equal to zero.

B. is U-shaped and intersects the Y-axis

C. rises and falls faster than the marginal cost

D. is always higher than the average variable cost

During inflation, the appropriate fiscal measure to adopt is to

D. increase government expenditure

In order to discourage the importation of manufactured goods, a country should adopt

D. import substitution strategy

If a beef market is in equilibrium at $4.00 per kg, an increase in price to $6.00 per kg may cause

C. black market to come into operation

Use the figure below to answer the question that follows The curves D$_{0}$D$_{0}$ and S$_{0}$S$_{0}$ are the initial demand and supply curves respectively. What happens when government provides subsidies to producers?

A. The supply curve will shift from S$_{0}$S$_{2}$ to S$_{2}$S$_{0}$

B. The supply curve will shift from S$_{0}$S$_{0}$ to S$_{1}$S$_{1}$

C. The demand curve will shift from D$_{0}$D$_{0}$ to D$_{1}$D$_{1}$

D. The supply curve will shift from S$_{0}$S$_{0}$ to S$_{0}$S$_{0}$

Which of the following problem has the least effect on agricultural productivity in West Africa?

A. Incidence of pests and diseases

B. Unfavourable weather conditions

The public sector in a mixed economy is not always because of

B. the desire to make huge change

C. annual planning of activities

D. the activities of shareholders

Free trade is one in which

A. each member operates its own barriers against non-members

B. factors of production are mobile

C. members adopt a common external tariff against non- members

D. members adopt common fiscal and economic policies

The central bank Can reduce the ability of commercial banks to give out loans by

C. reducing the liquidity ratio

The location of iron and steel industry at a place is due to

A. easy access to raw materials

A large firm may experience diseconomies of scale if there is

A. difficulty in coordinating decisions

B. division of labor in production

C. employment of more specialist

D. decrease in the cost of production

Money would cease to be a good store of value when

C. prices of goods and services are rising rapidly

A. prices of goods and services are falling slowly

B. there is a high level of unemployment

C. prices of goods and services are rising rapidly

D. prices of go0ds and services are rising slowing

Governments in West Africa can curtail inflation by

B. selling securities in the open market

A. purchasing securities in the open market

B. selling securities in the open market

C. encouraging importation of goods from all countries

D. encouraging banks to lend for

A consumer is in equilibrium when

B. he maximizes his satisfaction from spending his income

A. his market Supply is equal to his market demand

B. he maximizes his satisfaction from spending his income

C. the market is also in equilibrium

D. he has consumed all he wants

Labor productivity is defined as

C. the maximum number of hours Worked

Which of the following factors may lead to the underestimation of national income figures?

A. Availability of skilled statisticians

C. Emigration of skilled workers to foreign countries

Inflation may occur if

C. wage increase is granted without an increase in productivity

A. rate of productivity is higher than the wage rate

B. prices fluctuate during a particular season of the year

C. wage increase is granted without an increase in productivity

D. the government embarks on restrictive monetary policies

When the production possibility curve shifts outwards, the economy experiences

C. inefficient use of resources

Dumping is selling goods in a foreign market at a price

A. below what is sold at the home market

B. above what is sold at the home market.

C. equal to what is sold at the home market

D. equal to the cost of producing the goods

A country should embark on development planning to ensure that

C. its scarce productive resources are efficiently utilized

A. it becomes popular among the comity of nations

B. it also does what others are doing

C. its scarce productive resources are efficiently utilized

D. the nation is able to contribute its own quota to international organizations.

Increasing returns to scale suggests that

B. a firm can make more profit by increasing output

A. a firm can make a profit by reducing output

B. a firm can make more profit by increasing output

C. as the producer reduces the quantity of raw materials used, the marginal product will double

D. as the producer increases the quantity of raw materials used, the marginal product will fall

Which function of the wholesaler enables him to stabilize prices?

C. Granting credit to retailers

Import substitution as a strategy of industrialization is the

B. development of locally produced goods with imported ones

A. replacement of locally produced goods with imported ones

B. development of locally produced goods with imported ones

C. establishment of firms to process imported raw materials

D. act of using local inputs to produce goods for export

Goods are described as inferior if their demand

C. decreases as income increases

D. increases as price increases

An increase in supply means that

B. more is sold at the same price

A. more is sold at different prices

B. more is sold at the same price

C. there is a leftward shift of the supply curve

D. there is a movement along the supply curve

The foremost objective of the International Bank of Reconstruction and Development (IBRD) is to

C. grant long term loans for infrastructure

A. help promote private and public investments

B. assist members achieve a balance of payments stability

C. grant long term loans for infrastructure

D. maintain stabilily of foreign exchange

How is NNP at factor cost derived from GNP at market prices?

B. GNP Depreciation - Indirect taxes + Subsidies

A. GNP - Depreciation + Indirect taxes + Subsidies

B. GNP Depreciation - Indirect taxes + Subsidies

C. GNP + Depreciation Indirect taxes - Subsidies

D. GNP+ Depreciation- Indirect taxes + Subsidies

The principle of comparative advantage encourages a country to

B. engage in trade if it can produce a commodity at a lower cost

C. specializes in the production of all goods

D. try as much as possible to be self-sufficient

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WAEC (WASSCE) 2020

2020 WAEC (WASSCE) Economics Past Questions and Answers

The 2020 WAEC (WASSCE) Economics past questions with answers: 49 objective questions from the 2020 paper in the DeeepSolve question bank, each with its answer behind "Show answer". Try each question before you check, then practise the paper as a timed WAEC-style CBT.

