2023 WAEC (WASSCE) Economics Past Questions and Answers
The 2023 WAEC (WASSCE) Economics past questions with answers: 50 objective questions from the 2023 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.
Past questions © the examination body (JAMB/WAEC/NECO). DeeepSolve is not affiliated with them. Rights holders: see /copyright.
Questions
- 1.
The marks obtained by 9 students in a class test are recorded below: 9, 8, 7, 5,7, 6, 8, 9 and 7. What is the median mark?
- A.7
- B.8.5
- C.8
- D.7.5
Show answer
Answer: A. 7
AI explanation
Analyze the question: We need the median of 9 marks. The median is the middle value once the data is arranged in order.
Concept:
- Arrange the data in ascending (or descending) order.
- If there are n values and n is odd, the median is the value at position (n + 1)/2.
Solution:
Given marks: 9, 8, 7, 5, 7, 6, 8, 9, 7 (that is 9 values)
Step 1: Arrange in ascending order:
5, 6, 7, 7, 7, 8, 8, 9, 9
Step 2: Find the position of the median:
Position = (9 + 1)/2 = 5th value
Step 3: Pick the 5th value:
1st = 5, 2nd = 6, 3rd = 7, 4th = 7, 5th = 7, 6th = 8, 7th = 8, 8th = 9, 9th = 9
Median = 7
Answer: A. 7
Tip: Always sort the data first. Many students pick the middle number of the unsorted list, which gives the wrong answer here (the unsorted middle is 7 by coincidence, but it won't always work). Also, count your values to check that you have the right n. For an odd n, the median is a value in the list, so options like 8.5 or 7.5 (which come from averaging two middle numbers) are usually distractors.
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- 2.
National income is calculated mainly to
- A.determine how income is to shared
- B.help firms generate more funds
- C.determine aid to to be received from other nations
- D.determine the level of sectoral performance
Show answer
Answer: D. determine the level of sectoral performance
AI explanation
Step 1: Analyze the question The question asks about the main purpose of calculating national income, which is the total value of goods and services produced in an economy over a period, usually a year.
Step 2: Explain the concept National income accounting is done to:
- Measure the overall performance and size of the economy
- Show the contribution of each sector (agriculture, manufacturing, services, oil and gas, etc.)
- Compare the economy's growth over time and with other countries
- Help the government plan and make policy decisions
- Estimate living standards through per capita income
Step 3: Evaluate each option
- A. Determine how income is to be shared. Income distribution is a separate concern, handled by fiscal and wage policies. National income figures do not decide how income is shared.
- B. Help firms generate more funds. Firms raise funds through sales, loans, and shares, not through national income calculation.
- C. Determine aid to be received from other nations. Aid depends on donor policies and needs. It is not the main reason for national income accounting.
- D. Determine the level of sectoral performance. National income is broken down by sector (for example agriculture, industry, and services) using the output, income, and expenditure approaches. This shows how each sector contributes to the economy. This is the best fit.
Step 4: Answer
Tip: Whenever you see "why is national income calculated?", think measurement and planning: economic performance, sector contributions, growth, living standards, and policy planning. Options about sharing income, firms' funds, or aid are distractors.
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- 3.
A fall in the price of a normal commodity which has elastic demand will result in
- A.a fall in demand
- B.a fall in quantity demanded
- C.an increase in revenue
- D.a decrease in revenue
Show answer
Answer: C. an increase in revenue
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- 4.
Trade protection will assit economic growth in developing countries if it can
- A.allow the importation of cheaper goods people want
- B.effectively safeguard newly established firms
- C.eliminate importation of all commodities
- D.generate enough revenue through export duties
Show answer
Answer: B. effectively safeguard newly established firms
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- 5.
A government may cause a favourable change in her invisible trade account by
- A.developing tourism and other services
- B.imposing high tariff on exports
- C.encouraging people to go for medical treatment abroad
- D.increasing the export of her primary products
Show answer
Answer: A. developing tourism and other services
AI explanation
Step 1: Analyze the question The question asks which action would improve the invisible trade account, so we first need to be clear about what "invisible trade" means.
Step 2: The concept
- Visible trade is the export and import of tangible goods such as cocoa, crude oil and cars.
- Invisible trade is the export and import of services and other non-physical items. Examples are tourism, banking, insurance, shipping, transport, remittances, and education and medical services.
- A favourable invisible trade balance means the country earns more from selling services to foreigners than it spends buying services from abroad.
Step 3: Evaluate each option
- A. Developing tourism and other services: Foreign tourists spending money in Nigeria earns foreign exchange. Better banking, insurance and shipping services also bring in income from abroad. This increases invisible exports, so it is favourable. ✔
- B. Imposing high tariffs on exports: This is a tax on goods, so it concerns visible trade. It would also tend to discourage exports, so it is not favourable.
- C. Encouraging people to go for medical treatment abroad: This means Nigerians spend foreign exchange on foreign services, which is an invisible import. It worsens the account.
- D. Increasing the export of primary products: Primary products are tangible goods, so this improves the visible trade account, not the invisible one.
Step 4: Answer Only option A increases earnings from services, so it is the correct answer.
Exam tip: Ask yourself, "Can I touch it?" If you can (cocoa, oil, cars), it is visible. If it is a service (tourism, banking, insurance, shipping, medical care), it is invisible. Also remember that services you sell to foreigners improve the account, while services you buy from abroad worsen it.
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- 6.
The average revenue curve of a firm in a perfect market is the same as the
- A.supply curve of the firm
- B.average cost curve of the firm
- C.demand curve of the firm
- D.total revenue curve of the firm
Show answer
Answer: C. demand curve of the firm
AI explanation
Step 1: Analyze the question The question asks which curve is identical to the average revenue (AR) curve of a firm in a perfectly competitive market.
Step 2: Explain the concept In perfect competition:
- There are many buyers and sellers, and the product is homogeneous.
- The firm is a price taker. The market determines the price, and the firm can sell any quantity at that price.
- Because price stays constant at every level of output, the firm's demand curve is a horizontal line (perfectly elastic) at the market price.
Step 3: Work through the solution Average revenue is total revenue divided by quantity sold:
AR = TR ÷ Q = (P × Q) ÷ Q = P
So AR is always equal to the price. The demand curve shows the price buyers pay at each quantity, so it is also the price line. This means:
- AR = Price = Demand curve
- In perfect competition, AR = MR = Price = Demand (all one horizontal line)
Checking the other options:
- A. Supply curve: In the short run, the firm's supply curve is the part of the MC curve above AVC. It is not the AR curve.
