2024 WAEC (WASSCE) Economics Past Questions and Answers

Questions

1. 1.

   When total revenue increases as price falls, the coefficient of price elasticity of demand is

   1. A.greater than one.
   2. B.one
   3. C.less than one
   4. D.zero

   Show answer

   Answer: A. greater than one.

   AI explanation

   Analyze the question: It asks about the value of price elasticity of demand (PED) when a fall in price leads to a rise in total revenue.

   Concept: Total revenue (TR) = Price × Quantity. When price falls, two things happen:

   • Revenue per unit falls (a negative effect).
   • Quantity demanded rises (a positive effect).

   Which effect wins depends on elasticity:

   | PED (ignoring sign) | Price falls → TR | |---|---| | Greater than 1 (elastic) | TR increases | | Equal to 1 (unitary) | TR unchanged | | Less than 1 (inelastic) | TR decreases | | Zero (perfectly inelastic) | TR decreases |

   Worked example:

   • Price = ₦100, quantity = 50, so TR = ₦5,000.
   • Price falls to ₦80 and quantity rises to 70, so TR = ₦5,600. TR has increased.
   • % change in quantity = (20/50) × 100 = 40%
   • % change in price = (20/100) × 100 = 20%
   • PED = 40 / 20 = 2, which is greater than 1.

   So demand is elastic: the percentage rise in quantity demanded is larger than the percentage fall in price, which is why revenue rises.

   Answer: A. greater than one.

   Tip: Remember "Price and TR move in opposite directions when demand is elastic." If price falls and TR rises, the demand is elastic (PED > 1). If price and TR move in the same direction, demand is inelastic.

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2. 2.

   Capital market operators deal in the

   1. A.supply of and demand for short term loans only.
   2. B.supply of and demand for long term loans for investment.
   3. C.sales and purchases of treasury bills.
   4. D.sales and purchases of capital equipment.

   Show answer

   Answer: B. supply of and demand for long term loans for investment.

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3. 3.

   The law of demand will not hold when

   1. A.normal goods are involved.
   2. B.size of the population changes.
   3. C.rare commodities are involved.
   4. D.incomes of consumers increase.

   Show answer

   Answer: C. rare commodities are involved.

   AI explanation

   1. Analyze the question The law of demand says that, ceteris paribus (other things being equal), when the price of a good rises, the quantity demanded falls, and when the price falls, the quantity demanded rises. The question asks when this relationship breaks down. In other words, it asks for an exception to the law of demand.

   2. Explain the concept Common exceptions to the law of demand include:

   • Giffen goods: inferior staples where a price rise leads to more being bought.
   • Veblen (prestige) goods: goods bought for status, so a higher price makes them more desirable.
   • Rare commodities (antiques, art, rare gems): scarcity and exclusivity mean people want them more as the price rises.
   • Expectation of future price changes: speculative buying.

   3. Work through the options

   • A. Normal goods: These obey the law of demand. A price rise reduces quantity demanded. This is not an exception.
   • B. Size of population changes: This shifts the whole demand curve (a change in demand). It does not break the price-quantity relationship.
   • C. Rare commodities: These are an exception. Collectors treat a higher price as a sign of greater value or prestige, so demand may rise as price rises.
   • D. Incomes of consumers increase: This is a non-price determinant that shifts the demand curve. It is not an exception to the law.

   4. Answer The correct option is **C. rare commodities are involved.

   5. Exam tip Remember the exceptions with "G-V-R-E": Giffen goods, Veblen goods, Rare items, Expectations. Also, changes in income, population, or tastes shift the demand curve. Only a change in the good's own price moves along it. WASSCE often tests this difference.

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4. 4.

   Expansionary fiscal policy implies

   1. A.decreasing bank loans.
   2. B.raising tax rates.
   3. C.increasing the bank rate.
   4. D.decreasing tax rates.

   Show answer

   Answer: D. decreasing tax rates.

   AI explanation

   Step 1: Analyze the question The question asks what expansionary fiscal policy involves. The key term is fiscal policy, which concerns government spending and taxation, not the central bank's tools.

   Step 2: Explain the concept

   • Fiscal policy is the government's use of taxation and public spending to influence the economy.
   • Expansionary fiscal policy aims to boost economic activity, increase demand, and reduce unemployment. It does this by: • Reducing tax rates, so people and firms have more disposable income to spend and invest • Increasing government spending, for example on roads, schools and power projects
   • Contractionary fiscal policy does the opposite. It raises taxes or cuts spending to cool inflation.
   • Monetary policy is handled by the Central Bank of Nigeria (CBN). It uses tools such as the bank rate, the Monetary Policy Rate, bank loans and cash reserve ratios.

   Step 3: Evaluate each option

   • A. Decreasing bank loans: This is a monetary policy action, and it is contractionary because it reduces money in circulation. ✗
   • B. Raising tax rates: This is fiscal, but it is contractionary because it reduces spending power. ✗
   • C. Increasing the bank rate: This is monetary policy. Higher rates make borrowing costlier, so it is contractionary. ✗
   • D. Decreasing tax rates: This is fiscal and expansionary. People keep more income, so spending, investment and output rise. ✓

   Step 4: Answer The correct answer is D. decreasing tax rates.

   💡 Exam tip: First decide whether the question is about fiscal policy (government taxes and spending) or monetary policy (central bank, interest rates and money supply). Then ask whether the action puts more money into the economy (expansionary) or takes money out (contractionary). Remember: Expansionary = tax down, spending up.

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5. 5.

   If the coefficient of price elasticity of supply of a commodity is 0.8, then supply is

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

   Show answer

   Answer: B. fairly inelastic.

   AI explanation

   Analyze the question: We are given a coefficient of price elasticity of supply (PES) of 0.8 and must classify the supply.

   Concept: PES measures how responsive quantity supplied is to a change in price:

   PES = % change in quantity supplied ÷ % change in price

   The classification depends on the coefficient:

   • PES = 0 → perfectly inelastic supply
   • 0 < PES < 1 → inelastic (fairly inelastic) supply
   • PES = 1 → unitary elastic supply
   • 1 < PES < ∞ → elastic (fairly elastic) supply
   • PES = ∞ → perfectly elastic supply

   Solution:

   • The coefficient is 0.8.
   • It is greater than 0, so supply is not perfectly inelastic (this rules out C).
   • It is not infinite, so supply is not perfectly elastic (this rules out A).
   • It is less than 1, so supply is not elastic (this rules out D).
   • Since 0 < 0.8 < 1, quantity supplied changes by a smaller percentage than price. For example, a 10% rise in price leads to only an 8% rise in quantity supplied. This is fairly inelastic supply.

   **Answer: B. fairly inelastic.

   Tip: Remember the "1 rule." Below 1 means inelastic, above 1 means elastic, and exactly 1 means unitary. The extremes are 0 (perfectly inelastic) and infinity (perfectly elastic). Whenever you see a decimal like 0.8, it is inelastic.