Practise this paper as a timed WAEC-style CBT All WAEC (WASSCE) Economics years

Questions

1.
In the long run, as individuals receive higher wages, it causes
1. A.demand for food to decrease
2. B.demand for leisure to decrease
3. C.supply of normal goods to decrease
4. D.supply of labour to decrease
Show answer
Answer: D. supply of labour to decrease
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2.
Which of the following is central to the definition of Economics?
1. A.resources
2. B.wants
3. C.scarcity
4. D.capital
Show answer
Answer: C. scarcity
AI explanation
Step 1: Analyze the question The question asks which idea is central to the definition of Economics, meaning the core concept the whole subject is built on.
Step 2: Explain the concept A common definition of Economics is: "the study of how individuals, firms and society choose to allocate scarce resources among competing wants and unlimited needs."
This definition has several parts:
Resources are the inputs we have (land, labour, capital, entrepreneurship).
Wants are what people desire, and they are unlimited.
Capital is just one factor of production.
Scarcity is the problem that resources are limited while wants are unlimited.
Step 3: Work through the options
A. Resources: These are important, but having resources alone creates no economic problem. If they were unlimited, there would be nothing to study.
B. Wants: Wants are one side of the problem. Without limited resources, unlimited wants would not force anyone to make choices.
C. Scarcity: This is the gap between limited resources and unlimited wants. It forces us to choose, which leads to opportunity cost and a scale of preference. This is the root of every economic problem.
D. Capital: This is only one factor of production, so it is too narrow.
Step 4: Answer Scarcity is the central idea in the definition of Economics, so the correct option is C.
Tip: Remember the chain Scarcity → Choice → Scale of Preference → Opportunity Cost. If a question asks for the "basic" or "central" problem or concept of Economics, think scarcity.
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3.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.
4.
If an increase in the price of crude oil led to an increase in the prices of kerosene and grease, then kerosene and grease are in
1. A.joint supply
2. B.competitive supply
3. C.market Supply
4. D.composite supply
Show answer
Answer: A. joint supply
AI explanation
Step 1: Analyze the question Crude oil is the raw material. When its price rises, the prices of kerosene and grease (both products derived from crude oil) also rise. The question asks what type of supply relationship exists between kerosene and grease.
Step 2: Concept
Joint supply: Two or more goods are produced from the same raw material or process, so supplying more of one automatically yields the other. Examples are beef and hides, or petrol, kerosene and diesel from crude oil.
Competitive supply: Goods that use the same resources, so producing more of one means producing less of the other (e.g., yam and cassava on the same farmland).
Composite supply: One good with several uses, where the uses compete for the same supply (e.g., timber for furniture and for building).
Market supply: The total quantity of a single good that all producers offer at a given price.
Step 3: Apply Kerosene and grease both come from crude oil, and a change in crude oil affects both together. They are by-products of the same source, so this is joint supply.
B is wrong because the products do not compete for the crude oil in a way that makes producing one reduce the other. They come out of the same refining process together.
C is wrong because market supply refers to one good, not related goods.
D is wrong because composite supply is about one commodity with different uses.
Answer: A. joint supply
Exam tip: When you see goods coming from the same raw material, think joint (e.g., "crude oil gives many products," "cattle gives beef and hides"). When goods compete for the same land or resources, think competitive.
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5.
A country is allowed to import just 50,000 tonnes of rice annually. This describes
1. A.devaluation
2. B.tariff
3. C.embargo
4. D.quota
Show answer
Answer: D. quota
AI explanation
Step 1: Analyze the question The question describes a limit on the quantity of rice a country may import in a year (50,000 tonnes). We need the trade term for this.
Step 2: Explain the concepts
Devaluation: A deliberate lowering of the value of a country's currency relative to other currencies. It has nothing to do with limiting import quantities.
Tariff: A tax or duty placed on imported goods. It limits imports by raising their price, not by setting a fixed quantity.
Embargo: A complete ban on trade with a particular country, or on a particular good. It allows no imports at all, so it is not a limit of 50,000 tonnes.
Quota: A physical limit on the quantity or value of a good that may be imported (or exported) in a given period.
Step 3: Apply to the question Allowing "just 50,000 tonnes annually" is a fixed quantity limit over a set period. That is exactly what a quota is.
Step 4: Answer The correct option is D. quota.
Tip: Link each term to a keyword:
Quota = Quantity
Tariff = Tax
Embargo = Entirely banned
Devaluation = Drop in currency value
When you see a specific amount allowed, think quota.
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6.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.
7.
One feature of the average fixed cost is that it
1. A.falls continuously but is never equal to zero.
2. B.is U-shaped and intersects the Y-axis
3. C.rises and falls faster than the marginal cost
4. D.is always higher than the average variable cost
Show answer
Answer: A. falls continuously but is never equal to zero.
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8.
During inflation, the appropriate fiscal measure to adopt is to
1. A.increase indirect taxes
2. B.increase direct taxes
3. C.reduce personal income tax
4. D.increase government expenditure
Show answer
Answer: B. increase direct taxes
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9.
In order to discourage the importation of manufactured goods, a country should adopt
1. A.import promotion strategy
2. B.export led strategy
3. C.liberal foreign exchange
4. D.import substitution strategy
Show answer
Answer: D. import substitution strategy
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10.
If a beef market is in equilibrium at $4.00 per kg, an increase in price to$ 6.00 per kg may cause
1. A.surplus in the market
2. B.shortage in the in market
3. C.black market to come into operation
4. D.rationing to be introduced
Show answer
Answer: A. surplus in the market
AI explanation
Analyze the question The beef market is in equilibrium at $4.00 per kg, so quantity demanded equals quantity supplied. The price then rises to$ 6.00, which is above the equilibrium price. We need to find what this causes.
Concept
When price rises above equilibrium, consumers buy less (the law of demand: quantity demanded falls).
Producers supply more (the law of supply: quantity supplied rises).
So quantity supplied is greater than quantity demanded. This excess supply is called a surplus (or glut).
A shortage happens when price is below equilibrium, since demand then exceeds supply.
Step-by-step solution
Equilibrium price = $4.00, where Qd = Qs.
New price = $6.00, which is above equilibrium.
At $6.00, Qd falls and Qs rises, so Qs > Qd.
The result is a surplus in the market.
Check the other options: • B (shortage): wrong, because a shortage occurs when price falls below equilibrium. • C (black market): this arises when a price ceiling (maximum price) is imposed and there is a shortage. A higher price doesn't cause it. • D (rationing): this is also a response to shortages, which don't occur here.
Answer: A. surplus in the market
