WAEC SSCE - Economics - 2000
Question 1 Report
Dividing total variable cost by quantity of output gives
Answer Details
Dividing the total variable cost by the quantity of output gives the average variable cost (AVC). Variable costs are costs that vary with the level of production, such as the cost of raw materials and labor. The total variable cost is the sum of all variable costs incurred to produce a certain quantity of output. The average variable cost is found by dividing the total variable cost by the quantity of output produced. It represents the cost per unit of producing a certain quantity of output, and is important in determining the profitability of a product or service. If the average variable cost is higher than the price at which the product is being sold, the producer is making a loss on each unit produced. Therefore, it is important to keep the average variable cost as low as possible to maximize profits.
Question 2 Report
The entire satisfaction that a consumer derived from a successive consumption of a particular commodity is known as
Answer Details
The entire satisfaction that a consumer derives from a successive consumption of a particular commodity is known as total utility. Total utility represents the overall amount of satisfaction that a consumer receives from consuming a certain quantity of a product. As the consumer consumes more units of the product, the total utility increases, but at a decreasing rate. This is because of the concept of diminishing marginal utility, where each additional unit of the product provides less and less satisfaction to the consumer.
Question 3 Report
Which of the following is an item of government recurrent expenditure?
Answer Details
Wages and salaries is an item of government recurrent expenditure. Recurrent expenditure refers to the day-to-day expenses that a government incurs in providing public goods and services, such as salaries, wages, pensions, rent, and supplies. These expenses are recurring in nature and are incurred on an ongoing basis. Wages and salaries, as part of the recurrent expenditure, refer to the payment of salaries and wages to government employees, including civil servants, teachers, healthcare workers, and other public servants. This item of expenditure is essential to the functioning of the government, as it ensures that public services are delivered efficiently and effectively. In contrast, capital expenditure refers to the spending on infrastructure projects and capital assets, such as road construction, port facilities, and telecommunication projects. These expenses are not recurring in nature and are typically incurred to create long-term assets that will benefit the economy or society over an extended period. In summary, wages and salaries is an item of government recurrent expenditure that refers to the payment of salaries and wages to government employees, while road construction, port facilities, and telecommunication projects are examples of capital expenditure that involve spending on infrastructure projects and capital assets.
Question 4 Report
Abstention from consumption which enables capital to be produced is called
Answer Details
Abstention from consumption, which allows for capital to be generated, is called savings. When people or institutions save, they refrain from spending all of their income, leaving some for investment in productive activities such as the acquisition of tools, machines, buildings, and so on. This capital investment increases the economy's productive capacity and enables it to produce more goods and services in the future. Savings, therefore, are critical to the growth and development of an economy.
Question 5 Report
Deficit budget means that government’s
Answer Details
Deficit budget means that the government's planned expenditure is more than the estimated income or revenue. In other words, the government is spending more money than it is earning. This may lead to borrowing and accumulation of debt, which can have long-term implications on the economy.
Question 6 Report
Public enterprises are established mainly to
Answer Details
Public enterprises are established mainly to provide basic amenities for the people. These are owned and operated by the government, with the primary goal of providing essential services to the public. These services may include utilities like electricity, water, and transportation, as well as social services like healthcare, education, and housing. The aim of public enterprises is to ensure that these essential services are available to all citizens, regardless of their ability to pay for them, and to promote social welfare. While public enterprises may generate revenue, their primary focus is not profit but rather the provision of vital public services.
Question 7 Report
The maximum amount of money a company is allowed to raise by issuing shares to the public is called
Answer Details
The maximum amount of money a company is allowed to raise by issuing shares to the public is called authorized capital. This is the total amount of share capital that a company is authorized to issue as per its Memorandum of Association (MOA). The authorized capital can be changed with the approval of the shareholders, but this requires amending the MOA. The authorized capital is an important measure of a company's size and growth potential. It determines the company's ability to raise funds from the market and pursue its business objectives.
Question 8 Report
census of population is usually conducted every
Answer Details
Census of population is usually conducted every 10 years. This means that every decade, the government counts the number of people living in a particular country or region. This is done to get a better understanding of the population, such as their demographics, ages, and occupations. It also helps the government to plan and allocate resources based on the needs of the population. For example, if there is a growing number of school-aged children in a particular area, the government can plan to build more schools to accommodate them. The census is important because it helps to ensure that everyone is counted and represented in the government's decisions.