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6. 6.

   A major feature of the socialist economic system is

   1. A.setting of production targets by public authorities.
   2. B.freedom of choice for consumers.
   3. C.determination of price by market forces.
   4. D.private ownership of productive inputs.

   Show answer

   Answer: A. setting of production targets by public authorities.

   AI explanation

   Step 1: Analyze the question The question asks for a major feature of a socialist economic system. This means we need to recall how socialism answers the basic economic questions: what to produce, how to produce, and for whom.

   Step 2: Explain the concept In a socialist economy:

   • The government or state owns the major means of production (land, factories, mines, etc.).
   • Central planning authorities decide what, how much, and for whom to produce.
   • Prices are mostly set or controlled by the state, not by the market.
   • The aim is to reduce inequality and distribute wealth more evenly.

   In contrast, a capitalist (free market) economy has private ownership, consumer sovereignty, and prices determined by demand and supply.

   Step 3: Evaluate each option

   • A. Setting of production targets by public authorities. This matches central planning, a core feature of socialism. ✔
   • B. Freedom of choice for consumers. This is a feature of capitalism, where consumers are sovereign. ✘
   • C. Determination of price by market forces. This is the price mechanism of a market economy. ✘
   • D. Private ownership of productive inputs. This is the opposite of socialism, which favors public or state ownership. ✘

   Step 4: Answer The correct option is A: setting of production targets by public authorities.

   Tip: Link socialism with words like "state," "government," "planning," and "targets." Link capitalism with "private," "market," "profit," and "consumer choice." If an option mentions government control, it is likely the socialist feature.

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7. 7.

   The fixed cost of producing 100 units of a good is $600. If the variable cost is$400. the average total cost of one unit of the good is

   1. A.$4
   2. B.$6
   3. C.$8
   4. D.$10

   Show answer

   Answer: D. $10

   AI explanation

   Analyze the question: We are given the fixed cost (FC), the variable cost (VC) and the number of units produced (Q). We need the average total cost (ATC) per unit.

   Concept:

   • Total Cost (TC) = Fixed Cost + Variable Cost
   • Average Total Cost (ATC) = TC ÷ Quantity

   Solution:

   1. Total cost: TC = FC + VC = 600 + 400 = $1,000
   2. Quantity produced: Q = 100 units
   3. Average total cost: ATC = 1,000 ÷ 100 = $10

   Check: ATC is also AFC + AVC.

   • AFC = 600 ÷ 100 = $6
   • AVC = 400 ÷ 100 = $4
   • ATC = 6 + 4 = $10 ✓

   Common traps: Options A ($4) and B ($6) are the average variable cost and average fixed cost. They are each only part of the answer, so don't stop halfway.

   Exam tip: When you see "average total cost," always add FC and VC first, then divide by output. Remember: ATC = AFC + AVC.

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8. 8.

   In the short-run, a firm can increase output by

   1. A.increasing the size of its machines.
   2. B.purchasing more equipment.
   3. C.changing its organizational structure.
   4. D.increasing the quantity of raw materials.

   Show answer

   Answer: D. increasing the quantity of raw materials.

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9. 9.

   The function of money that enables credit purchases of goods and services is

   1. A.unit of account.
   2. B.store of value
   3. C.standard for deferred payment.
   4. D.D. relative scarcity.

   Show answer

   Answer: C. standard for deferred payment.

   AI explanation

   Analyze the question: It asks which function of money makes it possible to buy goods and services on credit, meaning you receive the item now and pay later.

   Explain the concept: Money has four main functions:

   1. Medium of exchange: accepted in payment for goods and services.
   2. Unit of account (measure of value): lets us express the prices and values of goods in common terms, such as ₦500 for a loaf of bread.
   3. Store of value: lets purchasing power be saved and used later.
   4. Standard for deferred payment: lets debts be settled in the future. Because money is a stable and accepted unit, it can be used to state the amount owed on credit, loans, and installment purchases.

   Solution:

   • A. Unit of account: this is about measuring and comparing values, not about delaying payment.
   • B. Store of value: this is about keeping wealth over time. It is related, but it does not describe buying now and paying later.
   • C. Standard for deferred payment: this fits exactly. When you buy on credit, you agree to pay a specified sum of money later, so money acts as the standard for that deferred payment.
   • D. Relative scarcity: this is not a function of money. It is an economic concept about limited resources.

   Answer: The correct option is **C. standard for deferred payment.

   Tip: Link the keyword "credit" or "later" with deferred payment. "Deferred" means delayed. If the question mentions saving or keeping wealth, think store of value. If it mentions pricing or measuring, think unit of account.

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10. 10.

    Devaluation of currency will help to correct balance of payments deficit if a country's

    1. A.exports have perfectly inelastic demand.
    2. B.imports have inelastic demand.
    3. C.exports have elastic demand.
    4. D.productivity is low.

    Show answer

    Answer: C. exports have elastic demand.

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11. 11.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.

12. 12.

    Exploitation of solid minerals in developing countries can stabilize their revenue base mainly because it helps in

    1. A.promoting a mono-economy.
    2. B.the transfer of technology.
    3. C.the diversification of the economy.
    4. D.the provision of energy.

    Show answer

    Answer: C. the diversification of the economy.

    AI explanation

    Step 1: Analyze the question The question asks why exploiting solid minerals (e.g., limestone, iron ore, tin, columbite, coal, gold) can stabilize the revenue base of developing countries. The key phrase is "stabilize their revenue base."

    Step 2: Explain the concept Many developing countries, Nigeria included, depend heavily on one or two sources of income. Nigeria depends on crude oil, for example. This is a mono-economy. When the price of that product falls, government revenue crashes. This makes revenue unstable.

    Stability comes from diversification, which means spreading income across many sectors. Developing solid minerals adds new sources of export earnings, taxes, royalties, and jobs, so a fall in one sector does not wreck the whole economy.

    Step 3: Evaluate the options

    • A. Promoting a mono-economy: Wrong. A mono-economy relies on a single product and makes revenue less stable, which is the opposite of the question.
    • B. Transfer of technology: This can be a benefit of mining investment, but it is not the main reason for revenue stability.
    • C. Diversification of the economy: Correct. It directly links to a stable and broader revenue base.
    • D. Provision of energy: Only some minerals (like coal) give energy, so this is too narrow and does not address revenue stability.

    Step 4: Answer The correct answer is **C. the diversification of the economy.

    Tip: In Economics, whenever you see "stabilize revenue" or "reduce over-dependence on oil/one product," think diversification. And remember that "mono-economy" is usually the problem, not the solution.

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13. 13.

    Separation of ownership from control is more pronounced in a

    1. A.partnership
    2. B.joint-stock company
    3. C.sole proprietorship
    4. D.constimer co- operative society

    Show answer

    Answer: B. joint-stock company

    AI explanation

    Step 1: Analyze the question The question asks which type of business organization has the clearest split between the people who own the business and the people who run it.