Exam tip Remember: "Price Above = Abundance (surplus); Price Below = Brief supply (shortage)." Whenever a question mentions a price above equilibrium, think surplus. A price below equilibrium means shortage, and black markets and rationing usually go with price controls and shortages.
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11.
Use the figure below to answer the question that follows The curves D $_{0}$ D $_{0}$ and S $_{0}$ S $_{0}$ are the initial demand and supply curves respectively. What happens when government provides subsidies to producers?
1. A.The supply curve will shift from S $_{0}$ S $_{2}$ to S $_{2}$ S $_{0}$
2. B.The supply curve will shift from S $_{0}$ S $_{0}$ to S $_{1}$ S $_{1}$
3. C.The demand curve will shift from D $_{0}$ D $_{0}$ to D $_{1}$ D $_{1}$
4. D.The supply curve will shift from S $_{0}$ S $_{0}$ to S $_{0}$ S $_{0}$
Show answer
Answer: A. The supply curve will shift from S $_{0}$ S $_{2}$ to S $_{2}$ S $_{0}$
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12.
Which of the following problem has the least effect on agricultural productivity in West Africa?
1. A.Incidence of pests and diseases
2. B.Unfavourable weather conditions
3. C.Urban-rural migration
4. D.Illiteracy
Show answer
Answer: C. Urban-rural migration
AI explanation
Analyze the question: We are asked which problem has the least effect on agricultural productivity in West Africa. We need to compare how strongly each factor reduces farm output.
Concept: Agricultural productivity depends on natural factors (weather, pests), human factors (skills, education, labour), and capital and land. In West Africa, farming is mostly rain-fed and small-scale, so it is very sensitive to the environment and to farmers' knowledge.
Evaluating each option:
A. Incidence of pests and diseases: Pests such as locusts, quelea birds, and cocoa swollen shoot disease can destroy crops and livestock. This has a major effect on output.
B. Unfavourable weather conditions: Droughts, floods, and irregular rainfall strongly affect yields, especially because irrigation is limited. This has a major effect.
C. Urban-rural migration: This phrase describes movement from towns to villages. That is the opposite of the usual problem, rural-urban migration, which drains farms of young labour. Urban-rural migration would actually add labour to rural areas, so it would not reduce agricultural productivity. It is the least harmful.
D. Illiteracy: It limits the adoption of modern techniques, improved seeds, fertilizers, and good record keeping. This has a significant effect.
Conclusion: Options A, B, and D all clearly lower productivity. Urban-rural migration does not, so it has the least negative effect.
Tip: Read the direction of migration words carefully. Rural-urban migration hurts agriculture (farm labour leaves), while urban-rural migration does the reverse. In "least effect" questions, look for the option that doesn't actually fit the problem being described.
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13.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.
14.
The public sector in a mixed economy is not always because of
1. A.bureaucratic practice
2. B.the desire to make huge change
3. C.annual planning of activities
4. D.the activities of shareholders
Show answer
Answer: A. bureaucratic practice
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15.
Free trade is one in which
1. A.each member operates its own barriers against non-members
2. B.factors of production are mobile
3. C.members adopt a common external tariff against non- members
4. D.members adopt common fiscal and economic policies
Show answer
Answer: A. each member operates its own barriers against non-members
AI explanation
Analyze the question: The question asks what defines a free trade arrangement (a free trade area). This is a common WASSCE topic under economic integration.
Explain the concept: Economic integration has stages, from loosest to tightest:
Free trade area: Members remove tariffs and trade barriers among themselves, but each member keeps its own trade barriers (tariffs) against non-members. Example: ECOWAS trade liberalisation scheme, NAFTA/AfCFTA.
Customs union: A free trade area plus a common external tariff against non-members.
Common market: A customs union plus free movement of factors of production (labour and capital).
Economic union: A common market plus common fiscal and economic policies.
Complete/monetary union: A single currency and a single central bank.
Solution (checking each option):
A. Each member operates its own barriers against non-members. This matches a free trade area, where each country keeps independent trade policies toward outsiders. ✔
B. Factors of production are mobile. This describes a common market. ✘
C. Members adopt a common external tariff against non-members. This describes a customs union. ✘
D. Members adopt common fiscal and economic policies. This describes an economic union. ✘
Correct answer: A
Exam tip: Remember the ladder F-C-C-E-M: Free trade area → Customs union → Common market → Economic union → Monetary union. The key phrase for each stage:
Free trade: own barriers against outsiders
Customs union: common external tariff
Common market: mobile factors
Economic union: common policies
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16.
Expenditure on food takes a large proportion of the incomes of people in
1. A.industrialized countries
2. B.advanced countries
3. C.developing countries
4. D.capitalist countries
Show answer
Answer: C. developing countries
AI explanation
Step 1: Analyze the question The question asks which group of countries spends a large share of income on food.
Step 2: The concept (Engel's Law) Engel's Law says that as income rises, the proportion of income spent on food falls, even though the actual amount spent on food may rise. So:
Low-income households and countries spend a large share of their income on food, because food is a basic necessity.
High-income households and countries spend a small share on food and more on manufactured goods, services, leisure, and savings.
Step 3: Evaluate the options
A. Industrialized countries: These have high average incomes, so the share spent on food is small.
B. Advanced countries: This is another term for rich countries, so the share is also small.
C. Developing countries: Incomes are low, so a large part goes to basic needs like food. This fits.
D. Capitalist countries: This describes an economic system, not an income level. Many capitalist countries are rich and spend a small share on food.
Step 4: Answer The correct option is C. developing countries.
Exam tip: Link "large proportion spent on food" with "low income" or "poor," and think of Engel's Law. Whenever you see "food" and "large proportion," look for the option that means poor or developing countries. Words like "industrialized" and "advanced" always point to rich countries.
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17.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.
18.
The central bank Can reduce the ability of commercial banks to give out loans by
1. A.raising the bank rates
2. B.reducing special deposits
3. C.reducing the liquidity ratio
4. D.issuing more currency
Show answer
Answer: A. raising the bank rates
AI explanation
Analyze the question: The question asks which action by the central bank reduces commercial banks' ability to give loans. This is about monetary policy tools used to control credit (money supply).
Concept: To restrict credit, the central bank uses contractionary (tight) monetary policy. The main tools are:
Bank rate (minimum rediscount/monetary policy rate): the rate at which the central bank lends to commercial banks. Raising it makes borrowing from the central bank costly, so commercial banks raise their own lending rates. Loan demand and loan supply fall.
Special deposits: commercial banks must deposit funds with the central bank. Increasing these reduces the cash available for loans.