- B. Average cost curve: This is U-shaped. It only touches AR at the break-even point (normal profit), so they are not the same curve.
- D. Total revenue curve: TR is an upward-sloping straight line from the origin, so it is not the same as the horizontal AR curve.
Step 4: Answer The AR curve is the same as the demand curve of the firm, which is option C.
Tip: Remember the chain "AR = MR = P = D" for a perfectly competitive firm. Whenever an exam asks about AR, think "AR is the demand curve" in any market structure. In perfect competition, it is also the same as MR.
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- 7.
One of the factor that may not promote industrial development is
- A.local firms entering into partnerships with foreign firms
- B.granting capital to firms at reasonable interest rates
- C.setting up industrial estates with modern amenities
- D.granting old firms tax exemptions
Show answer
Answer: D. granting old firms tax exemptions
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- 8.
A small scale firm located within an industrial estate will enjoy
- A.government protection and funding
- B.technological economies of scale
- C.financial economies of scale
- D.external economies of scale
Show answer
Answer: D. external economies of scale
AI explanation
Analyze the question: A small firm located within an industrial estate (a zone where many firms cluster together and share facilities) will enjoy which benefit?
Explain the concept: Economies of scale are cost advantages that arise as production grows. They come in two main types:
- Internal economies of scale come from the firm's own size and growth. Examples are technical (technological), financial, managerial, marketing and risk-bearing economies. A small firm cannot enjoy these because it lacks the size.
- External economies of scale come from the growth of the whole industry or from the firm's location. Examples are shared infrastructure (roads, electricity, water), a pool of skilled labour, nearby suppliers, ancillary services, and easy access to banks and transport. Any firm in the area benefits, regardless of its own size.
Work through the options:
- A. Government protection and funding: An industrial estate does not automatically give a firm protection or funding. This is a policy matter, not a benefit of location.
- B. Technological economies of scale: These are internal, and they come from using large, specialised machinery. A small firm cannot get them.
- C. Financial economies of scale: These are also internal. Large firms get cheaper loans because of their size, so this does not apply to a small firm.
- D. External economies of scale: Correct. By being in an industrial estate, even a small firm shares the common infrastructure, services, labour pool and nearby suppliers. Its own size does not matter.
Answer: D, external economies of scale.
Exam tip: Whenever you see words like "located within," "industrial estate," "cluster," or "industry growth," think external economies. If the question says "large firm" or "firm expands," think internal economies.
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- 9.
An example of government's recurrent expenditure is
- A.electrification projects in rural areas
- B.the cost of building a school
- C.purchase of new vehicles
- D.paying salaries of workers
Show answer
Answer: D. paying salaries of workers
AI explanation
Step 1: Analyze the question The question asks for an example of recurrent expenditure. This means spending that happens regularly, again and again (monthly or yearly), to keep government running day to day.
Step 2: Explain the concept Government spending is divided into two main types:
- Recurrent expenditure: regular, routine spending on the day-to-day running of government. Examples: salaries and wages, pensions, overheads (electricity, stationery), maintenance, and interest on debts.
- Capital expenditure: spending on building or buying long-lasting assets, usually one-off or occasional. Examples: roads, bridges, schools, hospitals, power projects, and big purchases like vehicles or machinery.
Step 3: Check each option
- A. Electrification projects in rural areas: a development project that creates infrastructure. This is capital expenditure.
- B. The cost of building a school: constructing a lasting asset. This is capital expenditure.
- C. Purchase of new vehicles: buying durable assets. This is capital expenditure.
- D. Paying salaries of workers: a regular payment made every month to keep government services running. This is recurrent expenditure.
Step 4: Answer The correct option is D, paying salaries of workers.
Exam tip: Ask yourself, "Does this spending happen again and again to keep things running, or does it create a lasting asset?" If it recurs (salaries, pensions, overheads), it is recurrent. If it builds or buys something lasting (roads, schools, vehicles), it is capital. A quick memory trick is that Recurrent means Routine and Regular.
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- 10.
An economy system is mainly concerned with
- A.studying the relationship between ends and means
- B.the allocation of scarce resources between alternative ends
- C.handling situations of abudant resources
- D.the establishment of economic laws
Show answer
Answer: B. the allocation of scarce resources between alternative ends
AI explanation
Step 1: Analyze the question The question asks what an economic system is mainly concerned with. An economic system is the way a society organizes the production, distribution, and consumption of goods and services.
Step 2: Explain the concept Every society faces scarcity: human wants are unlimited, but resources (land, labour, capital, entrepreneurship) are limited. Because of this, every economic system, whether traditional, capitalist (market), socialist (command), or mixed (like Nigeria's), must answer the basic economic questions:
- What to produce?
- How to produce it?
- For whom to produce it?
All of these are really about allocating scarce resources among competing uses (alternative ends).
Step 3: Evaluate the options
- A. Studying the relationship between ends and means. This is close to Lionel Robbins' definition of economics as a subject, not of an economic system. An economic system does not "study"; it organizes and allocates.
- B. The allocation of scarce resources between alternative ends. This describes exactly what an economic system does: it decides how limited resources are shared among competing uses.
- C. Handling situations of abundant resources. Economics deals with scarcity, not abundance. Incorrect.
- D. The establishment of economic laws. This is the work of economists and theory-building, not the main concern of an economic system.
Step 4: Answer The correct option is B, the allocation of scarce resources between alternative ends.
Tip: Link the words "economic system" → "allocation of scarce resources". If you see "study" or "relationship between ends and means," think of the definition of economics (Robbins). If you see "organizing/allocating/deciding what, how, for whom," think of the economic system.
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- 11.
The supply of light could be met using a candle, lantern and gas lamp. This is an example of a
- A.complementary supply
- B.abnormal supply
- C.joint supply
- D.composite supply
Show answer
Answer: D. composite supply
AI explanation
Analyze the question: Light can be supplied by different sources: a candle, a lantern, or a gas lamp. These are different products that all satisfy the same want (light). We need the supply term that describes this.
Explain the concepts:
- Joint supply: One production process yields two or more products together, so supplying one automatically supplies the other (e.g., beef and hide, cotton and cotton seed).