Question 9 Report
Which of the following is a measure of central tendency
Answer Details
The measure of central tendency is the Median. It is a statistical measure that represents the middle value in a set of observations. To calculate the median, you need to arrange the observations in order of magnitude and then select the middle value. If there is an even number of observations, the median is the average of the two middle values. The median is a useful measure of central tendency because it is not affected by extreme values, also known as outliers. Unlike the mean, which can be skewed by extreme values, the median is based on the order of the observations and is not influenced by the size of the values. For example, if you have a set of ten test scores, ranging from 60 to 100, and one of the scores is 100, the mean score would be affected by the outlier. However, the median score would remain the same, as it is based on the middle value, which is not influenced by the outlier. In summary, the median is a measure of central tendency that represents the middle value in a set of observations. It is not affected by extreme values, making it a useful measure for datasets with outliers.
Question 10 Report
which of the following banks grant credit facilities to individuals wishing to build houses?
Answer Details
The bank that grants credit facilities to individuals wishing to build houses is the Federal Mortgage Bank of Nigeria. It is specifically mandated to provide long-term credit facilities to mortgage institutions in order to enable them to finance the acquisition or construction of houses for residential purposes. Therefore, option D is the correct answer.
Question 11 Report
An association of workers in a particular industry, firm or line of job is called
Answer Details
An association of workers in a particular industry, firm or line of job is called a "trade union". Trade unions are organizations that represent the collective interests of workers in negotiations with employers or government bodies. They work to protect the rights of workers and improve their working conditions, wages, and benefits. Trade unions also provide a platform for workers to express their grievances and work together to find solutions.
Question 12 Report
A tax on a commodity whose demand is perfectly inelastic will fall heavily on the
Answer Details
A tax on a commodity whose demand is perfectly inelastic will fall heavily on the consumer. Demand for a product is considered perfectly inelastic when consumers are willing to pay the same price regardless of changes in supply or price. In other words, a change in price will have little to no effect on the amount of the product that consumers are willing to purchase. When a tax is imposed on a commodity with perfectly inelastic demand, the price of the product will increase. Since consumers are willing to pay the same price regardless of the increase, the burden of the tax falls heavily on them. The manufacturer, wholesaler, and retailer may also be impacted by the tax, but they can pass on some or all of the tax to the consumer in the form of a higher price. This is because they have some ability to adjust their prices based on changes in supply and demand. Overall, a tax on a commodity with perfectly inelastic demand is likely to fall heavily on the consumer, as they are unable to adjust their behavior in response to the increase in price.
Question 13 Report
Unemployment that arises because of introduction of new machines and equipment in production is called
Answer Details
The type of unemployment that arises because of the introduction of new machines and equipment in production is called structural unemployment. This type of unemployment occurs when there is a mismatch between the skills that workers have and the skills that are required by the new machines and equipment. As a result, some workers may become unemployed because they no longer have the necessary skills to perform the new jobs created by the introduction of these machines. For example, if a factory introduces new machinery that can automate certain tasks, workers who were previously responsible for performing those tasks may become unemployed because their skills are no longer needed. In summary, structural unemployment occurs when changes in technology or the economy create a mismatch between the skills of workers and the demands of employers.
Question 14 Report
The demand for a commodity that serves two or more purposes is
Answer Details
The demand for a commodity that serves two or more purposes is known as composite demand. This means that the commodity is demanded for different uses or purposes, and the demand for the commodity is influenced by the demand for these different uses. For example, electricity is demanded for various purposes such as lighting, heating, and powering electronic devices, and the demand for electricity for each purpose is different. The total demand for electricity is the composite demand, which is influenced by the demand for each specific use. If the demand for one use of the commodity increases, the demand for the commodity as a whole may also increase. Conversely, if the demand for one use of the commodity decreases, the demand for the commodity as a whole may decrease.
Question 15 Report
The charging of different prices to different group of buyers for the same goods or services is called
Answer Details
The charging of different prices to different groups of buyers for the same goods or services is called price discrimination. Price discrimination is when a seller charges different prices to different groups of customers for the same product or service. This can be based on various factors, such as location, age, income, or quantity purchased. The goal of price discrimination is to maximize profits by charging each customer the highest price they are willing to pay. For example, a movie theater might charge seniors a lower ticket price than adults, or an airline might charge more for a last-minute ticket than for one purchased well in advance. Price discrimination can occur in various types of markets, including monopolies, oligopolies, and monopolistic competition. It is often viewed as a way for sellers to increase their profits, but it can also be seen as a way to make goods or services more affordable for certain groups of consumers.