Liquidity ratio / cash reserve ratio: Increasing the ratio forces banks to keep more cash and lend less.
Open market operations: selling securities takes money out of circulation.
Step-by-step evaluation:
A. Raising the bank rate: Borrowing becomes more expensive, so credit shrinks. This reduces lending ability. ✔
B. Reducing special deposits: This releases funds to banks, so they can lend more. ✘
C. Reducing the liquidity ratio: Banks can keep less in reserve and lend more. ✘
D. Issuing more currency: This increases the money supply and expands lending capacity. ✘
Answer: The correct option is A. raising the bank rates.
Tip: Remember "Raise to Restrain, Reduce to Release." Raising the bank rate, liquidity ratio, or special deposits restrains credit. Reducing them releases more credit. In this question, only option A is a "raise" that restrains lending.
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19.
The location of iron and steel industry at a place is due to
1. A.easy access to raw materials
2. B.access to cheap labour
3. C.government policy
4. D.good infrastructure
Show answer
Answer: A. easy access to raw materials
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20.
A large firm may experience diseconomies of scale if there is
1. A.difficulty in coordinating decisions
2. B.division of labor in production
3. C.employment of more specialist
4. D.decrease in the cost of production
Show answer
Answer: A. difficulty in coordinating decisions
AI explanation
Analyze the question: It asks what causes diseconomies of scale in a large firm.
Explain the concept:
Economies of scale are cost advantages a firm gets as it grows, so average (unit) cost falls as output rises.
Diseconomies of scale happen when a firm becomes too large, and average cost starts to rise as output increases.
Common causes of diseconomies of scale:
Management and coordination problems (communication delays, slow decisions)
Bureaucracy and red tape
Reduced worker motivation and supervision problems
Overcrowding or overuse of facilities
Check each option:
A. Difficulty in coordinating decisions: This is a classic managerial diseconomy. In a very large firm, many departments, layers of management, and slow communication make it hard to coordinate decisions, so costs rise. ✔
B. Division of labor in production: This is a source of economies of scale, because specialization raises productivity. ✘
C. Employment of more specialists: This is also a source of economies of scale (technical and managerial economies). ✘
D. Decrease in the cost of production: This is the result of economies of scale, the opposite of diseconomies. ✘
Tip: Think "economies = efficient, diseconomies = disorganized." If an option describes something that makes a big firm more efficient or cheaper (specialization, bulk buying, lower costs), it is an economy of scale. If it describes management trouble, delays, or rising costs, it is a diseconomy.
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21.
Money would cease to be a good store of value when
1. A.prices of goods and services are falling slowly
2. B.there is a high level of unemployment
3. C.prices of goods and services are rising rapidly
4. D.prices of go0ds and services are rising slowing
Show answer
Answer: C. prices of goods and services are rising rapidly
AI explanation
Step 1: Analyze the question The question asks when money stops being a good store of value. A store of value means money can be kept today and still buy the same amount of goods and services in the future. So we are looking for the situation in which money loses its purchasing power.
Step 2: Explain the concept
Money's purchasing power depends on the price level.
When prices rise, each naira buys fewer goods. This is inflation.
When inflation is rapid, money held today is worth much less tomorrow, so people no longer want to hold it. In extreme cases (hyperinflation), people switch to goods, foreign currency, or other assets.
Step 3: Evaluate the options
A. Prices falling slowly: Money's purchasing power increases slightly, so it remains a good store of value. Wrong.
B. High unemployment: This affects incomes and jobs, not the purchasing power of money directly. Wrong.
C. Prices rising rapidly: Purchasing power falls quickly, so money loses its value as a store of value. Correct.
D. Prices rising slowly: Mild inflation erodes value only a little, so money still works reasonably well as a store of value. Wrong.
Step 4: Answer The correct option is C.
Exam tip: For "store of value" questions, think inflation = bad. The faster prices rise, the faster money loses value. Remember also that deflation (falling prices) does not hurt money's store-of-value function, though it causes other economic problems.
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22.
Governments in West Africa can curtail inflation by
1. A.purchasing securities in the open market
2. B.selling securities in the open market
3. C.encouraging importation of goods from all countries
4. D.encouraging banks to lend for
Show answer
Answer: B. selling securities in the open market
AI explanation
Analyze the question: The question asks how a government can curtail (reduce) inflation. Inflation means too much money chasing too few goods, so the aim is to reduce the money supply or increase the supply of goods.
Concept: Open Market Operations (OMO) This is a monetary policy tool in which the central bank buys or sells government securities (treasury bills, bonds):
Buying securities puts money into the economy. The money supply rises, which can worsen inflation.
Selling securities takes money out of the economy, because buyers pay with cash from their bank accounts. Banks then have less to lend, the money supply falls, and inflation is curtailed.
Evaluate the options:
A. Purchasing securities in the open market: This injects money and is inflationary. Wrong.
B. Selling securities in the open market: This withdraws money from circulation and is anti-inflationary. Correct.
C. Encouraging importation of goods from all countries: More imports can increase the supply of goods and ease prices. However, it is not a controlled policy tool, and it drains foreign exchange and hurts local industries. "From all countries" makes it a weak, unrealistic answer. It is not the standard answer.
D. Encouraging banks to lend for...: The option is incomplete, and encouraging more lending raises the money supply, which fuels inflation. Wrong.
Answer: B.
Tip: Remember "Sell to Shrink": selling securities shrinks the money supply and fights inflation. "Buy to Boost": buying securities boosts money supply and is used to fight deflation or recession.
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23.
A consumer is in equilibrium when
1. A.his market Supply is equal to his market demand
2. B.he maximizes his satisfaction from spending his income
3. C.the market is also in equilibrium
4. D.he has consumed all he wants
Show answer
Answer: B. he maximizes his satisfaction from spending his income
AI explanation
Analyze the question: It asks for the definition of consumer equilibrium in economics.
Explain the concept: A consumer has a limited income and wants to get the most satisfaction (utility) from it. Consumer equilibrium is reached when the consumer allocates income among goods so that total utility is at its maximum and there is no incentive to reallocate spending.
Under the utility approach, this happens when the marginal utility per naira is equal across all goods:
MU₁/P₁ = MU₂/P₂ = ... = MUₙ/Pₙ
For a single good, the condition is MU = Price.
Evaluate the options:
A. Market supply equals market demand: This describes market equilibrium, not an individual consumer's equilibrium. ❌
B. He maximizes his satisfaction from spending his income: This is the correct definition of consumer equilibrium. ✅
C. The market is also in equilibrium: Consumer equilibrium does not depend on the market being in equilibrium. ❌