- Complementary supply: Not a standard term. Complementary goods are used together (e.g., car and fuel).
- Competitive supply: Different goods that use the same resources or serve as alternatives, so producing more of one means producing less of another.
- Composite supply: A good supplied from several different sources, or several different goods that meet the same want. Examples are light from candles, lanterns and gas lamps, or electricity from hydro, gas and solar.
- Abnormal supply: Supply that behaves unusually, such as a backward-bending supply curve of labour.
Solution:
- Candle, lantern and gas lamp are different products.
- They are not produced together from one process, so it is not joint supply.
- They are not used together, so it is not complementary.
- They are alternative sources that all meet one need, light. This is composite supply.
Answer: D. composite supply.
Tip: Remember the word "composite" as "composed of many sources" for one end product. Joint supply is "one process, many products". Composite supply is "many sources, one want".
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- 12.
Consumers have access to a variety of goods through the activities of the
- A.retailers
- B.advertising agencies
- C.mass media
- D.wholesalers
Show answer
Answer: A. retailers
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- 13.
An indication that there is inflation in a country is that
- A.there is a decrease in the demand for goods and services
- B.there are too many goods in circulation
- C.the same amount of money buys lower quantity of goods
- D.people prefer to lend than to borrow
Show answer
Answer: C. the same amount of money buys lower quantity of goods
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- 14.
The fixing of maximum prices by government is mainly on
- A.imported capital goods
- B.inferior goods
- C.selected essential goods
- D.luxury goods
Show answer
Answer: C. selected essential goods
AI explanation
1. Analyze the question The question asks which goods the government usually places a maximum price (a price ceiling) on.
2. Explain the concept A maximum price, or price ceiling, is a legal limit set below the market equilibrium price. It stops sellers from charging more than that price. Governments use it to protect consumers, especially low-income earners, from high prices on goods that people need to survive or live decently.
3. Work through the options
- A. Imported capital goods: These are machines and equipment used by firms. Governments may tax or restrict them, but they do not usually put price ceilings on them.
- B. Inferior goods: These goods are already cheap, and demand for them rises when incomes fall. They do not need price protection.
- C. Selected essential goods: Examples are petroleum products, rice, bread, sugar, and drugs. Price ceilings are mostly used here because prices that are too high would hurt ordinary citizens. The word "selected" fits because governments control only some essentials, not every product.
- D. Luxury goods: These are bought by wealthy people. Governments are more likely to tax them than to cap their prices.
4. Answer The correct option is C. selected essential goods.
5. Tip Link these terms in your mind:
- Maximum price → protects consumers → used on essential goods.
- Minimum price → protects producers → used on agricultural products, and also on wages (the minimum wage).
Watch out for the possible side effects of price ceilings: shortages, black markets, and rationing.
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- 15.
When job vacancies are publicized, the government is mainly trying to solve the problem of
- A.residual unemployment
- B.cyclical unemployment
- C.technological unemployment
- D.frictional unemployment
Show answer
Answer: D. frictional unemployment
AI explanation
Step 1: Analyze the question The question asks which type of unemployment is reduced when job vacancies are publicized (advertised). Publicizing vacancies is about giving information to job seekers and employers.
Step 2: Explain the concepts
- Frictional unemployment: Arises from the time lag or lack of information as workers move between jobs or search for suitable ones. Jobs exist and workers exist, but they have not yet been matched.
- Cyclical unemployment: Caused by a downturn (recession or depression) in the economy, leading to low demand and job losses. Advertising vacancies cannot fix this because there are few vacancies.
- Technological unemployment: Caused by machines replacing workers. It needs retraining, not publicity.
- Residual unemployment: Affects people who are unemployable due to physical or mental disabilities or old age.
Step 3: Apply the concepts When the government publicizes vacancies (for example, through job centres, the National Directorate of Employment, newspapers, or online portals), job seekers learn quickly where jobs are available. This shortens the search period and the mismatch caused by poor information. That is exactly the problem of frictional unemployment.
Step 4: Answer The correct option is D. frictional unemployment.
Tip: Link keywords to the type of unemployment:
- Information, job search, between jobs → Frictional
- Recession, low demand → Cyclical
- Machines, automation → Technological
- Disability, old age → Residual
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- 16.
The total fixed cost curve is
- A.horizontal
- B.upward sloping
- C.vertical
- D.downward sloping
Show answer
Answer: A. horizontal
AI explanation
Step 1: Analyze the question We are asked about the shape of the Total Fixed Cost (TFC) curve when it is plotted on a graph. Output is on the horizontal axis and cost is on the vertical axis.
Step 2: Explain the concept Fixed costs are costs that do not change with the level of output. Examples are rent, insurance, and salaries of permanent staff. Whether a firm produces 0 units or 10,000 units, the total fixed cost stays the same in the short run.
Step 3: Work through the solution Suppose a bakery in Ibadan pays ₦50,000 rent every month:
| Output (loaves) | TFC (₦) | |---|---| | 0 | 50,000 | | 100 | 50,000 | | 500 | 50,000 | | 1,000 | 50,000 |
TFC has the same value at every output level. When you plot a constant value against output, you get a straight line parallel to the horizontal (output) axis.
Step 4: Check the other options
- Upward sloping: this is the shape of Total Variable Cost (TVC) and Total Cost (TC), which rise as output rises.
- Vertical: this would mean output stays fixed while cost changes, which does not describe fixed cost.
- Downward sloping: this is the shape of Average Fixed Cost (AFC), because the same fixed cost is spread over more units.
Answer: A. Horizontal
Exam tip: Remember "Fixed = Flat." Total Fixed Cost is a flat (horizontal) line. Average Fixed Cost slopes downward, and Total Variable Cost slopes upward. WAEC often tests the difference between TFC and AFC.
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- 17.
If the government stops subsidy on cocoa production, the supply curve of cocoa will
- A.become vertical
- B.remain unchanged
- C.shift to the left
- D.shift to the right
Show answer
Answer: C. shift to the left
AI explanation
Step 1: Analyze the question The question asks what happens to the supply curve of cocoa when the government removes (stops) a subsidy on cocoa production.
Step 2: Explain the concept A subsidy is a payment from the government to producers that reduces their cost of production. Because costs are lower, producers can supply more at every price, so the supply curve shifts to the right.