Question 16 Report
The primary objectives of the Nigerian Industrial Development Banks(NIDB) is the provision of loans to
Answer Details
The primary objective of the Nigerian Industrial Development Bank (NIDB) is to provide loans to manufacturers. The NIDB was established in 1964 to accelerate the growth and development of industries in Nigeria. The bank provides medium to long-term financing for fixed assets acquisition, working capital, and research and development. Its focus is on promoting the establishment of new industries and the expansion and modernization of existing ones to enhance their productivity and profitability. By providing affordable financing to manufacturers, the NIDB aims to stimulate economic growth and development, create job opportunities, and increase export earnings for the country.
Question 17 Report
The movement along the same curve is a
Answer Details
The movement along the same curve is a change in quantity demanded. This means that there has been a change in the quantity of a good or service that consumers are willing and able to buy due to a change in the price of that good or service, assuming all other factors remain constant. It is important to note that this is not the same as a shift in demand, which would involve a change in one or more of the other determinants of demand (such as income, tastes and preferences, price of related goods, etc.).
Question 18 Report
Hassan , an economic teacher in Lagos, resigned his appointment and took yup another job as a banker . The The concept here involves
Answer Details
The concept involved in this scenario is occupational mobility of labor. Occupational mobility of labor refers to the ability of workers to move from one occupation to another. In this case, Hassan moved from being an economic teacher to a banker, which is a different occupation. This type of mobility is important because it allows individuals to pursue new opportunities and can help them to improve their economic situation.
Question 19 Report
The Organization of Petroleum Exporting Countries (OPEC) is a
Answer Details
The Organization of Petroleum Exporting Countries (OPEC) is a cartel. A cartel is a group of producers who collude to limit competition and increase prices in a particular industry. OPEC is made up of 13 member countries, mostly located in the Middle East, Africa, and South America, that collectively control over 40% of the world's oil production. OPEC members cooperate to control the supply of oil and stabilize prices by setting production quotas for each member country. This allows OPEC to influence the global price of oil by adjusting its production levels.
Question 20 Report
Wages are to some extent, determined by the
Answer Details
Wages are to some extent, determined by the marginal productivity of labour. Marginal productivity of labour refers to the additional output that an additional unit of labour adds to the total production. When the marginal productivity of labour increases, it leads to an increase in wages. Employers are willing to pay higher wages when the workers are more productive and efficient, and this increased productivity leads to increased profits for the firm. Therefore, the level of wages paid to workers is closely related to their productivity, with higher productivity resulting in higher wages.
Question 21 Report
The most unique quality of money is its
Answer Details
The most unique quality of money is its general acceptability. Money is accepted by people in exchange for goods and services because it is generally recognized and agreed upon as a medium of exchange. Unlike other items that may be used for exchange such as gold, diamonds, or other commodities, money has no intrinsic value, but it is valuable because people accept it as payment for goods and services. This makes it a universally accepted means of exchange, and one of the most important functions of money.
Question 22 Report
Average Variable Cost (AVC) curve
Answer Details
The Average Variable Cost (AVC) curve is a graphical representation of the cost of producing one unit of output in the short run. The AVC curve shows the average variable cost of production for each level of output. The AVC curve is U-shaped because initially, as production increases, the cost per unit of output decreases due to economies of scale. However, as production continues to increase, the cost per unit of output begins to increase due to diminishing returns to variable inputs. Therefore, the AVC curve slopes upwards after reaching a minimum point. The minimum point is the point of the curve where the cost per unit of output is the lowest. This point is also where the Marginal Cost (MC) curve intersects the AVC curve from below. In summary, the AVC curve is U-shaped and slopes upwards after reaching a minimum point. The curve represents the average variable cost of production for each level of output, and it helps firms to make decisions about production levels and pricing.
Question 23 Report
Which of the following will occur when the market is unstable?
Answer Details
When the market is unstable, prices tend to fluctuate. This is because the market is not in equilibrium, which means that there is an imbalance between the quantity of goods supplied and the quantity of goods demanded. As a result, buyers and sellers are constantly adjusting their behavior, which causes the price to rise or fall until a new equilibrium is reached. Therefore, the correct answer is: "Price will fluctuate". The other options are not necessarily true when the market is unstable.