D. He has consumed all he wants: This describes satiation, where marginal utility is zero. A consumer is constrained by income, so this is not the condition. ❌
Exam tip: Look at the keyword in the question. "Consumer equilibrium" means maximum satisfaction given a limited income. "Market equilibrium" means demand = supply. WASSCE often tests the difference between the two, so don't mix them up.
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24.
Which of the following are intermediate products?
1. A.Cement and steel
2. B.Furniture and shirt
3. C.Handkerchief and shoe
4. D.Table and door
Show answer
Answer: A. Cement and steel
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25.
Labor productivity is defined as
1. A.output per man-hour
2. B.average Output
3. C.the maximum number of hours Worked
4. D.total output of labour
Show answer
Answer: A. output per man-hour
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26.
If the average fixed cost (AFC) of producing 5 bags of rice is $20.00, the average fixed cost of producing 10 bags will be
1. A.$2.00
2. B.$4.00
3. C.$10.00
4. D.$20.00
Show answer
Answer: C. $10.00
AI explanation
Analyze the question: AFC at 5 bags is $20.00. We need AFC at 10 bags.
Concept: Average Fixed Cost = Total Fixed Cost (TFC) ÷ Quantity (Q). Total fixed cost does not change with output, so as output rises, AFC falls.
Solution:
Find TFC from the first level of output: TFC = AFC × Q = $20.00 × 5 =$ 100.00
TFC stays at $100.00 when output rises to 10 bags.
Compute the new AFC: AFC = TFC ÷ Q = $100 ÷ 10 = **$ 10.00**
Check: Output doubled (5 → 10), so AFC halves ( $20 →$ 10). This matches.
Answer: Option C, $10.00.
Tip: Fixed costs are "spread" over more units as output grows. If output doubles, AFC halves. If output triples, AFC falls to one-third. Also remember that the AFC curve is a rectangular hyperbola that slopes downward throughout. Options A and B would be wrong because they imply TFC changed, and D would be wrong because it implies AFC did not fall.
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27.
Which of the following factors may lead to the underestimation of national income figures?
1. A.Availability of skilled statisticians
2. B.High volume of exports
3. C.Emigration of skilled workers to foreign countries
4. D.Subsistence production
Show answer
Answer: D. Subsistence production
AI explanation
Analyze the question National income is the total value of goods and services produced in a country in a year. The question asks which factor causes the figure to be underestimated, meaning the recorded figure is lower than the true value.
Concept National income is hard to measure accurately because of these problems:
Subsistence production: output that farmers consume themselves, or that is bartered, never passes through the market. It has no recorded price or transaction, so it is often left out or poorly estimated.
Informal sector activity and unrecorded transactions.
Illiteracy and poor record-keeping.
Double counting, which causes overestimation.
Lack of skilled statisticians, which causes inaccurate figures.
Evaluate each option
A. Availability of skilled statisticians: This improves accuracy, so it does not cause underestimation.
B. High volume of exports: Exports are part of national income (the X in X − M), so they are recorded and do not cause underestimation.
C. Emigration of skilled workers: This reduces the labour force and may reduce output, but it is a real fall in production, not a measurement error. Income earned abroad by citizens is also counted separately as net property income from abroad.
D. Subsistence production: Goods produced and consumed by households are not sold in the market, so they are often left out of the records. Real output is therefore higher than the recorded figure, which is underestimation. ✔
Answer: D
Tip: For "underestimation" questions, look for things that are unrecorded or non-market, such as subsistence farming, the informal sector, housewives' services and black-market activity. For "overestimation", think of double counting.
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28.
Inflation may occur if
1. A.rate of productivity is higher than the wage rate
2. B.prices fluctuate during a particular season of the year
3. C.wage increase is granted without an increase in productivity
4. D.the government embarks on restrictive monetary policies
Show answer
Answer: C. wage increase is granted without an increase in productivity
AI explanation
Step 1: Analyze the question We are asked which situation can cause inflation, which is a persistent, general rise in the price level over time.
Step 2: The concept Inflation happens when too much money chases too few goods (demand-pull), or when production costs rise and push prices up (cost-push). A wage increase without a matching rise in output raises production costs and also increases spending power, so the price level goes up.
Step 3: Evaluate each option
A. Productivity rate higher than wage rate: Workers produce more than they are paid for, so unit costs fall. This reduces inflationary pressure, so it is not a cause.
B. Seasonal price fluctuations: Prices of items like tomatoes or yams rise and fall with the season. This is temporary and not a persistent, general price rise, so it is not true inflation.
C. Wage increase without an increase in productivity: Firms' costs rise (cost-push), and workers have more money to spend while the quantity of goods stays the same (demand-pull). Prices rise, so this can cause inflation.
D. Restrictive monetary policies: These reduce money supply (higher interest rates, higher cash reserve requirements). They are used to fight inflation, not cause it.
Step 4: Answer
Tip: Remember "more money, same goods = higher prices." Whenever an option shows income or money supply rising without more output, it points to inflation. Whenever it shows restrictive or tight policy, it points to controlling inflation.
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29.
When the production possibility curve shifts outwards, the economy experiences
1. A.growth
2. B.over-production
3. C.inefficient use of resources
4. D.under-production
Show answer
Answer: A. growth
AI explanation
Step 1: Analyze the question The question asks what an outward shift of the Production Possibility Curve (PPC) means for an economy.
Step 2: Explain the concept The PPC shows the maximum combinations of two goods an economy can produce when it uses all its resources fully and efficiently.
Points on the curve: resources are fully and efficiently used.
Points inside the curve: resources are underused or wasted (inefficiency or unemployment).
Points outside the curve: not attainable with current resources.
A shift of the whole curve outward: the economy's productive capacity has increased.
Step 3: Work through the options An outward shift happens when:
the quantity of resources increases (for example, new oil discoveries, a larger labour force),
the quality of resources improves (for example, better education and training),
technology improves.
All of these mean the economy can now produce more than before. This is economic growth.
A. Growth: correct. Productive capacity has expanded.
B. Over-production: this is a market surplus idea and has nothing to do with a PPC shift.
C. Inefficient use of resources: this is shown by a point inside the curve, not by a shift of the curve.
D. Under-production: this also relates to being inside the curve, not to the curve moving outward.
Step 4: Answer The correct option is A. growth.
Tip: Remember the difference between movement and shift:
Movement to a point inside the curve means inefficiency or unemployment.
Movement along the curve means a trade-off (opportunity cost).
Shift outward means economic growth.
Shift inward means economic decline.
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30.
Organization and entrepreneurship are vested in diferrent persons in a
1. A.cooperative society
2. B.sole proprietorship
3. C.partnership
4. D.public company.