If the subsidy is removed, the reverse happens:
- Production costs rise.
- Producers supply less cocoa at every price level.
- The supply curve shifts to the left (a decrease in supply).
Step 3: Work through it
- Before: Subsidy exists → lower cost → supply curve at S₁.
- Government stops the subsidy → cost of production rises.
- At each price, fewer tons of cocoa are offered for sale.
- The whole curve moves leftward, from S₁ to S₂.
Checking the options:
- A. Vertical: this describes perfectly inelastic supply, which is not caused by removing a subsidy.
- B. Unchanged: wrong, because a change in production cost is a determinant of supply and shifts the curve.
- C. Shift to the left: correct, since supply decreases.
- D. Shift to the right: this would happen if a subsidy were introduced or increased.
Step 4: Answer The correct option is C. shift to the left.
Tip: Think "Subsidy = Supply goes right; Subsidy removed = Supply goes left." Taxes work the opposite way: a tax raises costs and shifts supply left, and removing a tax shifts it right. Also remember that a change in price causes a movement along the curve, while a change in cost, technology, taxes, or subsidies causes a shift of the curve.
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- 18.
Which of the following is a non-renewable natural resources?
- A.Rubber
- B.Oil palm
- C.Coal
- D.Cocoa
Show answer
Answer: C. Coal
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- 19.
The malthusian theory of population is best illustrated when
- A.the size of the population and available resources are equal
- B.both population and food supply increase at the same rate
- C.food supply increases much faster than population growth
- D.population increases much faster than food supply
Show answer
Answer: D. population increases much faster than food supply
AI explanation
Step 1: Analyze the question The question asks which situation best illustrates the Malthusian theory of population.
Step 2: The concept Thomas Robert Malthus (1798, An Essay on the Principle of Population) argued that:
- Population grows in a geometric progression (1, 2, 4, 8, 16...)
- Food supply grows in an arithmetic progression (1, 2, 3, 4, 5...)
Because population grows much faster than food production, a time comes when there is not enough food to feed everyone. Malthus said this is checked by:
- Positive checks: famine, disease, war (these raise the death rate)
- Preventive checks: moral restraint, late marriage (these lower the birth rate)
Step 3: Evaluate the options
- A. Population equal to resources describes the optimum population idea, not Malthus. ❌
- B. Both growing at the same rate contradicts Malthus's central claim. ❌
- C. Food growing faster than population is the opposite of his theory. ❌
- D. Population increasing much faster than food supply matches the geometric versus arithmetic idea exactly. ✅
Step 4: Answer
Tip: Remember "Population = Geometric, Food = Arithmetic." Whenever you see Malthus, think "population outruns food," which leads to famine, disease, and war. Don't confuse this with optimum population, where resources and population are in balance.
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- 20.
At what point on the total product curve shown above will marginal product be negative?
- A.Q
- B.S
- C.R
- D.P
Show answer
Answer: C. R
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- 21.
Assisting members to solve temporary balance of payments problems is the reasons for the establishment of the
- A.International Monetary Fund
- B.Economic Commission for Africa
- C.World Bank
- D.African Development Bank
Show answer
Answer: A. International Monetary Fund
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- 22.
A country is described as developing if
- A.the income per head is low
- B.the contribution of tertiary sector to national income is high
- C.the population is decreasing
- D.there is low labour supply
Show answer
Answer: A. the income per head is low
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- 23.
Many workers are employed in the agricultural sector of developing countries because
- A.labour intensive method is mostly adopted
- B.abnormal profits are made
- C.wages in the sector is high
- D.they practice mechanized system of farming
Show answer
Answer: A. labour intensive method is mostly adopted
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- 24.
When more of tax on a product is borne by the buyer than the seller, the commodity involved has
- A.perfectly elastic demand
- B.perfectly inelastic demand
- C.fairly inelastic demand
- D.elastic demand
Show answer
Answer: C. fairly inelastic demand
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- 25.
A joint stock company enjoys perpetual existence because
- A.there is a higher degree of specialization
- B.it is a corporate entity
- C.it is formed by a minimum of seven members
- D.its shares are easily
Show answer
Answer: B. it is a corporate entity
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- 26.
The most liquid asset among the following is
- A.bonds
- B.cheque
- C.cash
- D.shares
Show answer
Answer: C. cash
AI explanation
Step 1: Analyze the question The question asks which asset is the most liquid. In economics, liquidity is how quickly and easily an asset can be used to pay for goods and services, or converted into spendable money, without losing value.
Step 2: Explain the concept Liquidity exists on a spectrum:
- Cash (notes and coins) is the benchmark of liquidity. It is already money, is accepted immediately as legal tender, and needs no conversion.
- Cheques and bank deposits are highly liquid, but a cheque must be presented, cleared, and honoured by the bank. It can also be rejected (a "bounced" cheque) and is not legal tender.
- Bonds and shares must be sold on the capital market before you get cash. Their prices can change, and the sale takes time and may involve brokerage fees.
Step 3: Compare the options
- A. Bonds: need to be sold, so less liquid.
- B. Cheque: liquid, but needs clearing and is not legal tender.
- C. Cash: immediately usable and universally accepted, so most liquid.
- D. Shares: need to be sold, and their value fluctuates, so less liquid.
Step 4: Answer The most liquid asset is cash, which is option C.
Exam tip: Remember the liquidity ladder: Cash → Bank deposits/cheques → Treasury bills → Bonds/Shares → Land/Buildings. The further an asset is from being cash, the less liquid it is. Whenever you see "most liquid", look for cash first.
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- 27.
Which of the following is not a problem facing Economic Community of West African States (ECOWAS)?
- A.Language barriers
- B.Inadequate supply of labour
- C.Production of the same commodities
- D.Poor transportation and communication
Show answer
Answer: B. Inadequate supply of labour
AI explanation
Analyze the question: We are looking for the option that is NOT a problem facing ECOWAS. Three options are real obstacles to integration, and one is not.
Concept: ECOWAS (founded 1975) aims to promote economic integration among West African states. Its major challenges include:
- Language barriers: the region is split into Anglophone, Francophone and Lusophone countries, which hinders communication and trade.
- Production of similar commodities: member countries produce similar primary products (cocoa, groundnut, palm oil, crude oil), so they compete rather than trade with each other and have little to exchange.
- Poor transportation and communication: bad roads, weak rail links and limited telecoms make cross-border trade costly.