Question 24 Report
Net migration is the difference between
Answer Details
Net migration is the difference between the number of immigrants (people who move into a country) and the number of emigrants (people who move out of a country) during a specific period of time, usually a year. It is a measure of how much the population of a country is changing due to international migration. If more people are coming into the country than leaving, the net migration is positive, and if more people are leaving than coming in, the net migration is negative. Net migration is an important indicator of population growth and demographic changes in a country.
Question 25 Report
which of the following is a function of the retailer?
Answer Details
The function of a retailer is to sell goods directly to the end consumer. Therefore, of the options given, "stocking a variety of goods" is the function of a retailer. Retailers buy goods in large quantities from manufacturers and wholesalers and then sell them in smaller quantities to consumers. The retailer is responsible for ensuring that the goods they stock are what their customers want and need, and they must also ensure that they are properly displayed and priced to attract customers. While retailers may provide some storage facilities for their goods, this is not their main function. Financing manufacturers and advertising goods are also not functions of the retailer, as these activities are typically performed by manufacturers and wholesalers or advertising agencies, respectively.
Question 27 Report
The consumers co-operative society is owned by
Answer Details
A consumers co-operative society is owned by its members. These members are individuals who have bought shares in the society and have the right to vote on matters related to the running of the co-operative. This is one of the fundamental principles of co-operatives - democratic member control, where each member has an equal say in the decision-making process regardless of the number of shares they hold. Therefore, the co-operative society is not owned by a management committee, debenture holders or the government, but by its members.
Question 28 Report
Basic extractive activities are classified as
Answer Details
Basic extractive activities are classified as primary production. This refers to the economic sector concerned with the extraction and collection of natural resources from the environment, such as mining, agriculture, fishing, and forestry. Primary production involves harvesting raw materials directly from natural resources rather than producing new goods from previously made ones.
Question 29 Report
One major export crop in West Africa is
Answer Details
One major export crop in West Africa is cocoa. Cocoa is a type of plant that produces seeds that are used to make chocolate and other products. The seeds are grown on trees that are found in tropical regions, including West Africa. The countries in West Africa that are major producers of cocoa include Ivory Coast, Ghana, and Nigeria. Cocoa is an important crop for the economy of these countries and is a major source of income for many people. It is exported to other countries where it is processed into chocolate and other products.
Question 30 Report
foreign exchange control in most West African countries is is enforced by the
Answer Details
Foreign exchange control in most West African countries is enforced by the Central Banks. Central Banks are the institutions responsible for regulating and supervising the financial system in a country, including the management of its currency. As part of their role, Central Banks often implement foreign exchange controls, which are rules and regulations that restrict or limit the buying and selling of foreign currencies by individuals and businesses. These controls are typically put in place to maintain stability in the country's financial system, prevent capital flight, and manage the balance of payments. In West African countries, the Central Banks are the primary institutions responsible for enforcing these controls, rather than development banks, merchant banks, or the ministry of economic planning.
Question 31 Report
The quantity supplied of a book per week is represented by the function: Qs + 70 + 1/2 P, At a price of N8.00, the quantity supplied is
Answer Details
The quantity supplied of a book per week is given by the function: Qs = 70 + 1/2P, where P is the price of the book. To find the quantity supplied at a price of N8.00, we substitute P=8 into the equation: Qs = 70 + 1/2(8) Qs = 70 + 4 Qs = 74 Therefore, the quantity supplied of the book per week at a price of N8.00 is 74.
Question 32 Report
The income elasticity of a normal goods is
Answer Details
The income elasticity of a normal good is positive. This means that as a person's income increases, the demand for the good also increases. In other words, the quantity demanded of a normal good is directly related to income. If income increases, people can afford to buy more of the good, and if income decreases, people will buy less of the good.
Question 33 Report
An industry can best be described as
Answer Details
An industry can be best described as an aggregation of individual firms that are involved in producing similar commodities. Industries are often characterized by firms that have similar production processes, face similar market conditions, and offer similar products to their consumers. For example, the automobile industry consists of different firms that produce cars, and the textile industry is made up of firms that produce fabrics and textiles.
Question 34 Report
one economic implication of over-population is that it
Answer Details
Over-population can lead to a fall in per capita income. This is because over-population leads to an increase in the labor supply, which in turn leads to a decrease in wages. As a result, individuals have less disposable income to spend on goods and services. This leads to a decrease in the demand for goods and services, and ultimately, a fall in per capita income. Additionally, over-population can lead to an increase in competition for resources, such as housing and food, which can further reduce individuals' purchasing power and contribute to a decrease in per capita income.