Show answer
Answer: D. public company.
AI explanation
Step 1: Analyze the question The question asks where organization (managing and coordinating the factors of production) and entrepreneurship (risk-taking, owning the business, and bearing the uncertainty) are carried out by different people.
Step 2: Explain the concept In economics, the entrepreneur is the person who takes the risk and supplies the capital. The organizer (manager) coordinates land, labour and capital in the daily running of the business.
In a sole proprietorship, one person owns, risks and manages, so both roles are combined.
In a partnership, the partners usually own and manage the business themselves, so both roles are combined.
In a cooperative society, members own the business and usually elect from among themselves those who manage it, so the roles largely overlap.
In a public company, the shareholders bear the risk and own the business (entrepreneurship). The day-to-day running is handled by the board of directors and hired professional managers (organization). This is the separation of ownership and control.
Step 3: Solution Comparing the options, only the public company clearly has the risk-bearers (shareholders) and the organizers (directors and managers) as different groups of people.
Step 4: Answer The correct option is D. public company.
Tip: Remember "ownership ≠ control" for public companies. Whenever a question mentions shareholders and a board of directors or hired managers, think of separate entrepreneurship and organization. For sole proprietorships, think "one-man business, one person does everything."
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31.
Tools of monetary policy do not include
1. A.open market operations
2. B.reserve requirement
3. C.bank rate
4. D.tax and public expenditure
Show answer
Answer: D. tax and public expenditure
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32.
Mr. X and Mrs. Y pay $500.00 and$ 1,400.00 as taxes on their earning of S5,000.00 and $7,000.00 respectively. The system of taxation employed is
1. A.specific tax
2. B.proportional tax
3. C.regressive tax
4. D.progressive tax
Show answer
Answer: D. progressive tax
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33.
Dumping is selling goods in a foreign market at a price
1. A.below what is sold at the home market
2. B.above what is sold at the home market.
3. C.equal to what is sold at the home market
4. D.equal to the cost of producing the goods
Show answer
Answer: A. below what is sold at the home market
AI explanation
Step 1: Analyze the question The question asks for the definition of dumping in international trade.
Step 2: Explain the concept Dumping is the practice of selling goods in a foreign market at a price lower than the price charged for the same goods in the producer's home market. It can also mean selling below the cost of production. Its usual meaning in exams, though, is the home-versus-foreign price comparison.
Why do firms or countries do it?
To get rid of surplus goods
To capture or gain a share of a foreign market
To eliminate foreign competitors, after which they can raise prices
To take advantage of economies of scale
Step 3: Check each option
A. Below what is sold at the home market. This matches the definition of dumping.
B. Above the home price. This is the opposite of dumping.
C. Equal to the home price. This is ordinary trade with no price discrimination, so it is not dumping.
D. Equal to the cost of producing the goods. This is not the standard definition. Dumping is usually below cost or below the home price, not simply at cost.
Step 4: Answer The correct option is A.
Exam tip: Think "dump = throw away cheaply." Dumping means a lower price abroad than at home. Countries often respond with anti-dumping duties or tariffs, which is a common follow-up question.
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34.
A country should embark on development planning to ensure that
1. A.it becomes popular among the comity of nations
2. B.it also does what others are doing
3. C.its scarce productive resources are efficiently utilized
4. D.the nation is able to contribute its own quota to international organizations.
Show answer
Answer: C. its scarce productive resources are efficiently utilized
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35.
Land as a factor of production is made useful through the
1. A.application of human effort
2. B.acts of nature
3. C.application of fertilizer
4. D.use of machines
Show answer
Answer: A. application of human effort
AI explanation
Step 1: Analyze the question The question asks how land, which is a natural resource, becomes useful in production. Land is "a gift of nature," but in its raw state it often produces little of value.
Step 2: Explain the concept In Economics, the four factors of production are land, labour, capital, and entrepreneurship. Land includes all natural resources, such as soil, minerals, forests, and water. These resources only become useful for production when people work on them. For example:
A farmland must be cleared, tilled, planted, and harvested.
Crude oil must be explored, drilled, and refined.
Timber must be felled and processed.
All of these involve labour, which is human effort (physical or mental).
Step 3: Evaluate the options
A. Application of human effort: Correct. Labour turns natural resources into useful goods and services.
B. Acts of nature: Nature provides land, but it does not make it economically useful. This is why land is called a "free gift of nature."
C. Application of fertilizer: Fertilizer is a form of capital input. It improves productivity, but it is only one specific method and it is also applied by humans.
D. Use of machines: Machines are capital goods. They help, but they are also operated by humans, and they are not the general answer.
Step 4: Answer Land becomes useful through the application of human effort (labour), so the answer is A.
Tip: Remember "Land is given, labour makes it work." Whenever you see a question about making a natural resource useful, think of labour (human effort) as the key link between nature and production.
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36.
The exploitation of mineral resources constitutes which form of production?
1. A.Primary production
2. B.Secondary production
3. C.Tertiary production
4. D.Services production
Show answer
Answer: A. Primary production
AI explanation
Step 1: Analyze the question The question asks which stage (form) of production includes the exploitation (extraction) of mineral resources such as crude oil, tin, coal, and limestone.
Step 2: Explain the concept Production in economics is classified into three main stages:
| Type | What it involves | Examples | |---|---|---| | Primary | Extracting or harvesting natural resources directly from nature | Farming, fishing, mining, oil drilling, forestry | | Secondary | Turning raw materials into finished or semi-finished goods | Manufacturing, refining, construction, textiles | | Tertiary | Providing services that help distribute goods or support people | Banking, transport, insurance, teaching, trading |
Step 3: Apply the concept
Exploiting mineral resources means taking minerals out of the earth. Examples are crude oil in the Niger Delta, tin on the Jos Plateau, and coal in Enugu.
This is the first stage of production, because it deals with raw materials taken directly from nature, with no processing yet.
Refining the crude oil into petrol would be secondary production.
Selling the petrol or transporting it would be tertiary production.
"Services production" (D) is essentially the same idea as tertiary production, so it does not fit mineral extraction.
Step 4: Answer The exploitation of mineral resources is primary production, which is option A.
Step 5: Exam tip Remember "Primary = Pull from nature." Anything that involves farming, fishing, mining, or logging is primary. If the item is changed into something else, it is secondary. If it is a service, it is tertiary.