    Step 2: Explain the concept

    • Ownership belongs to those who put in the capital (shareholders, partners, members).
    • Control (management) is the day-to-day running of the business and decision-making.

    In a small business, the owner often manages the business personally. In a large business with many owners, it becomes impractical for everyone to manage, so professional managers are hired.

    Step 3: Examine each option

    • A. Partnership: Partners usually both own and manage the business. Ownership and control are mostly combined.
    • B. Joint-stock company: Thousands of shareholders may own the company, but they elect a Board of Directors, who appoint managers to run it. Shareholders rarely take part in daily management, so ownership is clearly separated from control.
    • C. Sole proprietorship: One person owns, manages, and controls everything. There is no separation at all.
    • D. Consumer co-operative society: Members own the society, and they elect a management committee from among themselves. Members still participate democratically (one member, one vote), so the separation is less pronounced than in a joint-stock company.

    Step 4: Answer The separation of ownership from control is most pronounced in a joint-stock company, which is option B.

    Step 5: Exam tip Remember: "Shareholders own, directors control." Whenever you see "separation of ownership from control" in Economics or Commerce, think of limited liability companies (public or private joint-stock companies). The opposite, where owner and manager are the same person, is the sole proprietorship.

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14. 14.

    One effect of inflation is that

    1. A.money's purchasing power will increase.
    2. B.the real incomes of workers will rise.
    3. C.both borrowers and lenders benefit from it.
    4. D.money's purchasing power will fall.

    Show answer

    Answer: D. money's purchasing power will fall.

    AI explanation

    Step 1: Analyze the question The question asks for one effect of inflation. Inflation is a sustained rise in the general price level of goods and services over time.

    Step 2: Explain the concept When prices rise, each naira buys fewer goods and services than before. So inflation reduces the purchasing power (value) of money. Example: if a bag of rice rises from ₦50,000 to ₦80,000, the same ₦50,000 can no longer buy a bag.

    Step 3: Evaluate each option

    • A. Money's purchasing power will increase. Wrong. This is the effect of deflation (falling prices), not inflation.
    • B. The real incomes of workers will rise. Wrong. Real income is money income adjusted for price changes. If prices rise faster than wages, real income falls, especially for fixed-income earners such as pensioners and salary earners.
    • C. Both borrowers and lenders benefit from it. Wrong. Inflation favours borrowers, because they repay with money that is worth less. It hurts lenders, because the money they get back buys less than what they lent. So both cannot benefit.
    • D. Money's purchasing power will fall. Correct. This is the direct and defining effect of inflation.

    Step 4: Answer The correct option is D.

    Exam tip: Remember the pair: Inflation → prices up → value of money down. Deflation is the opposite. For options on "who gains and who loses," remember that inflation helps debtors/borrowers and hurts creditors/lenders and fixed-income earners. Avoid options that say "both" benefit, as they are usually traps.

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15. 15.

    What will be the likely effect if agriculture is fully mechanized in West Africa?

    1. A.More jobs will be available for farm labourers
    2. B.Labour intensive method of farming will still be dominant
    3. C.Less labour will be required on the farm
    4. D.Governments will no longer be involved in agriculture

    Show answer

    Answer: C. Less labour will be required on the farm

    AI explanation

    Step 1: Analyze the question The question asks about the likely effect of full mechanization of agriculture. Mechanization means replacing human and animal labour with machines such as tractors, harvesters, planters and sprayers.

    Step 2: Explain the concept Mechanization makes farming capital-intensive instead of labour-intensive. Machines do the work of many people, so:

    • Output per worker rises (higher productivity)
    • Fewer workers are needed for the same or larger area of land
    • Some farm labourers may become unemployed or move to other sectors, such as industry and services

    Step 3: Evaluate each option

    • A. More jobs will be available for farm labourers. Incorrect. Machines replace labourers, so farm jobs for manual workers generally fall. Some new jobs appear (machine operators, mechanics), but not more jobs for farm labourers.
    • B. Labour intensive method of farming will still be dominant. Incorrect. This contradicts "fully mechanized." A fully mechanized system is capital-intensive.
    • C. Less labour will be required on the farm. Correct. This is the direct and most likely effect of replacing manual work with machines.
    • D. Governments will no longer be involved in agriculture. Incorrect. Governments still provide subsidies, research, infrastructure, extension services and regulation, whatever the farming method.

    Step 4: Answer The correct option is C. Less labour will be required on the farm.

    Exam tip: Whenever you see "mechanization" or "automation" in Economics, think more capital, less labour. Also watch for words like "fully," which rule out options that say the old method will "still be dominant."

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16. 16.

    A commodity with perfectly inelastic demand has the burden of tax borne by

    1. A.both the sellers and the buyers.
    2. B.the buyers alone.
    3. C.the government alone.
    4. D.both the buyers and the government.

    Show answer

    Answer: B. the buyers alone.

    AI explanation

    Step 1: Analyze the question We need to find who bears the tax burden when demand for a good is perfectly inelastic (price elasticity of demand = 0).

    Step 2: The concept Tax incidence depends on the relative elasticities of demand and supply:

    • The more inelastic side of the market bears more of the tax burden.
    • The more elastic side can more easily move away from the product, so it escapes more of the tax.

    With perfectly inelastic demand, the quantity demanded does not change at all when the price rises. The demand curve is a vertical line.

    Step 3: Solution

    1. The government imposes a tax, which shifts the supply curve upward by the amount of the tax.
    2. Because demand is vertical, buyers keep buying the same quantity, whatever the price.
    3. Sellers therefore raise the price by the full amount of the tax.
    4. The buyers pay the entire tax through the higher price, while sellers receive the same net price as before.

    So the entire burden falls on the buyers (consumers).

    Step 4: Check the other options

    • A: Both sellers and buyers share the burden only when demand is neither perfectly inelastic nor perfectly elastic.
    • C: The government collects the tax. It does not bear the burden.
    • D: The government does not bear the burden, so this is wrong.

    Correct answer: B. The buyers alone.

    Exam tip: Remember "the inelastic side pays." If demand is inelastic, buyers pay the tax. If supply is inelastic, sellers pay it. Perfectly inelastic demand means buyers pay 100%.

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17. 17.

    Locating firms in urban areas

    1. A.reduce rural-urban migration.
    2. B.ensure balanced development of rural areas.
    3. C.make a firm enjoy the bene- fits of the existence of other firms.
    4. D.increase urban-rural migration.

    Show answer

    Answer: C. make a firm enjoy the bene- fits of the existence of other firms.

    AI explanation

    Analyze the question: It asks about the effect of locating firms (businesses) in urban areas. This relates to the location of industry in Economics, especially the idea of external economies of scale and agglomeration.