- Others: multiple currencies, political instability, border restrictions and trade barriers, and overdependence on foreign powers.
Step by step:
- A. Language barriers: a real problem.
- B. Inadequate supply of labour: West Africa has a large, growing and youthful population, with high unemployment and underemployment. Labour is abundant, not scarce, so this is not a problem facing ECOWAS.
- C. Production of the same commodities: a real problem, since it limits complementary trade.
- D. Poor transportation and communication: a real problem.
Answer: B. Inadequate supply of labour is not a problem facing ECOWAS. If anything, the region has a surplus of labour.
Exam tip: In "which is NOT" questions, first tick the options you know are true problems. Remember the ECOWAS challenge keywords: language, currency, similar products, poor infrastructure, politics. Whatever doesn't fit is your answer.
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- 28.
The dependency ratio of a country is the
- A.the children and aged who rely on the active population for support
- B.people who are cared for by their extended families
- C.total active population who depend on government for survival
- D.number of children who depend on their parents for survival
Show answer
Answer: A. the children and aged who rely on the active population for support
AI explanation
Analyze the question: It asks for the meaning of the dependency ratio in Economics (a population topic).
Concept: The dependency ratio compares the dependent population with the working (economically active) population.
- Dependents: children (usually under 15) and the aged (usually 65 and above), who cannot fully work to support themselves.
- Active population: people aged roughly 15-64, who produce goods and services and support the dependents.
Formula:
Dependency ratio = (Number of children + Number of aged) ÷ (Working-age population) × 100
Evaluating the options:
- A. Children and aged who rely on the active population for support. This matches the definition exactly. ✔
- B. People cared for by extended families. This is a social description, not the economic definition.
- C. The active population depending on government. This is wrong, because dependents are the non-active group, not the active one.
- D. Only children who depend on their parents. This leaves out the aged, so it is incomplete.
Answer: Option A. (The wording of the question is a little awkward, since the dependency ratio is technically a ratio and not the group itself.)
Exam tip: Remember "Young + Old ÷ Working." A high dependency ratio means a heavy burden on the working population. This is common in developing countries like Nigeria because of the large proportion of children. Whenever you see "dependency," think of children and the aged.
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- 29.
When the demand for a commodity increases while supply remains unchanged, the equilibrium price and quantity will
- A.increase
- B.remain constant
- C.decrease
- D.turn negative
Show answer
Answer: A. increase
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- 30.
When the marginal utility from the consumption of commodity X (Mux) is greater than the price commodity X (Px), a rational consumer should
- A.strive to remain in disequilibrium
- B.consume the same quantity of commodity X
- C.consume more of commodity X
- D.reduce consumption of commodity X
Show answer
Answer: C. consume more of commodity X
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- 31.
The demand for a factor input as a result of the demand for its output is known as
- A.market demand
- B.complementary demand
- C.competitive demand
- D.derived demand
Show answer
Answer: D. derived demand
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- 32.
If a firm retrenches some of its factory workers its
- A.average fixed cost may increase
- B.variable cost will decline
- C.marginal cost may increase
- D.fixed cost is likely to increase
Show answer
Answer: B. variable cost will decline
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- 33.
Which of the following items is not classified as working capital?
- A.Fuel
- B.Money to pay wages
- C.Semi-finished goods
- D.Equipment
Show answer
Answer: D. Equipment
AI explanation
Step 1: Analyze the question We are asked to find the item that is NOT working capital.
Step 2: Explain the concept
- Working capital (also called circulating capital) is the capital used up or turned over in the day-to-day running of a business. It is used in a single production cycle or changes form quickly. Examples include raw materials, fuel, cash for wages, goods in progress, and stock of goods.
- Fixed capital is capital goods that last a long time and are used repeatedly in production, such as machinery, buildings, equipment, and vehicles.
Step 3: Check each option
- A. Fuel: It is consumed during production, so it is working capital.
- B. Money to pay wages: This is liquid cash used for daily operations, so it is working capital.
- C. Semi-finished goods: These are goods in progress that will be turned into finished goods, so they are working capital.
- D. Equipment: It is durable and used again and again over many years, so it is fixed capital, not working capital.
Step 4: Answer The item that is not working capital is Equipment, which is option D.
Tip: Ask yourself, "Is it used up or turned over quickly?" If yes, it is working capital. If it lasts for years (machines, buildings, equipment), it is fixed capital. Remember: Working = Wasted/Winding through production; Fixed = Stays.
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- 34.
The rate of growth of population is
- A.initial population plus number of births and net migration
- B.the difference between birth rate and death rate
- C.birth rate less death rate plus net migration
- D.the number of immigrants plus number of births
Show answer
Answer: C. birth rate less death rate plus net migration
AI explanation
Analyze the question: It asks for the definition of the rate of growth of population.
Concept: Population changes in two ways:
- Natural increase, which is births minus deaths.
- Net migration, which is immigrants minus emigrants.
So the overall growth rate of population is:
Growth rate = (Birth rate − Death rate) + Net migration rate
If we consider only natural increase, we ignore migration. That is the "natural rate of growth." The full rate of growth of a population includes migration.
Evaluate the options:
- A. "Initial population plus births and net migration" gives a population size or a count. It leaves out deaths and is not a rate. Wrong.
- B. "The difference between birth rate and death rate" is the natural rate of increase. It leaves out migration, so it is incomplete for the total growth rate. This is the tempting distractor.
- C. "Birth rate less death rate plus net migration" covers all components of population change. Correct.
- D. "Immigrants plus births" leaves out deaths and emigrants. Wrong.
Answer: C
Tip: Remember the population equation B − D + (I − E). If the question says "natural increase," choose births minus deaths only. If it says "growth rate" or "population change," include net migration as well.
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- 35.
The Net National Product (NNP) of a country is 10m. The Gross National Product (GNP) is
- A.$40m
- B.$60m
- C.$30m
- D.$500m
Show answer
Answer: B. $60m
AI explanation
Analyze the question We are given the Net National Product (NNP) and the depreciation allowance, and we must find the Gross National Product (GNP).
Concept GNP measures a country's total output before deducting the wear and tear of capital goods (depreciation). NNP is what remains after depreciation is deducted:
NNP = GNP − Depreciation
Rearranging:
GNP = NNP + Depreciation
Solution
- NNP = $50m
- Depreciation = $10m
GNP = 10m = $60m
Check: 10m = $50m, which matches the given NNP.