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37.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.
38.
Increasing returns to scale suggests that
1. A.a firm can make a profit by reducing output
2. B.a firm can make more profit by increasing output
3. C.as the producer reduces the quantity of raw materials used, the marginal product will double
4. D.as the producer increases the quantity of raw materials used, the marginal product will fall
Show answer
Answer: B. a firm can make more profit by increasing output
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39.
Which function of the wholesaler enables him to stabilize prices?
1. A.Warehousing goods
2. B.Advertising the goods
3. C.Granting credit to retailers
4. D.Transporting goods
Show answer
Answer: A. Warehousing goods
AI explanation
Step 1: Analyze the question The question asks which wholesaler function helps stabilize prices. Price stability means avoiding big swings caused by seasonal supply and demand.
Step 2: Explain the concept Many goods, especially agricultural products like yam, maize, tomatoes and garri, are produced seasonally.
Harvest season: supply is high, so prices would normally fall sharply.
Off-season: supply is low, so prices would normally rise sharply.
A wholesaler who warehouses (stores) goods buys and stores them when they are plentiful and releases them when they are scarce. This evens out supply across the year, so prices stay relatively stable.
Step 3: Evaluate the options
A. Warehousing goods: Storage evens out supply over time, which stabilizes prices. ✔
B. Advertising the goods: This promotes sales and informs buyers, but it does not control supply or price swings.
C. Granting credit to retailers: This helps retailers finance their stock, but it has no direct effect on price stability.
D. Transporting goods: This moves goods from place to place (a place utility), but it does not manage supply over time.
Step 4: Answer The correct option is A. Warehousing goods.
Tip: Link keywords to functions. "Stabilize prices" means "storage/warehousing", "bridge the gap between producer and retailer" means "break bulk", and "financing retailers" means "credit". Also remember that storage creates time utility, while transport creates place utility.
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40.
Import substitution as a strategy of industrialization is the
1. A.replacement of locally produced goods with imported ones
2. B.development of locally produced goods with imported ones
3. C.establishment of firms to process imported raw materials
4. D.act of using local inputs to produce goods for export
Show answer
Answer: B. development of locally produced goods with imported ones
AI explanation
Analyze the question: It asks for the meaning of import substitution as an industrialization strategy.
Explain the concept: Import substitution industrialization (ISI) is a policy where a country reduces its dependence on foreign goods by producing those goods locally. The aim is to replace imports with domestically manufactured products. Governments usually support this with tariffs, quotas, import bans, and incentives for local manufacturers. Nigeria used this approach in the 1960s and 1970s, for example by setting up local factories to make textiles, soap, cement, and assembled vehicles.
Evaluate the options:
A. Replacement of locally produced goods with imported ones: This is the opposite of import substitution. It would increase imports. Wrong.
B. Development of locally produced goods with imported ones: The wording is clumsy. The intended meaning is the development of local production to take the place of (substitute for) imported goods. Of the four options, it is the closest to the idea of building up local production in place of imports. This is the official answer.
C. Establishment of firms to process imported raw materials: This describes industries that depend on imported inputs. It is not the definition of import substitution. Wrong.
D. Using local inputs to produce goods for export: This is export promotion, not import substitution. Wrong.
Note on the wording: Option B is awkwardly phrased. A better version would be "development of locally produced goods to replace imported ones.
Answer: B
Exam tip: Remember it this way: Import substitution = Make at home what you used to buy abroad. If an option talks about exporting, it is export promotion. If it talks about increasing imports, it is the opposite of the strategy. When the wording of a WASSCE option looks odd, choose the one closest to the core idea.
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41.
Goods that are abundant in supply usually have low
1. A.total utility
2. B.marginal utility
3. C.average utility
4. D.time utility
Show answer
Answer: B. marginal utility
AI explanation
Analyze the question: The question asks which type of utility is low when a good is abundant (plentiful) in supply.
Explain the concept:
Total utility is the overall satisfaction from consuming all units of a good.
Marginal utility is the extra satisfaction from consuming one more unit.
Law of diminishing marginal utility: as you consume more units of a good, the additional satisfaction from each extra unit falls.
Step-by-step solution:
When a good is abundant, consumers have plenty of it and can consume many units.
As consumption rises, each additional unit adds less satisfaction than the one before.
So the satisfaction from the last (marginal) unit becomes low. Water in a village with a flowing stream is a good example: one more cup adds almost no extra satisfaction.
Total utility, by contrast, usually keeps rising (at a slowing rate) as more units are consumed, so it is not low. This rules out A.
Average utility isn't the concept the question is testing, and time utility relates to having goods available at the right time, so C and D do not fit.
Answer: The correct option is B. marginal utility.
Exam tip: Remember "Plenty = Poor marginal utility." Whenever a question links abundance or excess consumption to satisfaction, think of the law of diminishing marginal utility. Also, it is marginal utility that falls first, while total utility can still be rising.
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42.
Goods are described as inferior if their demand
1. A.decreases as price falls
2. B.increases as income rises
3. C.decreases as income increases
4. D.increases as price increases
Show answer
Answer: C. decreases as income increases
AI explanation
Step 1: Analyze the question The question asks for the definition of an inferior good. The key is knowing which variable the definition depends on: price or income.
Step 2: Explain the concept Goods are classified by how demand responds to a change in the consumer's income (income elasticity of demand):
Normal goods: demand rises as income rises (positive income elasticity).
Inferior goods: demand falls as income rises (negative income elasticity). Examples in Nigeria include garri, second-hand clothing ("okrika"), and low-quality local rice. When people earn more, they switch to better alternatives such as foreign rice, new clothes, or bread.
Giffen goods: a special case of inferior goods where demand rises as price rises. This is a price relationship, not the general definition.
Step 3: Check each option
A. Decreases as price falls: This is an unusual price-demand relationship, not tied to income. It does not define an inferior good.
B. Increases as income rises: This describes a normal good, so it is wrong.
C. Decreases as income increases: This matches the definition of an inferior good, so it is correct.
D. Increases as price increases: This describes a Giffen good (or a good with a perverse demand curve), not inferior goods in general.
Step 4: Answer
Tip: Look at the keyword in the question. If it says "inferior" or "normal," think income. If it says "Giffen" or "law of demand," think price. Memory trick: Inferior = Income goes up, demand goes down.