    Explain the concept: When firms cluster in towns and cities, they enjoy advantages such as:

    • Ready availability of skilled labour
    • Good infrastructure (roads, electricity, water, banking, telecommunications)
    • Large market of consumers nearby
    • Supporting and complementary firms (suppliers, transporters, insurers, repair services)

    These shared advantages are called external economies of scale, or the benefits of industrial concentration/localization.

    Evaluate each option:

    • A. Reduce rural-urban migration: Wrong. Firms in cities create jobs there, which attracts more people from villages. Migration increases.
    • B. Ensure balanced development of rural areas: Wrong. Concentrating firms in cities leads to uneven development, since rural areas are neglected. Balanced development would need firms located in rural areas.
    • C. Make a firm enjoy the benefits of the existence of other firms: Correct. This is the agglomeration or external economies benefit. Firms share infrastructure, labour pool, and linkages with other firms.
    • D. Increase urban-rural migration: Wrong. The movement would be rural to urban, not the reverse.

    Exam tip: When you see "locating firms in urban areas," think of "clustering = external economies." When you see "locating firms in rural areas," think of "balanced development, reduced rural-urban drift." Linking location to its likely effect helps you eliminate wrong options fast.

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18. 18.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.

19. 19.

    If the budget on education is $50 m out of an annual national budget of$300 m. The sector of a pie chart representing education is

    1. A.16.6°
    2. B.60°
    3. C.150°
    4. D.300°

    Show answer

    Answer: B. 60°

    AI explanation

    Analyze the question: We need the angle of the pie chart sector for education, given that education gets $50m out of a total of$300m.

    Concept: A pie chart is a circle, which has 360°. Each sector's angle is its share of the total multiplied by 360°.

    Angle = (Part ÷ Total) × 360°

    Solution:

    Angle = (50 ÷ 300) × 360°

    = (1/6) × 360°

    = 60°

    Check: The education share is 1/6 of the budget, and 1/6 of a full circle is 60°.

    Why the other options are wrong:

    • A (16.6°) comes from 50/300 written as about 16.6%. That is a percentage, not an angle.
    • C (150°) and D (300°) do not match the 1/6 fraction.

    Answer: B (60°)

    Tip: For pie chart questions, always simplify the fraction first (50/300 = 1/6), then take that fraction of 360°. Watch out for the trap in option A, where the percentage (16.6%) is offered as if it were the angle.

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20. 20.

    Balance of payments is defined as the

    1. A.difference between the values of visible imports and visible exports.
    2. B.record of financial transactions between a country and the rest of the world.
    3. C.relationship between prices of exports and prices of imports.
    4. D.difference between a country's expected revenue and proposed expenditure

    Show answer

    Answer: B. record of financial transactions between a country and the rest of the world.

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21. 21.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.

22. 22.

    Malthus predictions did not come to pass mainly because

    1. A.food supply and population grew at the same rate.
    2. B.the use of machines in agriculture was discouraged.
    3. C.a lot of people died during epidenties.
    4. D.many people emigrated to the new lands.

    Show answer

    Answer: D. many people emigrated to the new lands.

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23. 23.

    An increase in a country's production capacity usually leads to economic

    1. A.development.
    2. B.stability.
    3. C.growth
    4. D.efficiency.

    Show answer

    Answer: C. growth

    AI explanation

    1. Analyze the question The question asks what an increase in a country's production capacity (its ability to produce goods and services) usually leads to.

    2. Explain the concept

    • Economic growth is a sustained increase in a country's output of goods and services (real GDP). It is usually caused by an increase in productive capacity, which comes from more resources, better technology, more capital, or a larger labour force. On a PPF (Production Possibilities Frontier), it is shown by the curve shifting outward.
    • Economic development is broader. It covers growth plus improvements in living standards, such as health, education, income distribution, and reduced poverty.
    • Economic stability means steady prices, low inflation, and steady employment, with no wild fluctuations.
    • Economic efficiency means using resources in the best way, with minimal waste.

    3. Solution

    • An increase in production capacity means the economy can produce more output, which is the definition of economic growth.
    • Development (A) needs more than increased output, because quality-of-life indicators must also improve.
    • Stability (B) concerns price and income fluctuations, not capacity.
    • Efficiency (D) concerns how well resources are used, not how much can be produced.

    4. Answer The correct option is C. growth.

    5. Exam tip Remember: Growth = more output (quantity), Development = better living standards (quality). If a question mentions "production capacity," "output," "GDP," or "outward shift of the PPF," think growth.

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24. 24.

    Other things being equal, an increase in the demand for land in the short-run will cause an increase in the

    1. A.price only.
    2. B.price and supply.
    3. C.quantity supplied only.
    4. D.supply only.

    Show answer

    Answer: A. price only.

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25. 25.

    National income estimates will be understated as a result of the activities of

    1. A.subsistence farmers.
    2. B.musicians.
    3. C.laundry women.
    4. D.housekeepers.

    Show answer

    Answer: A. subsistence farmers.

    AI explanation

    Step 1: Analyze the question The question asks which activity causes national income estimates to be understated, meaning the recorded figure is lower than the true value of output.

    Step 2: Explain the concept National income is calculated by adding up the value of goods and services produced and recorded in the market. Some activities are left out or poorly captured, and these cause understatement. Common examples are:

    • Subsistence farming, where output is consumed at home and not sold, so it is not recorded.
    • Unpaid housework done by family members.
    • Black-market and informal activities that are not reported.
    • Barter trade.

    Step 3: Evaluate each option

    • A. Subsistence farmers: They produce mainly for their own consumption, so most of their output never passes through the market and is not recorded. This understates national income. ✔
    • B. Musicians: Their services are paid for, recorded, and often taxed, so they are included.
    • C. Laundry women: These are paid services. They may be informal in some cases, but the textbook answer is not this option.
    • D. Housekeepers: Paid housekeepers earn wages, so their services are counted. It is unpaid housework by family members that is excluded, and the option does not say that.

    Step 4: Answer The correct option is **A.

    Tip: Remember the phrase "not sold, not counted". If output is consumed by the producer and never enters the market (subsistence farming, unpaid housework), it is usually left out of national income, which causes understatement.

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26. 26.

    Terms of trade is favourable when the

    1. A.value of visible imports is greater than that of visible exports.
    2. B.price on imports is greater than that of exports
    3. C.payments on imports is greater than receipts from exports.
    4. D.price of exports is rising faster than that of imports.

    Show answer

    Answer: D. price of exports is rising faster than that of imports.

    AI explanation

    Step 1: Analyze the question The question asks when the terms of trade are favourable. This is about the relationship between the prices a country receives for its exports and the prices it pays for its imports.

    Step 2: Explain the concept The terms of trade measure the rate at which a country's exports exchange for its imports:

    Terms of Trade = (Index of export prices ÷ Index of import prices) × 100

    • If the ratio rises above 100 (or increases over time), the terms of trade are favourable. Each unit of exports can buy more imports.
    • If the ratio falls, the terms of trade are unfavourable. The country must export more to buy the same amount of imports.

