2012 Economics WAEC SSCE (School Candidates) May/June

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Economics 1 - Objective

1. Which of the following problems arises where there are more than one technically possible methods of production?
   1. Where to produce
   2. For whom to produce
   3. How to produce
   4. What to produce
2. Visible balance is also known as
   1. terms of trade
   2. balance of payments
   3. balance of trade
   4. capital balance
3. A shift in the demand curve indicates
   1. exceptional demand
   2. change in demand
   3. change in quantity demanded
   4. elasticity of demand
4. If a 6% decrease in price results in more than 6% decrease in quantity supplied, supply can be regarded as
   1. elastic
   2. unitary elastic
   3. perfectly inelastic
   4. perfectly elastic
5. A condition for consumer utility maximization is
   1. equality of the ratio of marginal utilities and the ratio of prices
   2. equality of the ratio of average utilities and the ratio of prices
   3. equality of the marginal utility to total utility ratio for both commodities
   4. total utility and marginal utility must be zero.
6. Which of the following best describes the mode? The
   1. observation with the highest frequency
   2. average of two middle numbers
   3. item that occupies the middle position
   4. difference of two extreme values
7. Where a commodity takes an insignificant proportion of the consumer's income, demand for it will be
   1. unitary elastic
   2. price inelastic
   3. fairly elastic
   4. income inelastic
8. A demand schedule shows the quantities of goods that are
   1. bought at given prices at a time
   2. supplied at given prices at a time
   3. produced at given prices at a time
   4. reserved for future consumption
9. The demand curve for a commodity is downward sloping because the consumer will pay
   1. less as the marginal utility falls
   2. more as the marginal utility falls
   3. less as the total utility falls
   4. more as the average utility falls
10. A decrease in the demand for a product X resulted in a decrease in the demand for another product Y. The demand for X and Y is
    1. derived
    2. composite
    3. joint
    4. competitive
11. Any price below the equilibrium price will lead to
    1. increase in supply
    2. excess demand
    3. equality of demand and supply
    4. decrease in demand
12. The allocation of goods and services in a free-market economy is performed by
    1. the price system
    2. the banking system
    3. the central planning body
    4. government budgets
13. Given the demand function $Qd=20-{\tfrac {1}{2}}P$. What is Qd when P is $12?
    1. 6 units
    2. 10 units
    3. 12 units
    4. 14 units
14. If a particular consumer derives total utility of 22 units having consumed 4 units of a given product, his average utility will be
    1. 88 units
    2. 18 units
    3. 5.5 units
    4. 3.5 units
15. The law of diminishing marginal utility applies to a
    1. firm which minimizes cost
    2. consumer who maximizes satisfaction
    3. producer who maximizes marginal product
    4. consumer who minimizes total utility
16. Why is the law of diminishing returns a short run phenomenon?
    1. All inputs are fixed
    2. All inputs are variable
    3. some outputs are variable
    4. some inputs are variable
17. Which of the following is capable of increasing the population of a country?
    1. Decrease in death rate
    2. Increase in death rate
    3. Poor medical facilities
    4. Decrease in birth rate
18. In the firm's production process, marginal cost
    1. falls continuously throughout
    2. falls and later rises
    3. remains unchanged throughout
    4. rises and later falls
19. If a firm's price is less than average cost but more than average variable cost, the firm is covering
    1. All of its fixed cost and variable cost
    2. All of its fixed cost and part of variable cost
    3. All of its variable cost and part of fixed cost
    4. Part of its fixed cost and part of variable cost
20. An arrangement in which the debts of a company can only be paid from Its own assets implies
    1. unlimited liability
    2. transferred liability
    3. limited liability
    4. capital liability
21. One reason why small scale businesses are very common in West Africa is that
    1. they can easily float shares
    2. their management boards are easily formed
    3. their initial capital is easy to raise
    4. their dividend payments are very regular
22. A public limited company could finance its operations through
    1. government taxes
    2. equity shares
    3. dividend payments
    4. import duties
23. The factor of production which takes the initiative in combining resources for production is known as
    1. capital
    2. land
    3. entrepreneur
    4. labour
24. The type of monopoly that develops as a result of granting patent right is known as
    1. natural monopoly
    2. state monopoly
    3. legal monopoly
    4. discriminating monopoly
25. Which of the following markets determines its own price or output?
    1. perfect market
    2. common market
    3. Monopoly market
    4. commodity market