Question 35 Report
The main feature of regressive taxation is that its rate
Answer Details
Regressive taxation is a tax system where the rate of tax decreases as the income increases. This means that the tax rate is higher for lower-income individuals and lower for higher-income individuals. Therefore, the more someone earns, the smaller the percentage of their income they pay in taxes. So, the correct answer is: "reduces when income increases."
Question 36 Report
Small enterprises finds it difficult to expand due to
Answer Details
Small enterprises often find it difficult to expand due to inadequate capital. This means that they don't have enough money to invest in the necessary resources, such as new equipment or employees, to expand their operations. Without enough capital, they may struggle to keep up with demand or to enter new markets. Lack of access to loans or other forms of financing can also contribute to the problem. While lack of skilled manpower, the high level of technology required for expansion, and the inability to provide after-sale services can be challenges for some small enterprises, inadequate capital is often the main obstacle to growth.
Question 37 Report
Scarcity implies that
Answer Details
Scarcity implies that goods and services are limited in supply. This means that there are not enough resources to produce everything that people want, and as a result, choices have to be made about which goods and services to produce and distribute. Since resources are finite, scarcity is an inherent feature of any economy, and it leads to the problem of allocation of scarce resources to satisfy unlimited human wants.
Question 38 Report
Which of the following countries is not a member of the Economic Community of West African States (ECOWAS)?
Answer Details
Cameroon is not a member of the Economic Community of West African States (ECOWAS). ECOWAS is a regional economic union consisting of fifteen West African countries, including Ghana, The Gambia, and Guinea Bissau. Cameroon is a Central African country and is not part of the West African region, and hence not a member of ECOWAS.
Question 40 Report
Majority of West African labour force is engaged in
Answer Details
The majority of the West African labour force is engaged in agricultural production. This means that a significant number of people in West Africa are involved in activities such as farming, livestock rearing, and fishing. Agriculture is an important sector of the economy in many West African countries and provides employment opportunities for a large portion of the population. The types of crops and livestock raised vary by country and region, but some common ones include cassava, yams, rice, maize, and cattle. The agricultural sector also contributes to food security, as the crops and livestock produced are used to feed the population as well as for export.
Question 41 Report
One important feature of sole proprietorship is that
Answer Details
One important feature of sole proprietorship is that one person bears all the risks. Sole proprietorship is a form of business in which an individual owns and manages the business alone. This means that the owner is solely responsible for all the debts and obligations of the business. In other words, the owner has unlimited liability for the business. As a result, the owner also enjoys all the profits and controls all the decision-making in the business. This makes sole proprietorship an attractive option for individuals who want to start and manage a business on their own.
Question 42 Report
West African countries have low level of economic development due to
Answer Details
West African countries have low levels of economic development mainly due to ineffective plan implementation. While other factors like under-population, inadequate labor, and failure to plan can contribute to the lack of economic growth, poor implementation of economic policies and plans is a significant factor in West African countries' underdevelopment. This poor implementation of economic policies could be caused by various factors such as corruption, poor governance, lack of accountability, and insufficient funding. Without proper implementation, economic plans and policies will not yield the expected results, and the development of the country will remain stagnant.
Question 43 Report
Which of the following is an item of government recurrent expenditure?
Answer Details
Wages and salaries are items of government recurrent expenditure. Recurrent expenditure refers to regular, ongoing expenses incurred by the government in the day-to-day running of its operations. Wages and salaries are paid to civil servants and public officials for the work they do in providing public services, and are therefore an example of recurrent expenditure. The other options listed are capital expenditures, which refer to investments made in long-term assets such as infrastructure, equipment, and buildings.
Question 44 Report
Balance of payment deficit implies that a country is
Answer Details
Balance of payment deficit implies that a country is importing more than she is exporting. This means that the total value of the goods and services that the country imports exceeds the total value of the goods and services that the country exports. In other words, the country is spending more on foreign goods and services than it is earning from the sales of its own goods and services to other countries. This can result in a shortage of foreign exchange reserves and can lead to difficulties in meeting foreign financial obligations.