    Step 3: Evaluate each option

    • A. Value of visible imports greater than visible exports: This describes an unfavourable balance of trade (a trade deficit). It is not about the terms of trade.
    • B. Price of imports greater than that of exports: This means import prices are high relative to export prices, so the terms of trade are unfavourable.
    • C. Payments on imports greater than receipts from exports: This describes a deficit in the balance of payments, not the terms of trade.
    • D. Price of exports rising faster than that of imports: The export price index is rising relative to the import price index, so the ratio increases. This is favourable.

    Step 4: Answer The correct option is D.

    Tip: Don't confuse these two ideas:

    • Terms of trade is about prices (export prices vs import prices).
    • Balance of trade/payments is about values or money flows (receipts vs payments).

    If a question mentions prices of exports rising relative to imports, think "favourable terms of trade."

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27. 27.

    Short-term deficits in the current account of the balance of payments can be financed by balancing with the

    1. A.invisible account.
    2. B.capital account.
    3. C.visible account.
    4. D.national income account.

    Show answer

    Answer: B. capital account.

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28. 28.

    Price elasticity of demand is the responsiveness of quantity demanded to a change in

    1. A.demand for the product.
    2. B.price of another product.
    3. C.income of the buyer.
    4. D.price of the product.

    Show answer

    Answer: D. price of the product.

    AI explanation

    Step 1: Analyze the question The question asks what a change in which variable causes quantity demanded to respond, when we talk about price elasticity of demand.

    Step 2: Explain the concept Elasticity measures responsiveness. The first word tells you which variable is changing:

    • Price elasticity of demand: the change in the product's own price.
    • Cross elasticity of demand: the change in the price of another product.
    • Income elasticity of demand: the change in the buyer's income.

    Formula:

    PED = (% change in quantity demanded) ÷ (% change in price of the product)

    Step 3: Check each option

    • A. Demand for the product: Wrong. A change in demand is a shift of the whole curve, not the cause measured by PED.
    • B. Price of another product: This is cross elasticity of demand.
    • C. Income of the buyer: This is income elasticity of demand.
    • D. Price of the product: Correct. PED measures how much quantity demanded changes when the product's own price changes.

    Step 4: Answer The correct option is **D. price of the product.

    Tip: Look at the first word of the term. "Price elasticity" means the product's own price, "cross" means another product's price, and "income" means the buyer's income. In every case, the thing measured is the response of quantity demanded.

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29. 29.

    One indicator of the low level of cap ital formation in developing countries is

    1. A.low per capita income.
    2. B.high rate of investment.
    3. C.low importation of consumer goods.
    4. D.high rate of household savings

    Show answer

    Answer: A. low per capita income.

    AI explanation

    Step 1: Analyze the question The question asks for an indicator (a sign) that capital formation is low in developing countries.

    Step 2: Explain the concept Capital formation is the process of increasing a country's stock of capital goods (machinery, factories, roads, equipment). It depends on savings and investment. The chain works like this:

    • Low income leads to low savings.
    • Low savings lead to low investment.
    • Low investment leads to low capital formation.
    • Low capital formation leads to low productivity and output, which keeps income low.

    This is the "vicious circle of poverty" often discussed in WASSCE Economics.

    Step 3: Evaluate each option

    • A. Low per capita income. This is a sign of low output and low productivity, which result from a small capital stock. It is the standard indicator of low capital formation in developing countries. ✔
    • B. High rate of investment. This would mean high capital formation, the opposite of what the question asks. ✘
    • C. Low importation of consumer goods. This has no direct link to capital formation. Developing countries often import many consumer goods. ✘
    • D. High rate of household savings. High savings would support capital formation, so it cannot be a sign of low capital formation. ✘

    Step 4: Answer The correct option is A. low per capita income.

    Tip: When a question asks for an indicator of underdevelopment, look for the negative signs: low income, low savings, low investment, low productivity. Eliminate any option that describes "high" investment or savings, since those are signs of progress.

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30. 30.

    The low productivity per worker in agriculture experienced in West African countries is due to

    1. A.laziness on the part of farmers.
    2. B.the use of simple traditional implements.
    3. C.the presence of many extension workers.
    4. D.the law of increasing returns to scale.

    Show answer

    Answer: B. the use of simple traditional implements.

    AI explanation

    Step 1: Analyze the question The question asks why output per worker (productivity) in agriculture is low in West African countries. Productivity depends mainly on the tools, technology, skills, and capital available to workers.

    Step 2: Explain the concept Labour productivity = Total output ÷ Number of workers. It rises when workers use modern technology (tractors, improved seeds, fertilizers, irrigation). It stays low when production relies on simple tools such as the hoe and cutlass, which limit how much land one farmer can cultivate.

    Step 3: Evaluate each option

    • A. Laziness on the part of farmers: This is a stereotype, not an economic explanation. Many farmers work very long hours. The problem is the lack of capital and technology, not a lack of effort. Wrong.
    • B. The use of simple traditional implements: Hoes, cutlasses, and manual methods limit the area one person can farm and the output they can produce. This is a well-known cause of low productivity in West African agriculture. Correct.
    • C. The presence of many extension workers: Extension workers teach farmers better methods, so they would raise productivity, not lower it. Wrong.
    • D. The law of increasing returns to scale: Increasing returns means output rises more than proportionately as inputs increase, which would improve productivity. Wrong.

    Step 4: Answer

    Exam tip: In Economics questions about low productivity in developing countries, look for answers about capital, technology, and skills, such as simple tools, poor storage, or lack of credit. Be wary of options that blame people's character, like "laziness". WASSCE rarely rewards those.

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31. 31.

    Harmonised monetary and fiscal policies is a feature of

    1. A.a free trade area.
    2. B.an economic union.
    3. C.a customs union.
    4. D.a common market.

    Show answer

    Answer: B. an economic union.

    AI explanation

    Step 1: Analyze the question The question asks which stage of regional economic integration involves harmonised (coordinated) monetary and fiscal policies.

    Step 2: The concept – stages of economic integration From the loosest to the deepest form:

    1. Free Trade Area: Members remove tariffs and trade barriers among themselves, but each keeps its own tariffs against non-members (e.g. AfCFTA).
    2. Customs Union: A free trade area plus a common external tariff against non-members.
    3. Common Market: A customs union plus free movement of factors of production (labour and capital) among members (e.g. ECOWAS aims at this).
    4. Economic Union: A common market plus harmonised monetary and fiscal policies, such as a common currency, a central bank, and coordinated taxation and government spending (e.g. the European Union, and the WAEMU/UEMOA with the CFA franc).
    5. Political Union (the final stage): Full integration under a single government.

    Step 3: Match the feature to the stage

    • Free trade area: only removal of trade barriers, so it does not fit.
    • Customs union: common external tariff, so it does not fit.
    • Common market: free movement of labour and capital, so it does not fit.
    • Economic union: harmonisation of monetary and fiscal policies, so it fits.