26. Which of the following is a function of a retailer?
    1. Banking services
    2. Hoarding services
    3. Storage services
    4. Sales services
27. The difference between the number of immigrants and emigrants is
    1. natural growth rate
    2. natural increase
    3. net migration
    4. census
28. All the following are features of optimum population except
    1. full employment of available resources.
    2. unlimited amount of unexploited resources.
    3. maximum per capita production and income.
    4. high standard of living.
29. The financial institution that specializes in risk spreading is called
    1. an investment bank.
    2. a development bank.
    3. an insurance company.
    4. the stock exchange.
30. The following are means of reducing the population of a country except encouraging
    1. emigration
    2. family planning
    3. early marriage
    4. sex education
31. Which of the following features best describes peasant agriculture in West Africa’?
    1. specializes in the production of one crop.
    2. involves the use of small farm holdings.
    3. is a capital-intensive system of farming.
    4. is mostly associated with tree crops.
32. One of the problems facing industrial development in West African countries is
    1. inadequate large market.
    2. inadequate infrastructure.
    3. inadequate supply of labour.
    4. unavailability of natural resources
33. In a situation where the finished product of an industry is fragile, bulky and perishable, such an industry should be located close to its
    1. raw materials
    2. market
    3. labour supply
    4. power supply
34. If Y = Income, C = Consumption, I = Investment, X = Export and M = Import, then national income is
    1. Y = C - I + (x+ m)
    2. Y= C + l + (x+m)
    3. Y= C + l + (x-m)
    4. Y= C + I + (m-x)
35. The national income is the
    1. Gross Domestic Product at market prices.
    2. Gross National Product at factor cost.
    3. Net National Product at factor cost.
    4. Net National Product at market prices.
36. When depreciation is deducted from Gross National Product, the result is
    1. Total national income.
    2. Gross domestic product
    3. net national product
    4. net domestic product
37. Okpoti has meat and wants maize, while Mr. Adama has maize and wants meat. A transaction is possible because of
    1. joint demand
    2. scale of preference
    3. double coincidence of wants
    4. opportunity cost
38. Which of the following is not a form of money?
    1. coins
    2. bank notes
    3. bank balance
    4. bank depositOption a
39. A price index as a statistic, measures
    1. how the value of money changes over time.
    2. the volume of currency in the economy
    3. the exchange rate of a country’s currency.
    4. the composition of goods and services.
40. The difference between birth rate and death rate is known as
    1. demographic transition.
    2. natural growth rate
    3. migration rate
    4. fertility rate.
41. in open market operations, what the Central Bank sells or buys are
    1. shares
    2. debentures
    3. securities
    4. equities
42. The following are reasons for the failure of agricultural policies in West Africa except
    1. vague policy statements
    2. negation of policies
    3. creation of agro-service stations
    4. provision of obsolete implements
43. A situation in which the estimated government revenue is less than the proposed expenditure for a given year can be described as
    1. surplus budgeting
    2. supplementary budgeting
    3. balanced budgeting
    4. deficit budgeting
44. An excise tax is imposed on goods
    1. smuggled into the country
    2. manufactured locally
    3. imported into the country
    4. seized by custom officials
45. Which of the following will not retard economic development in West Africa?
    1. Dependence on imports
    2. Population control
    3. High level of illiteracy
    4. Low level of savings
46. When there is improvement in a country’s terms of trade, it means that the country's
    1. exports are cheaper relative to imports.
    2. imports are cheaper relative to exports.
    3. volume of imports has declined.
    4. volume of exports has declined.
47. Which of the following is true about import substitution? It
    1. helps in increasing exportation
    2. is meant to reduce exportation
    3. enables a country to curtail importation.
    4. enables a country to improve on importation
48. Balance of payments problem can be corrected through
    1. increasing foreign reserves.
    2. increasing domestic borrowing
    3. import promotion strategies.
    4. export promotion strategies.
49. One of the reasons why government may erect a trade barrier is to
    1. control foreign currencies
    2. protect infant industries
    3. promote importation
    4. diversify the economy
50. Which of the following is not a function of the West African Development Bank?
    1. Promotion of both private and public investments in member States
    2. Financing and executing projects in member states
    3. Promotion of social development of member states
    4. Harmonization of oil prices to the advantage of member states