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43.
If an increase in the supply of beef increased the supply of hides, then beef and hides are in
1. A.competitive supply
2. B.joint supply.
3. C.composite supply
4. D.joint demand
Show answer
Answer: B. joint supply.
AI explanation
Step 1: Analyze the question The question says that when the supply of beef rises, the supply of hides (cow skins) also rises. So one product's supply moves together with the other's. We need the term for this relationship.
Step 2: Explain the concept
Joint supply: Two or more products come from the same source or production process, so producing more of one automatically produces more of the other. Examples are beef and hides, mutton and wool, and petrol and diesel from crude oil.
Competitive supply: Two products compete for the same resources, so producing more of one means producing less of the other. An example is a farmer choosing between planting yam and cassava on the same land.
Composite supply: One product has several uses, so its supply is shared among them. An example is wood used for furniture, fuel, or paper.
Joint demand: Two goods are demanded together, such as a car and petrol. This is about demand, not supply.
Step 3: Apply to the question Beef and hides both come from the same animal. When more cattle are slaughtered to increase beef supply, more hides become available as well. Their supplies rise together, so this is joint supply.
A is wrong, because competitive supply would make the supply of one product fall when the other rises.
C is wrong, because beef and hides are not different uses of a single product.
D is wrong, because the question is about supply, not demand.
Step 4: Answer The correct option is B. joint supply.
Tip: Ask yourself whether the two products come from the same source and rise together. If they do, it is joint supply. If they compete for the same resources, it is competitive supply. Remember "one animal, two products" for beef and hides.
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44.
An increase in supply means that
1. A.more is sold at different prices
2. B.more is sold at the same price
3. C.there is a leftward shift of the supply curve
4. D.there is a movement along the supply curve
Show answer
Answer: B. more is sold at the same price
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45.
The foremost objective of the International Bank of Reconstruction and Development (IBRD) is to
1. A.help promote private and public investments
2. B.assist members achieve a balance of payments stability
3. C.grant long term loans for infrastructure
4. D.maintain stabilily of foreign exchange
Show answer
Answer: C. grant long term loans for infrastructure
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46.
How is NNP at factor cost derived from GNP at market prices?
1. A.GNP - Depreciation + Indirect taxes + Subsidies
2. B.GNP Depreciation - Indirect taxes + Subsidies
3. C.GNP + Depreciation Indirect taxes - Subsidies
4. D.GNP+ Depreciation- Indirect taxes + Subsidies
Show answer
Answer: B. GNP Depreciation - Indirect taxes + Subsidies
AI explanation
Analyze the question: You want to move from GNP at market prices to NNP at factor cost.
Concept:
NNP = GNP − Depreciation (capital consumption allowance). This gives "net" national product.
Market prices include indirect taxes (which raise prices) and exclude subsidies (which lower prices). To get to factor cost, remove the indirect taxes and add the subsidies.
Formula: NNP at factor cost = GNP at market prices − Depreciation − Indirect taxes + Subsidies
Checking the options: The options are garbled by formatting, with some operators missing, but we can read them as follows:
A. GNP − Depreciation + Indirect taxes + Subsidies. This is wrong because indirect taxes should be subtracted.
B. GNP − Depreciation − Indirect taxes + Subsidies. This matches the formula. The minus signs were lost in the formatting: "GNP Depreciation -" and "Indirect taxes + Subsidies" read as GNP − Depreciation − Indirect taxes + Subsidies.
C. GNP + Depreciation ... Indirect taxes − Subsidies. This is the reverse of what is needed.
D. GNP + Depreciation − Indirect taxes + Subsidies. This is wrong because depreciation is added instead of subtracted.
Tip: Remember "Net means minus depreciation. Factor cost means strip out taxes and add back subsidies." Think of it this way: taxes inflate the market price, so you take them out. Subsidies deflate it, so you put them back.
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47.
In a free market economy, resources are allocated through the
1. A.government department
2. B.price mechanisms
3. C.trade union
4. D.state planning committee.
Show answer
Answer: B. price mechanisms
AI explanation
Step 1: Analyze the question The question asks how resources are allocated in a free market economy. In other words: who or what decides what to produce, how to produce it, and for whom?
Step 2: Explain the concept In a free market (capitalist) economy:
Resources are privately owned.
Decisions are made by individual consumers and producers.
Demand and supply interact to set prices.
These prices signal where resources should go. High prices attract producers to supply more, and low prices tell them to cut back.
This system is called the price mechanism (or "invisible hand"). It is the main allocator of resources.
By contrast, in a command (centrally planned) economy, the government or a state planning committee decides how resources are allocated.
Step 3: Evaluate the options
A. Government department: This is typical of a command or planned economy, not a free market.
B. Price mechanisms: Correct. Prices determined by demand and supply allocate resources.
C. Trade union: Trade unions protect workers' interests and do not allocate resources in an economy.
D. State planning committee: This is typical of a command economy such as the former Soviet Union.
Step 4: Answer The correct answer is **B.
Exam tip: Link each economic system to its allocator:
Free market → price mechanism
Command economy → government/state planning
Mixed economy → both
If you see "free market," "capitalist," or "market economy," think price mechanism.
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48.
A seller increased the quantity he offered for sale from 200 units to 250 units when the price of his product increased by 12.5%. What is the price elasticity of the supply of his product?
1. A.2.00
2. B.1.50
3. C.1.00
4. D.0.50
Show answer
Answer: A. 2.00
AI explanation
Step 1: Analyze the question We need the price elasticity of supply (PES), which measures how responsive the quantity supplied is to a change in price.
Step 2: The concept
PES = % change in quantity supplied ÷ % change in price
Step 3: Solution
Change in quantity = 250 − 200 = 50 units
% change in quantity supplied = (50 ÷ 200) × 100 = 25%
% change in price = 12.5% (given)
PES = 25% ÷ 12.5% = 2.00
Since PES > 1, supply is elastic. This means producers increase quantity supplied by a larger proportion than the price rise.
Step 4: Answer The correct option is A. 2.00.
Tip: When the question gives an initial and a new quantity, use the original figure (here, 200) as the base for the percentage change. Using 250 or the average would give a different result. Also remember that PES is normally positive because price and quantity supplied move in the same direction. Always check: if the quantity changes by a bigger percentage than the price, the answer must be greater than 1.
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49.
The principle of comparative advantage encourages a country to
1. A.produce only consumer goods
2. B.engage in trade if it can produce a commodity at a lower cost
3. C.specializes in the production of all goods
4. D.try as much as possible to be self-sufficient
Show answer
Answer: B. engage in trade if it can produce a commodity at a lower cost
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