    Step 4: Answer The correct option is B. an economic union.

    Tip: Remember the ladder "F-C-C-E-P": Free trade area → Customs union → Common market → Economic union → Political union. Each step adds one feature:

    • tariffs removed
    • common external tariff
    • free factor movement
    • common policies (monetary and fiscal)
    • one government

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32. 32.

    An advantage a small firm has over a large firm is that the former can better

    1. A.enjoy financial economics of scale
    2. B.satisfy individual tastes.
    3. C.enjoy internal economics of scale.
    4. D.attract huge discounts on inputs.

    Show answer

    Answer: B. satisfy individual tastes.

    AI explanation

    Step 1: Analyze the question The question asks for an advantage a small firm has over a large firm. Options A, C and D all describe benefits that come with size, so they favor large firms.

    Step 2: Explain the concept Small firms (like a local tailor, a neighborhood barber, or a small bakery) have these strengths:

    • Personal contact with customers
    • Flexibility and quick decisions
    • Ability to offer customized goods and services
    • Easy management and close supervision

    Large firms benefit from economies of scale, which are cost savings that come from producing on a large scale:

    • Financial economies: big firms can borrow more easily and at lower interest rates.
    • Internal economies: savings within the firm, such as specialization, bulk buying, and the use of machinery.
    • Bulk-purchase discounts: big firms buy inputs in huge quantities and get price reductions.

    Step 3: Evaluate each option

    • A. Financial economies of scale: Large firms enjoy these because banks trust them more. This is not a small-firm advantage.
    • B. Satisfy individual tastes: Small firms produce in small quantities and can tailor products to each customer, such as custom-sewn clothes. This is a small-firm advantage.
    • C. Internal economies of scale: These come with large-scale production, so they favor large firms.
    • D. Huge discounts on inputs: These come from bulk purchases, so they favor large firms.

    Step 4: Answer

    Tip: In "small firm vs. large firm" questions, think of small firms as personal, flexible, and customized. If an option mentions "economies of scale," "bulk discounts," or "easy credit," it is almost always a large-firm advantage.

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33. 33.

    In determining the growth of a country's population, infant mortality is a component of

    1. A.immigration rate.
    2. B.fertility rate.
    3. C.net migration.
    4. D.death rate.

    Show answer

    Answer: D. death rate.

    AI explanation

    Step 1: Analyze the question The question asks which component of population growth includes infant mortality. Infant mortality means the death of babies under one year old.

    Step 2: Explain the concept Population growth depends on three things:

    • Births (fertility or birth rate): adds to the population.
    • Deaths (mortality or death rate): reduces the population.
    • Migration (immigration minus emigration, which is net migration): adds to or reduces the population.

    Natural increase = Birth rate − Death rate.

    Step 3: Work through the options

    • A. Immigration rate: This is people moving into a country. Infant deaths have nothing to do with it.
    • B. Fertility rate: This is the number of births per woman. It measures births, not deaths.
    • C. Net migration: This is immigrants minus emigrants. It is not related to deaths.
    • D. Death rate: This is the number of deaths per 1,000 people. Infant mortality (the deaths of children under one year) is part of the total deaths in a population, so it is a component of the death rate.

    Step 4: Answer

    Tip: When you see "mortality," think "death." Whenever you see mortality, whether infant, child, or maternal, it falls under the death rate. Fertility is linked to births, and migration is linked to movement.

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34. 34.

    Supply of money is best defined as the

    1. A.money in circulation plus bank deposits.
    2. B.money given out as loans to members of the public.
    3. C.amount of currency printed annually by the government.
    4. D.amount of money spent on consumer goods

    Show answer

    Answer: A. money in circulation plus bank deposits.

    AI explanation

    Step 1: Analyze the question The question asks for the best definition of the supply of money in an economy.

    Step 2: Explain the concept Money supply is the total stock of money available in an economy at a particular time. It includes:

    • Currency in circulation (notes and coins held by the public), and
    • Bank deposits (demand/current account deposits, and in broader measures, savings and time deposits).

    In economics, this is commonly measured as M1 (narrow money) and M2 (broad money), which add deposits to currency in circulation.

    Step 3: Evaluate each option

    • A. Money in circulation plus bank deposits. This matches the standard definition of the total stock of money in the economy.
    • B. Money given out as loans. This is only bank credit, which is one way money is created, not the whole money supply.
    • C. Currency printed annually by the government. This is only a flow of new notes. It ignores existing money and bank deposits. In Nigeria, the Central Bank of Nigeria (CBN) issues currency, not "the government" directly.
    • D. Money spent on consumer goods. This is consumption expenditure, not money supply.

    Step 4: Answer

    Step 5: Exam tip Remember: Money supply = Currency in circulation + Bank deposits. When you see "supply of money," think of a stock of money available, not just loans, printing, or spending.

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35. 35.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.

36. 36.

    Minimum price legislation is used to protect the interests of

    1. A.Small scale producers.
    2. B.foreign companies.
    3. C.government.
    4. D.consumers.

    Show answer

    Answer: A. Small scale producers.

    AI explanation

    Step 1: Analyze the question The question asks who benefits from minimum price legislation. This is a form of price control, where the government sets a price floor, meaning a price below which goods cannot legally be sold.

    Step 2: Explain the concept

    • Maximum price (price ceiling): set below the equilibrium price to protect consumers, for example price control on essential goods.
    • Minimum price (price floor): set above the equilibrium price to protect producers, especially those whose incomes could fall when market prices drop. This is common for agricultural products such as cocoa, groundnut, and grains, and for minimum wage laws, which set a minimum price for labour.

    Step 3: Work through the options

    • A. Small scale producers: A guaranteed minimum price ensures that farmers and small producers get a reasonable income even when supply is high and market prices fall. ✔
    • B. Foreign companies: Not the target group of this policy.
    • C. Government: The government enforces the policy, but it is not the one being protected. It often has to buy surplus produce, which is a cost to it.
    • D. Consumers: Consumers are protected by maximum price legislation. A minimum price raises what they pay.

    Step 4: Answer Minimum price legislation protects the interests of small scale producers, so the correct option is A.

    Tip: Remember it like this: Floor = Farmers/producers, Ceiling = Consumers. A minimum price is a floor that stops producers' prices from falling too low, while a maximum price is a ceiling that stops consumers from being overcharged.

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37. 37.

    The pursuit of private profits is a feature of

    1. A.command economies.
    2. B.Socialist economies.
    3. C.capitalist economies.
    4. D.statutory corporations.

    Show answer

    Answer: C. capitalist economies.

    AI explanation

    Step 1: Analyze the question The question asks which economic system or institution has the pursuit of private profit as a defining feature.