Answer The correct option is B. $60m.
Option A (500m) is a misleading figure that comes from nowhere in the calculation.
Exam tip Remember: "Gross is bigger, Net is smaller." GNP is always larger than NNP because depreciation is taken out to get to "net." So whenever you go from NNP to GNP, you add depreciation.
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- 36.
Petrol and Kerosene are jointly obtained from crude oil. If the supply of petrol increases, the
- A.cost of crude oil production has increased
- B.supply of kerosene will rise
- C.supply of kerosene will remain unchanged
- D.supply of kerosene will fall
Show answer
Answer: B. supply of kerosene will rise
AI explanation
Step 1: Analyze the question Petrol and kerosene are obtained from the same source, crude oil. This is a classic case of joint supply.
Step 2: The concept Joint supply (also called joint products) means that two or more goods are produced together from the same raw material or process. Producing more of one automatically yields more of the other, so their supplies move in the same direction.
Common examples:
- Beef and hides (leather)
- Petrol and kerosene
- Mutton and wool
Step 3: Apply it
- If the supply of petrol increases, it means more crude oil is being refined.
- Refining more crude oil also produces more kerosene as a by-product.
- So the supply of kerosene will rise.
Step 4: Check the options
- A. Cost of crude oil production has increased. This is not a consequence of increased petrol supply, so it is wrong.
- B. Supply of kerosene will rise. This is correct and matches joint supply.
- C. Supply of kerosene will remain unchanged. This would apply only to unrelated goods, so it is wrong.
- D. Supply of kerosene will fall. This describes competitive supply (e.g., yam vs. maize on the same farmland), not joint supply, so it is wrong.
Answer: B
Exam tip: Ask yourself, "Do the goods come from the same source?"
- Same source gives joint supply, and the supplies move together.
- Same resources used for alternative products gives competitive supply, and the supplies move in opposite directions.
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- 37.
The price level and the value of money are
- A.positively related
- B.directly related
- C.not related
- D.inversely related
Show answer
Answer: D. inversely related
AI explanation
Analyze the question: It asks how the general price level relates to the value (purchasing power) of money.
Explain the concept: The value of money is the quantity of goods and services one unit of money can buy. It is the reciprocal of the price level:
Value of money = 1 / Price level
Step-by-step reasoning:
- Suppose a loaf of bread costs ₦200. Then ₦1,000 buys 5 loaves.
- If prices rise (inflation) and bread now costs ₦500, the same ₦1,000 buys only 2 loaves.
- Prices went up, but the purchasing power of the money went down.
- If prices fall (deflation), the same money buys more, so the value of money rises.
The two variables move in opposite directions, which means they are inversely related.
Checking the options:
- A. Positively related: wrong, because this would mean they move in the same direction.
- B. Directly related: wrong, because this means the same as positive.
- C. Not related: wrong, because the value of money depends on the price level.
- D. Inversely related: correct.
Exam tip: Remember "Prices up, money's value down." Whenever you see inflation, think of the naira buying less. The words "positive" and "direct" mean the same thing, so if two options are synonyms, neither is likely to be the answer.
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- 38.
Commericial banks help in economic development mainly by
- A.acting as trustees and executors of wills
- B.acting as intermediaries between government and borowers
- C.serving as custodians of valuables
- D.giving financial advice to the government
Show answer
Answer: B. acting as intermediaries between government and borowers
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- 39.
Resources are pooled for the mutual benefit of its members mainly in a
- A.cooperative society
- B.joint stock company
- C.private company
- D.partnership
Show answer
Answer: A. cooperative society
AI explanation
Step 1: Analyze the question The question asks which type of business organisation pools resources mainly for the mutual benefit of its members. The key phrase is "mutual benefit", not profit for owners or shareholders.
Step 2: Explain the concept Business organisations differ in their main purpose:
- Cooperative society: A voluntary association of people with common needs who pool their resources (money, labour, produce) to help one another. Examples include thrift and credit societies, farmers' cooperatives and consumer cooperatives. The goal is service and mutual benefit, with profit as a secondary aim. Members share surplus as dividends or patronage rebates.
- Joint stock company: Capital is raised by selling shares to the public. The main aim is profit for shareholders.
- Private company: Shares are held by a small group (2 to 50 members) and are not offered to the public. It is run for profit.
- Partnership: Two to twenty persons carry on business together with a view to profit.
Step 3: Apply to the options
- B, C and D are all profit-oriented businesses, so their resources are pooled mainly to make profit.
- A, the cooperative society, is the only one formed mainly so members can help one another, for example through cheap loans, bulk buying or joint marketing of produce.
Step 4: Answer The correct option is A. cooperative society.
Exam tip: Whenever you see the words "mutual benefit", "members help one another" or "service rather than profit", think cooperative society. Whenever you see "shares", "shareholders" or "profit", think company.
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- 40.
Tariffs, quotas and embargoes are examples of
- A.trade restriction policies
- B.monetary policies
- C.fiscal policies
- D.foreign exchange policies
Show answer
Answer: A. trade restriction policies
AI explanation
Step 1: Analyze the question The question asks what category tariffs, quotas and embargoes belong to. All three relate to international trade.
Step 2: Explain the concepts
- Tariff: a tax placed on imported goods, which makes them more expensive.
- Quota: a limit on the quantity of a good that may be imported (or exported) within a period.
- Embargo: a total ban on trade with a particular country or on particular goods.
All three are tools a government uses to restrict or control the flow of goods across its borders. This is commercial or trade policy, and the tools are called trade restrictions (also called trade barriers or protectionist measures).
Step 3: Check each option
- A. Trade restriction policies: Correct. Each of the three limits imports or exports.
- B. Monetary policies: These deal with money supply and interest rates (for example, the CBN's Monetary Policy Rate and cash reserve ratio). They are not related.
- C. Fiscal policies: These deal with government taxation and spending. A tariff is a tax, but it is a tax specifically on trade, and quotas and embargoes are not fiscal tools at all. Fiscal policy is therefore not the best classification.
- D. Foreign exchange policies: These deal with exchange rate management, such as devaluation and exchange controls. They are not the same as limiting goods traded.
Step 4: Answer The correct option is A. trade restriction policies.