Question 45 Report
Commercial banks settle their inter-bank indebtedness through
Answer Details
Commercial banks settle their inter-bank indebtedness through **central banks**. When one commercial bank needs to settle an obligation to another bank, it may not necessarily have cash reserves in the other bank. In such a situation, the banks can go through the central bank, which acts as an intermediary to settle the inter-bank transactions. The central bank facilitates the transfer of funds between the banks, making sure that the payment obligations of each bank are met.
Question 46 Report
In production , the formula total product/number of men employed is used to calculate
Answer Details
The formula total product/number of men employed is used to calculate the average product. Average product is the average output produced by each unit of input, in this case, the average output produced by each worker. It is calculated by dividing the total product (the total output produced) by the number of workers employed. Average product is an important measure of productivity and efficiency, and is often used by firms to assess the performance of their workers and production processes.
Question 47 Report
The supply of labour can be influenced by the
Answer Details
The supply of labor refers to the number of workers available to work in an economy. It can be influenced by several factors, including the size of the population, as a larger population generally means a larger workforce. The stage of economic development is also a factor, as more developed economies may have higher levels of education and skills training, leading to a larger and more productive workforce. The size of the country may also play a role, as workers in more remote or isolated regions may have limited opportunities or be less likely to migrate to areas with better job prospects. Finally, the extent of the market, or the number and size of businesses and industries in an economy, can also affect the supply of labor, as more firms may mean more job opportunities and a higher demand for workers.
Question 48 Report
Shares and stocks can be bought in the
Answer Details
Shares and stocks can be bought in the stock exchange. A stock exchange is a marketplace where publicly traded companies' stocks and shares are bought and sold by investors. It provides a regulated and transparent platform for buyers and sellers to exchange securities. When a company wants to raise capital, it can issue shares of stock to the public. Investors can then buy these shares through a stockbroker, who acts as an intermediary between the buyer and the seller. The stockbroker facilitates the transaction on the stock exchange by matching buyers with sellers and executing trades. Investors can buy and sell shares in the stock exchange in real-time, and the prices of stocks fluctuate based on market demand and supply. The stock exchange is subject to regulations and oversight by regulatory bodies to ensure transparency, fairness, and investor protection. In summary, stocks and shares can be bought in the stock exchange, which provides a marketplace for publicly traded companies' securities to be bought and sold by investors through intermediaries called stockbrokers.
Question 49 Report
economy problems arises mainly as a result of
Answer Details
Economic problems mainly arise as a result of the limitation in the availability of resources. Resources are the materials, factors, and inputs used in the production of goods and services in an economy. Resources include natural resources, labor, capital, and entrepreneurship. However, these resources are scarce, and as a result, the economy has to make choices on how to allocate them efficiently. When there is a limitation in the availability of resources, the economy faces several problems. For instance, the economy may not be able to produce enough goods and services to meet the demand, which results in scarcity. This, in turn, leads to high prices, inflation, and a decline in the standard of living. Additionally, the scarcity of resources can lead to unemployment, as the economy may not have enough resources to produce the goods and services needed to create employment opportunities. This, in turn, can lead to poverty, income inequality, and social unrest. In summary, economic problems arise mainly as a result of the limitation in the availability of resources. When resources are scarce, the economy faces several problems, including scarcity, high prices, inflation, unemployment, poverty, income inequality, and social unrest.
Question 50 Report
A collective data which has not been processed is referred to as
Answer Details
A collective data which has not been processed is referred to as raw data. Raw data is a set of unprocessed data collected from various sources and in its original form, without any manipulation or organization. It is the first step in the process of data analysis, and it needs to be processed, cleaned, and analyzed to make meaningful conclusions. Examples of raw data include survey responses, sensor readings, and financial records.
Question 51 Report
Mono-product economies are those that produce
Answer Details
Mono-product economies are those that produce one main commodity. This means that the economy is heavily reliant on the production and export of this one commodity, which can be either a natural resource or a manufactured product. Examples of mono-product economies include countries that rely heavily on the production and export of oil, such as Saudi Arabia or Venezuela, or countries that rely on the production and export of agricultural products, such as coffee or cocoa. Mono-product economies can be vulnerable to fluctuations in the global market for their one commodity, which can lead to economic instability and hardship for the population.
Question 52 Report
(a) What is income elasticity of demand? The table below shows the various incomes and demand for different commodities.
| Income (N) | Quantity Demanded (kg) |
| A 20,000 | 120 |
| B 36,000 | 96 |
| C 40,000 | 160 |
| D 44,000 | 200 |
| E 45,000 | 240 |
| F 47,000 | 252 |
(b) Calculate the income elasticity between
(i) A and B
(ii) C and D
(iii) E and F
(c) What kind of good is between
(i) A and B?