    Step 2: Explain the concept Economic systems differ in who owns resources and who decides what to produce:

    • Command (planned) economy: The government owns the main resources and makes the production decisions. The goal is to meet state targets, not private profit.
    • Socialist economy: Resources are collectively or state owned, and the aim is equitable distribution and social welfare, not individual profit.
    • Capitalist (free enterprise/market) economy: Individuals and private firms own resources and production. The profit motive is the main driving force, and private property, competition and consumer sovereignty support it.
    • Statutory corporations: These are public enterprises set up by an Act of Parliament, such as NNPC or the Nigerian Ports Authority. They exist mainly to provide public services, not to maximize private profit.

    Step 3: Solution

    • A is wrong because command economies are state-controlled and not profit-driven.
    • B is wrong because socialism emphasizes collective ownership and welfare.
    • C is correct because capitalism rests on private ownership and the pursuit of private profit.
    • D is wrong because statutory corporations are publicly owned and service-oriented.

    Step 4: Answer The pursuit of private profit is a feature of capitalist economies, which is option C.

    Tip: Link the key words to the system: "Private profit" = Capitalism, "State control" = Command/Socialism, and "Public service" = Statutory corporations. If you see "profit motive," "private ownership" or "price mechanism," think capitalism.

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38. 38.

    Money supply will increase when the Central Bank

    1. A.buys securities from the public.
    2. B.increases the reserve requirements.
    3. C.increases the bank rate.
    4. D.sells securities to the public.

    Show answer

    Answer: A. buys securities from the public.

    AI explanation

    Step 1: Analyze the question We are asked which action by the Central Bank leads to an increase in money supply. This is about monetary policy tools.

    Step 2: The concept The Central Bank controls money supply through three main tools:

    • Open market operations (OMO): buying or selling securities (such as treasury bills and government bonds).
    • Reserve requirements: the percentage of deposits banks must keep with the Central Bank.
    • Bank rate (Monetary Policy Rate in Nigeria): the rate at which the Central Bank lends to commercial banks.

    Expansionary (money-increasing) policy: buy securities, lower reserve requirements, lower the bank rate. Contractionary (money-reducing) policy: sell securities, raise reserve requirements, raise the bank rate.

    Step 3: Check each option

    • A. Buys securities from the public. The Central Bank pays the public (and banks) with money. Cash flows into the economy and bank deposits rise, so banks can lend more. Money supply increases. ✔
    • B. Increases reserve requirements. Banks must keep more with the Central Bank, so they have less to lend. Money supply falls. ✘
    • C. Increases the bank rate. Borrowing becomes costlier, so loans fall. Money supply falls. ✘
    • D. Sells securities to the public. The public pays the Central Bank, so money is withdrawn from circulation. Money supply falls. ✘

    Step 4: Answer The correct option is A.

    Tip: Remember "Buy = Boost, Sell = Shrink." When the Central Bank buys securities, it puts money into the economy. When it sells, it takes money out. For reserve requirements and the bank rate, higher means tighter (less money), and lower means looser (more money).

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39. 39.

    Firms in perfect competition break even in the long-run because

    1. A.new firms can not enter the market due to copyright laws.
    2. B.more firms can enter the industry due to attractive prof its.
    3. C.marginal revenue is greater than marginal cost at all levels.
    4. D.profits are not enough to repay traders' loans.

    Show answer

    Answer: B. more firms can enter the industry due to attractive prof its.

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40. 40.

    There is scarcity when

    1. A.the means exceed society's wants.
    2. B.demand for resources is greater than its supply.
    3. C.productive resources are in excess.
    4. D.supply of resources is greater than its demand.

    Show answer

    Answer: B. demand for resources is greater than its supply.

    AI explanation

    Analyze the question: The question asks for the condition under which scarcity exists, which is a basic concept in Economics.

    Explain the concept: Scarcity is the central problem of economics. It means resources (land, labour, capital, entrepreneurship) are limited, while human wants are unlimited. Because of this, society cannot satisfy every want and must make choices, which leads to opportunity cost.

    In simple terms, scarcity exists when the demand for resources is greater than the supply of them, so there is not enough to go around.

    Solution, option by option:

    • A. The means exceed society's wants. Wrong. If means were more than wants, there would be abundance, not scarcity.
    • B. Demand for resources is greater than its supply. Correct. Wants and the demand for resources outstrip the available supply, which is the definition of scarcity.
    • C. Productive resources are in excess. Wrong. Excess resources mean surplus, the opposite of scarcity.
    • D. Supply of resources is greater than its demand. Wrong. This describes a surplus, not a shortage.

    Answer: B

    Exam tip: Remember that scarcity = limited resources versus unlimited wants. If an option says resources are in excess or supply exceeds demand, it describes a surplus, so eliminate it. Scarcity always points to a shortage: wants or demand are greater than supply.

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41. 41.

    The government policy that encourages public corporations to operate profitably is

    1. A.liberalization
    2. B.nationalization
    3. C.commercialization
    4. D.indigenization

    Show answer

    Answer: C. commercialization

    AI explanation

    Step 1: Analyze the question The question asks which government policy pushes public corporations (state-owned enterprises) to run profitably, like private businesses.

    Step 2: Explain the concepts

    • Liberalization: Removing restrictions on trade, prices, or entry into markets, such as lowering import controls. It is not specific to public corporations.
    • Nationalization: The government takes over private businesses and makes them public property. It is the opposite direction.
    • Commercialization: The government keeps ownership of public corporations but requires them to operate on commercial principles. They must cover their costs, charge economic prices, and make a profit with less reliance on government subsidies. Examples in Nigeria include NITEL, NEPA (now PHCN) and the Nigerian Ports Authority in the 1980s-90s reforms.
    • Indigenization: Transferring ownership of foreign-owned businesses to citizens, as in Nigeria's Indigenization Decrees of 1972 and 1977.

    Step 3: Solution The key phrase is "encourages public corporations to operate profitably." Only commercialization keeps the corporations in government hands while making them profit-oriented. Nationalization and indigenization concern a change of ownership, and liberalization concerns market freedom.

    Answer: C. Commercialization

    Tip: Link the word to its root. Commercial means business and profit, so commercialization = run public enterprises like a business. Compare it with privatization, which transfers ownership to private individuals. Examiners often put the two side by side.

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42. 42.

    Points within a Production Possibilities Curve (PPC) indicate

    1. A.optimum production levels.
    2. B.attainable but inefficient production levels.
    3. C.unattainable production levels.
    4. D.attainable and efficient production levels.

    Show answer

    Answer: B. attainable but inefficient production levels.

    AI explanation

    Step 1: Analyze the question The question asks what a point inside (within) the Production Possibilities Curve represents.

    Step 2: The concept The PPC (also called the Production Possibility Frontier) shows the maximum combinations of two goods an economy can produce when it uses all its resources fully and efficiently with a given technology. There are three zones on the graph:

    • On the curve: attainable and efficient. Resources are fully employed (this is the maximum output).
    • Inside the curve: attainable but inefficient. Resources are underused or unemployed, for example during unemployment, idle factories, or poor resource allocation.
    • Outside the curve: unattainable with present resources and technology. Economic growth is needed to reach these points.