Tip: Remember "TQE = Trade Quantity/Entry blocks". If you see tariffs, quotas, embargoes, or import licensing, think protectionism or trade restrictions. Link money supply and interest rates to monetary policy, and government taxes and spending to fiscal policy.
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- 41.
Country M enjoys absolute advantage over country N in the production of commodities X and Y, if country M
- A.is inefficient in the production of both commodities X and Y
- B.is more efficient than country N in producing both commodities X and Y
- C.can produce only commodity Y cheaper than country N
- D.and country N are efficient in the production of both goods
Show answer
Answer: B. is more efficient than country N in producing both commodities X and Y
AI explanation
Step 1: Analyze the question The question asks what it means for Country M to have an absolute advantage over Country N in producing both commodities X and Y.
Step 2: The concept Absolute advantage (from Adam Smith) is the ability of a country to produce a good using fewer resources (lower cost, or higher output per unit of input) than another country. In other words, the country is more efficient at producing that good.
- Absolute advantage = produces more output with the same resources, or the same output with fewer resources.
- Comparative advantage (David Ricardo) = produces a good at a lower opportunity cost. This is a different idea.
Step 3: Evaluate the options
- A. Inefficient in both goods. This is the opposite of absolute advantage. ❌
- B. More efficient than country N in producing both X and Y. This matches the definition exactly. ✅
- C. Can produce only Y cheaper. This gives an advantage in only one good, not both. ❌
- D. Both countries are efficient. This does not show M is better than N, so it is not an advantage. ❌
Step 4: Answer The correct option is B.
Exam tip: Remember "Absolute = Always better." If a country is better at producing a good with fewer resources, it has an absolute advantage. If the question talks about opportunity cost, think comparative advantage instead.
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- 42.
The study of economics is mainly concerned with how to
- A.rank individuals' wants given the abundant resources
- B.make choice when resources are inadequate
- C.satisfy every member of all societies
- D.produce all the goods needed by everyone
Show answer
Answer: B. make choice when resources are inadequate
AI explanation
Step 1: Analyze the question The question asks what economics is mainly concerned with. This is a basic definition question.
Step 2: Explain the concept Economics is the study of how individuals, firms, and governments make choices about using scarce resources to satisfy unlimited wants. The core problem is scarcity: resources are limited, but human wants are unlimited. Because of this, choices must be made, and every choice involves an opportunity cost.
Step 3: Evaluate each option
- A. Rank individuals' wants given the abundant resources. Wrong. Resources are scarce, not abundant. If resources were abundant, there would be no economic problem.
- B. Make choice when resources are inadequate. Correct. "Inadequate" means scarce, and choice is the central activity in economics. This matches the standard definition.
- C. Satisfy every member of all societies. Wrong. Because of scarcity, it is impossible to satisfy everyone completely.
- D. Produce all the goods needed by everyone. Wrong. Limited resources mean not all goods and services can be produced.
Step 4: Answer
Tip: For definition questions in economics, look for the keywords scarcity and choice. Any option that says resources are "abundant" or that "everyone will be satisfied" is almost always a distractor.
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43.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.
- 44.
If the demand for a commodity remains constant as price increases, the commodity is said to be
- A.perfectly price inelastic
- B.unit price elastic
- C.price elastic
- D.price inelastic
Show answer
Answer: A. perfectly price inelastic
AI explanation
Analyze the question: The question says demand stays constant (quantity demanded does not change at all) even when price rises. We need the term for this type of price elasticity of demand (PED).
Concept: Price elasticity of demand = % change in quantity demanded ÷ % change in price
| Type | PED value | Meaning | |---|---|---| | Perfectly inelastic | 0 | Quantity does not change at all when price changes | | Price inelastic | between 0 and 1 | Quantity changes by a smaller percentage than price | | Unit elastic | 1 | Quantity changes by the same percentage as price | | Price elastic | greater than 1 | Quantity changes by a larger percentage than price | | Perfectly elastic | infinity | Any price rise reduces quantity demanded to zero |
Solution:
- Price increases, so the % change in price is greater than 0.
- Demand is constant, so the % change in quantity demanded = 0.
- PED = 0 ÷ (% change in price) = 0
A PED of 0 means demand is perfectly price inelastic. Its demand curve is a vertical straight line.
Checking the options:
- A. Perfectly price inelastic: PED = 0, which matches.
- B. Unit price elastic: PED = 1, which does not match.
- C. Price elastic: PED > 1, which does not match.
- D. Price inelastic: this means quantity does fall, only by a smaller proportion. Here it does not fall at all, so this is not the best answer.
Correct answer: A
Exam tip: Look for the key phrase. "Does not change at all" or "remains constant" means perfectly inelastic (vertical curve, PED = 0). "Changes by a smaller proportion" means inelastic. Examples of near-perfectly inelastic goods are life-saving drugs such as insulin for diabetics.
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- 45.
Warehousing is an economic activity that falls under
- A.secondary production
- B.primary production
- C.tertiary production
- D.intermediate production
Show answer
Answer: C. tertiary production
AI explanation
Step 1: Analyze the question The question asks which stage of production warehousing belongs to. So we need to recall the three levels of production.
Step 2: The concept
- Primary production: extracting or harvesting natural resources directly (farming, fishing, mining, forestry, crude oil drilling).
- Secondary production: turning raw materials into finished or semi-finished goods (manufacturing, construction, refining, processing cocoa into chocolate).
- Tertiary production: providing services that help move goods from producers to consumers (trade, transport, banking, insurance, advertising, warehousing, communication).
"Intermediate production" is not one of the standard stages of production. It refers to goods used up in producing other goods.
Step 3: Apply it Warehousing means storing goods until they are needed. It does not extract anything from nature (so not primary), and it does not change raw materials into new products (so not secondary). It is a service that supports the distribution of goods, which makes it a tertiary activity. Warehousing creates time utility, because goods are available when consumers need them.
Step 4: Answer Warehousing is a service that aids distribution, so it falls under tertiary production.
Tip: Remember the phrase "Pull it out, Shape it, Serve it", meaning Primary extracts, Secondary manufactures, and Tertiary provides services. Any activity that stores, moves, sells, insures, or finances goods is a tertiary activity (a service).
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- 46.
Taxes levied on goods and services by government are called
- A.indirect taxes
- B.direct taxes
- C.coporate taxes
- D.poll taxes
Show answer
Answer: A. indirect taxes
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- 47.