(ii) C and D?
(a) Income elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in consumer income: \[E_y=\dfrac{\%\ \text{change in quantity demanded}}{\%\ \text{change in income}}.\]
(b)(i) Between A and B: \(\%\Delta Q=\dfrac{96-120}{120}\times100=-20\%\); \(\%\Delta Y=\dfrac{36{,}000-20{,}000}{20{,}000}\times100=80\%\); \[E_y=\dfrac{-20}{80}=-0.25.\]
(b)(ii) Between C and D: \(\%\Delta Q=\dfrac{200-160}{160}\times100=25\%\); \(\%\Delta Y=\dfrac{44{,}000-40{,}000}{40{,}000}\times100=10\%\); \[E_y=\dfrac{25}{10}=2.5.\]
(b)(iii) Between E and F: \(\%\Delta Q=\dfrac{252-240}{240}\times100=5\%\); \(\%\Delta Y=\dfrac{47{,}000-45{,}000}{45{,}000}\times100=4.44\%\); \[E_y=\dfrac{5}{4.44}=1.13.\]
(c)(i) Between A and B the elasticity is negative (-0.25), so the good is an inferior good (demand falls as income rises).
(c)(ii) Between C and D the elasticity is positive and greater than 1 (2.5), so the good is a normal good, specifically a luxury (superior) good.
Answer Details
(a) Income elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in consumer income: \[E_y=\dfrac{\%\ \text{change in quantity demanded}}{\%\ \text{change in income}}.\]
(b)(i) Between A and B: \(\%\Delta Q=\dfrac{96-120}{120}\times100=-20\%\); \(\%\Delta Y=\dfrac{36{,}000-20{,}000}{20{,}000}\times100=80\%\); \[E_y=\dfrac{-20}{80}=-0.25.\]
(b)(ii) Between C and D: \(\%\Delta Q=\dfrac{200-160}{160}\times100=25\%\); \(\%\Delta Y=\dfrac{44{,}000-40{,}000}{40{,}000}\times100=10\%\); \[E_y=\dfrac{25}{10}=2.5.\]
(b)(iii) Between E and F: \(\%\Delta Q=\dfrac{252-240}{240}\times100=5\%\); \(\%\Delta Y=\dfrac{47{,}000-45{,}000}{45{,}000}\times100=4.44\%\); \[E_y=\dfrac{5}{4.44}=1.13.\]
(c)(i) Between A and B the elasticity is negative (-0.25), so the good is an inferior good (demand falls as income rises).
(c)(ii) Between C and D the elasticity is positive and greater than 1 (2.5), so the good is a normal good, specifically a luxury (superior) good.
Question 53 Report
Why do governments impose taxes?
Governments impose taxes for several reasons:
- To raise revenue: taxes are the main source of government income for financing its expenditure.
- To redistribute income: progressive taxes take more from the rich, and the proceeds are used to provide services that benefit the poor, reducing inequality.
- To control inflation or deflation: as a tool of fiscal policy, higher taxes reduce spending power to curb inflation, while lower taxes boost demand.
- To protect infant industries: import duties make foreign goods dearer and shield young home industries.
- To discourage consumption of harmful goods: heavy taxes on items such as tobacco and alcohol reduce their consumption.
- To correct a balance-of-payments deficit: taxes on imports reduce spending on foreign goods.
- To check monopoly and windfall gains: taxes can reduce excessive profits.
Answer Details
Governments impose taxes for several reasons:
- To raise revenue: taxes are the main source of government income for financing its expenditure.
- To redistribute income: progressive taxes take more from the rich, and the proceeds are used to provide services that benefit the poor, reducing inequality.
- To control inflation or deflation: as a tool of fiscal policy, higher taxes reduce spending power to curb inflation, while lower taxes boost demand.
- To protect infant industries: import duties make foreign goods dearer and shield young home industries.
- To discourage consumption of harmful goods: heavy taxes on items such as tobacco and alcohol reduce their consumption.
- To correct a balance-of-payments deficit: taxes on imports reduce spending on foreign goods.
- To check monopoly and windfall gains: taxes can reduce excessive profits.
Question 54 Report
(a) What is unemployment?