    Step 3: Apply to the options

    • A. Optimum production levels: Wrong. Optimum production happens on the curve, not inside it.
    • B. Attainable but inefficient production levels: Correct. The economy can produce these combinations, but it is wasting resources, so it is not using its full capacity.
    • C. Unattainable production levels: Wrong. These are points outside the curve.
    • D. Attainable and efficient production levels: Wrong. Efficiency applies only to points on the curve.

    Step 4: Answer Points within the PPC are attainable but inefficient, which is option B.

    Exam tip: Remember "In, On, Out":

    • In = Inefficient (but possible)
    • On = Optimal (efficient)
    • Out = Out of reach (unattainable)

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43. 43.

    If the quantity demanded of rice de- creased from 150 bags to 100 bags, the percentage change in quantity demanded is

    1. A.30.0 %
    2. B.33.3 %
    3. C.50.0%
    4. D.66.7%

    Show answer

    Answer: B. 33.3 %

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44. 44.

    One major achievement of the Eco- nomic Commission for Africa (ECA) is the

    1. A.setting up of the African Development Bank (AfDB).
    2. B.provision of long-term loans to non-members.
    3. C.reduction of balance of payments problems in Africa.
    4. D.removing the gap between African countries and the rich nations.

    Show answer

    Answer: A. setting up of the African Development Bank (AfDB).

    AI explanation

    Analyze the question: It asks for a major achievement of the UN Economic Commission for Africa (ECA), which was established in 1958 by the United Nations Economic and Social Council (ECOSOC) and is headquartered in Addis Ababa, Ethiopia.

    Concept: The ECA's role is to promote the economic and social development of African countries, encourage intra-African cooperation and integration, and carry out research and provide technical advice. One of its well-known accomplishments was pushing for and supporting the creation of the African Development Bank (AfDB). The ECA carried out the studies and consultations that led to the AfDB's establishment in 1964.

    Evaluate each option:

    • A. Setting up of the AfDB. Correct. The ECA played a key role in the idea and the groundwork that led to the AfDB, and this is the achievement most often cited in textbooks.
    • B. Provision of long-term loans to non-members. Wrong. The ECA is not a lending institution, and it does not lend to non-members.
    • C. Reduction of balance of payments problems in Africa. Wrong. Balance of payments problems remain widespread in Africa, so this is not an achievement of the ECA.
    • D. Removing the gap between African countries and the rich nations. Wrong. The development gap still exists, so the ECA has not removed it.

    Answer: Option A, the setting up of the African Development Bank (AfDB).

    Exam tip: Be careful with options that use absolute words like "removing" or "reduction" of big problems. Such options are usually too sweeping to be true. Also, remember the link: ECA → AfDB (1964), and the ECA is a UN body, while the AfDB is a separate African-owned financial institution.

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45. 45.

    Warehousing of goods in the process of distribution is the function of

    1. A.Supermarkets
    2. B.departmental stores
    3. C.retailers
    4. D.wholesalers

    Show answer

    Answer: D. wholesalers

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46. 46.

    The negative slope of the demand curve is best explained by

    1. A.consumer's choice.
    2. B.increasing returns to scale
    3. C.diminishing returns to scale
    4. D.diminishing marginal utility.

    Show answer

    Answer: D. diminishing marginal utility.

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47. 47.This question needs a diagram, table or passage that we don't have yet, so it isn't shown.

48. 48.

    Which of the following is not a feature of labour?

    1. A.It is an active factor
    2. B.It is highly mobile
    3. C.Its reward is wages or salaries
    4. D.Its efficiency depends on its size

    Show answer

    Answer: D. Its efficiency depends on its size

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49. 49.

    The supply of labour to an occupation will tend to rise when

    1. A.there are less monetary benefits.
    2. B.holiday entitlement is cut.
    3. C.welfare packages improve.
    4. D.unemployment benefit rises.

    Show answer

    Answer: C. welfare packages improve.

    AI explanation

    Step 1: Analyze the question The question asks what makes more people willing to work in a particular occupation. This is about the factors affecting the supply of labour to an occupation.

    Step 2: The concept The supply of labour to an occupation depends largely on how attractive the job is. Workers compare both:

    • Monetary benefits: wages, salaries, bonuses
    • Non-monetary benefits: welfare packages, holidays, housing, health care, job security, working conditions

    When an occupation becomes more attractive, more people want to join it, so the supply of labour rises. When it becomes less attractive, supply falls.

    Step 3: Check each option

    • A. Less monetary benefits: Lower pay makes the job less attractive, so labour supply falls. ✘
    • B. Holiday entitlement is cut: Fewer holidays is a worse condition of service, so labour supply falls. ✘
    • C. Welfare packages improve: Better health care, pension, housing and similar allowances make the job more attractive, so labour supply rises. ✔
    • D. Unemployment benefit rises: Higher unemployment benefit makes staying jobless more comfortable, so it tends to reduce the incentive to take jobs. This does not raise labour supply to an occupation. ✘

    Step 4: Answer The correct option is C.

    Tip: For "supply of labour to an occupation" questions, ask yourself, "Does this make the job more attractive or less attractive?" Better pay, better conditions and better fringe benefits increase supply. Anything that worsens the job decreases supply.

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50. 50.

    Which of the following best explains diseconomies of scale? Increase in output causes the

    1. A.average cost to rise.
    2. B.marginal revenue to fall.
    3. C.marginal cost to fall.
    4. D.firm to be de- stabilized.

    Show answer

    Answer: A. average cost to rise.

    AI explanation

    Step 1: Analyze the question The question asks which option best explains diseconomies of scale, completing the stem "Increase in output causes the..."

    Step 2: Explain the concept Economies of scale occur when a firm expands output and its long-run average cost (cost per unit) falls. Diseconomies of scale are the opposite: beyond a certain size, further expansion makes the average cost per unit rise. Common causes include:

    • Management problems (poor coordination, communication delays)
    • Labour disputes in very large firms
    • Bureaucracy and red tape
    • Scarcity of inputs, which pushes input prices up

    Step 3: Evaluate each option

    • A. Average cost to rise. This is the textbook definition of diseconomies of scale. Correct.
    • B. Marginal revenue to fall. This relates to demand and pricing, not to production costs and scale.
    • C. Marginal cost to fall. Falling cost is associated with economies of scale, not diseconomies.
    • D. Firm to be de-stabilized. This is vague and is not the economic definition.

    Step 4: Answer Diseconomies of scale means that as output increases, the average cost of production rises.

    Exam tip: Link the words to the direction of average cost:

    • Economies of scale = average cost falls (a "good" outcome)
    • Diseconomies of scale = average cost rises (a "bad" outcome)

    If you see "scale" in a question, think "average cost per unit."

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