Money is able to function more as a medium of exchange when
- A.there is a fall in production
- B.more prople engage in subsistence production
- C.individuals and nations are self-sufficient
- D.there is specialization of labour
Show answer
Answer: D. there is specialization of labour
AI explanation
Step 1: Analyze the question The question asks about the condition under which money works better as a medium of exchange, meaning something people accept in payment for goods and services.
Step 2: Explain the concept Money became necessary because of the problems of barter, especially the need for a "double coincidence of wants." When people specialize in producing particular goods or services, they produce far more than they personally need. They must trade the surplus to get everything else they want. This trade needs a convenient, widely accepted medium, and that is money.
So the more people specialize (division of labour), the more exchange takes place, and the more important money becomes as a medium of exchange.
Step 3: Check each option
- A. A fall in production: Less output means fewer goods to trade, so there is less need for exchange. Wrong.
- B. More people engage in subsistence production: Subsistence producers consume what they produce and trade very little, so money is used less. Wrong.
- C. Individuals and nations are self-sufficient: Self-sufficiency removes the need for trade, so money is not needed for exchange. Wrong.
- D. There is specialization of labour: People depend on one another for goods and services, so exchange is widespread and money is used constantly. Correct.
Step 4: Answer
Tip: Link the keywords: specialization → surplus → exchange → money. If an option describes people being self-sufficient or producing only for themselves (subsistence), it works against the use of money, so you can eliminate it quickly.
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- 48.
Industries are sometimes located in areas which are not profitable so as to
- A.encourage rural-urban migration
- B.be able to even-out development
- C.bring about external economies of scale
- D.be able to reap internal economies of scale
Show answer
Answer: B. be able to even-out development
AI explanation
Step 1: Analyze the question The question asks why a firm or government would place an industry in an area that is not profitable. Normal profit-driven location decisions favor places with good infrastructure, markets, and raw materials. So choosing an unprofitable site must be for a non-commercial, usually government-driven, reason.
Step 2: Explain the concept This is the idea of industrial location and balanced regional development. Governments often site industries (such as a steel complex, a refinery, or an agro-processing plant) in less-developed areas even when profits are low. The goal is to:
- create jobs in that area,
- build infrastructure like roads, electricity, and water,
- reduce overcrowding in big cities,
- spread development evenly across regions.
Step 3: Evaluate the options
- A. Encourage rural-urban migration: Wrong. Placing industries in rural areas reduces migration to cities, not encourages it.
- B. Be able to even-out development: Correct. This is the main reason for locating industries in less-developed areas, so that all regions benefit.
- C. Bring about external economies of scale: Wrong. External economies come from industries clustering together in an already developed area, which is usually the profitable place.
- D. Reap internal economies of scale: Wrong. Internal economies depend on the firm's own size and output, not on where it is located.
Step 4: Answer
Tip: When a question says an industry is located in an unprofitable area, think of government policy: balanced regional development, job creation, and reducing rural-urban drift. Profit-driven reasons like economies of scale point to clustering in developed areas instead.
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- 49.
A monopolist may enjoy abnormal profit only if its
- A.marginal cost exceeds marginal revenue
- B.demand curve is perfectly elastic
- C.expenditure on advertisement increases
- D.price exceeds average total cost
Show answer
Answer: D. price exceeds average total cost
AI explanation
Step 1: Analyze the question The question asks about the condition under which a monopolist earns abnormal (supernormal) profit.
Step 2: Explain the concept Abnormal profit (also called supernormal or economic profit) is the profit earned above normal profit. It exists when:
- Total Revenue (TR) > Total Cost (TC)
- Dividing both sides by quantity gives: Average Revenue (AR = Price) > Average Total Cost (ATC)
A monopolist maximizes profit where MC = MR. At that output, it charges the price on the demand (AR) curve. If this price is higher than the ATC at that output, the firm earns abnormal profit.
Step 3: Check each option
- A. Marginal cost exceeds marginal revenue: Incorrect. If MC > MR, the firm is producing too much and profit is falling. Profit is maximized where MC = MR.
- B. Demand curve is perfectly elastic: Incorrect. A perfectly elastic demand curve is a feature of perfect competition, not monopoly. A monopolist faces a downward-sloping demand curve.
- C. Expenditure on advertisement increases: Incorrect. Higher advertising spending raises costs and does not by itself guarantee abnormal profit.
- D. Price exceeds average total cost: Correct. Profit per unit = Price − ATC. When this is positive, the monopolist earns abnormal profit.
Step 4: Answer The correct option is D. price exceeds average total cost.
Tip: Remember the rule "P > ATC = abnormal profit; P = ATC = normal profit; P < ATC = loss." This works for any market structure, so you can use it in many WASSCE, NECO and JAMB questions. Also, if you see "perfectly elastic demand," think perfect competition, not monopoly.
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- 50.
To overcome the problem of double counting under the expenditure approach,
- A.spending on intermediate goods and inputs are considered
- B.valued added method is used
- C.proper accounting standards must be used
- D.only spending on final goods are considered
Show answer
Answer: D. only spending on final goods are considered
AI explanation
Analyze the question
Double counting means counting the same output more than once when calculating national income. The question asks how to avoid it under the expenditure approach, which measures national income by adding up total spending on goods and services in the economy.
Explain the concept
Take a loaf of bread sold for ₦500:
- The farmer sells wheat to the miller for ₦100.
- The miller sells flour to the baker for ₦250.
- The baker sells bread to the consumer for ₦500.
If we add all the transactions (100 + 250 + 500 = ₦850), we count the wheat and flour twice, because their values are already included in the price of the bread. The real value of output is only ₦500.
Solution: checking each option
- A. Counting spending on intermediate goods is exactly what causes double counting, so this is wrong.
- B. The value-added method does avoid double counting, but it belongs to the output (production) approach, not the expenditure approach. So it doesn't fit the question.
- C. Accounting standards do not address the problem of double counting, so this is wrong.
- D. Counting only spending on final goods and services (C + I + G + (X − M)) leaves out intermediate goods, so each item is counted only once. This is correct.
Answer: Option D. Under the expenditure approach, only final goods and services are included in GDP, so double counting is avoided.
Exam tip: Remember the pairing:
- Expenditure approach → final goods only
- Output approach → value added
If the question names the method, match the fix to that method.
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