Economics 2 - Essay

Section A

Answer one question only from this section.

1. The diagram below represents the cost and revenue situation of a firm. Use the information in the diagram to answer the questions that follow.

   

   Diagram 1

   1. Why would the firm not produce at
      1. Q₁
      2. Q₃?
   2. How much profit does the firm make at P₂?
   3. If price falls to P₁
      1. What quantity would the firm produce?
      2. What type of profit does the firm make?
      3. Explain your answer c(ii)
   4. In which type of market is the firm operating?
2. The tables below show the expected revenues and projected expenditures from the budget of a hypothetical country in 1998. Use the information in the tables to answer the questions that follow.

EXPECTED REVENUE

ITEM	AMOUNT ( $ MILLIONS)
Rents, royalties and profits	75.00
Company income tax	150.00
Customs and excise duties	300.20
Personal income tax	80.00
Fees and specific charges	60.80
Value added tax	100.00

PROJECTED EXPENDITURE

ITEM	AMOUNT ( $ MILLIONS)
General administration	220.10
Maintenance of foreign missions	50.00
Transfer payments	65.00
Building of schools and hospitals	200.00
Road construction	180.90

1. Calculate the total revenue from
   1. direct taxes
   2. indirect taxes
   3. non-tax sources
2. Determine the total
   1. capital expenditures
   2. recurrent expenditure.
3. Determine whether the budget is a surplus or deficit.

Section B

Answer four questions only from this section.

3. Explain how the following factors will affect the demand fora commodity X
   1. a decrease in the price of a complement
   2. an increase in consumers' disposable income
   3. a decrease in the supply of a substitute P
   4. an increase in income tax
4. 1. State and explain the law of comparative cost advantage
   2. Give two limitations of the law as a theory of international trade
5. 1. Define money
   2. State the three motives for holding money
   3. Mention two determinants of each of the motives for holding money
6. 1. Distinguish between economic activities and an economic system
   2. Explain the following terms:
      1. Production
      2. Distribution
      3. Consumption
7. 1. Define
      1. elasticity of demand
      2. price elasticity of demand
   2. State any four determinants of elasticity of demand
   3. Draw curves illustrating
      1. fairly elastic demand
      2. perfectly inelastic demand
8. 1. Define market in economics
   2. State any three features of a monopoly
   3. Outline any three sources of monopoly power
9. 1. With the aid of a diagram, explain a minimum price.
   2. State any five measures by which a minimum price for an agricultural produce can be made effective.
10. 1. What is a supply schedule?
    2. Using an example, show how a market supply schedule of a product is obtained from individual supply schedules.
    3. State three examples of exceptional demand
11. Distinguish between the following:
    1. wants and effective demands
    2. demand schedule and demand curve
    3. individual demand and market demand
    4. change in demand and change in quantity demanded
12. 1. Describe the output method of measuring the gross domestic product of a country
    2. How is the net national product at factor cost obtained from gross domestic product?
    3. State two problems associated with the output method.