(b) Explain any three types of unemployment
a. Meaning of unemployment. Unemployment is a situation in which people who are willing and able to work at the prevailing wage rate are unable to find suitable jobs.
b. Three types of unemployment.
- Frictional unemployment: the short-term unemployment that occurs when workers are between jobs, for example when they have left one job and are searching for another.
- Structural unemployment: unemployment caused by a change in the structure of the economy or of demand, so that workers' skills no longer match the jobs available (for example, when a product goes out of use or a new technology replaces old skills).
- Cyclical (demand-deficient) unemployment: unemployment that arises during a general fall in economic activity or depression, when total demand for goods and services is low, so firms cut output and lay off workers.
(Other types include seasonal and disguised unemployment.)
Answer Details
a. Meaning of unemployment. Unemployment is a situation in which people who are willing and able to work at the prevailing wage rate are unable to find suitable jobs.
b. Three types of unemployment.
- Frictional unemployment: the short-term unemployment that occurs when workers are between jobs, for example when they have left one job and are searching for another.
- Structural unemployment: unemployment caused by a change in the structure of the economy or of demand, so that workers' skills no longer match the jobs available (for example, when a product goes out of use or a new technology replaces old skills).
- Cyclical (demand-deficient) unemployment: unemployment that arises during a general fall in economic activity or depression, when total demand for goods and services is low, so firms cut output and lay off workers.
(Other types include seasonal and disguised unemployment.)
Question 55 Report
How can the International Bank for Reconstruction and Development (World Bank) contribute to the economic development of your country?
The International Bank for Reconstruction and Development (the World Bank) can help the economic development of a country in the following ways:
- Provision of long-term loans: it lends money at moderate interest to finance development projects.
- Financing infrastructure: it funds roads, dams, power stations, water supply and similar projects that support growth.
- Technical assistance and advice: it provides experts to plan and supervise projects and to advise on economic policy.
- Feasibility studies: it helps investigate whether proposed projects are viable before funds are committed.
- Capacity building and training: it helps train personnel and strengthen local institutions.
- Support for key sectors: it channels funds into agriculture, education and health to raise productivity and welfare.
- Encouraging further investment: its involvement gives confidence that attracts other lenders and investors.
Answer Details
The International Bank for Reconstruction and Development (the World Bank) can help the economic development of a country in the following ways:
- Provision of long-term loans: it lends money at moderate interest to finance development projects.
- Financing infrastructure: it funds roads, dams, power stations, water supply and similar projects that support growth.
- Technical assistance and advice: it provides experts to plan and supervise projects and to advise on economic policy.
- Feasibility studies: it helps investigate whether proposed projects are viable before funds are committed.
- Capacity building and training: it helps train personnel and strengthen local institutions.
- Support for key sectors: it channels funds into agriculture, education and health to raise productivity and welfare.
- Encouraging further investment: its involvement gives confidence that attracts other lenders and investors.
Question 56 Report
(a) State the laws of demand and supply.
(b) With the aid of a diagram, explain the implications of a change in the quantity demanded of a commodity.
(a) Laws of demand and supply
- Law of demand: Other things being equal, the quantity demanded of a commodity rises when its price falls and falls when its price rises.
- Law of supply: Other things being equal, the quantity supplied of a commodity rises when its price rises and falls when its price falls.
(b) Change in quantity demanded
A change in quantity demanded is a movement along the same demand curve caused solely by a change in the commodity's own price. It is different from a change in demand, which shifts the whole demand curve.
In the diagram, the price of maize falls from $200 at point A to $150 at point B. Consequently, quantity demanded rises from 200 bags to 300 bags. This movement from A to B along the demand curve DD is called an extension or expansion in quantity demanded.
Conversely, if the price rises from $150 to $200, quantity demanded falls from 300 bags to 200 bags. The movement from B to A along the same demand curve is called a contraction in quantity demanded.
Answer Details
(a) Laws of demand and supply
- Law of demand: Other things being equal, the quantity demanded of a commodity rises when its price falls and falls when its price rises.
- Law of supply: Other things being equal, the quantity supplied of a commodity rises when its price rises and falls when its price falls.
(b) Change in quantity demanded
A change in quantity demanded is a movement along the same demand curve caused solely by a change in the commodity's own price. It is different from a change in demand, which shifts the whole demand curve.
In the diagram, the price of maize falls from $200 at point A to $150 at point B. Consequently, quantity demanded rises from 200 bags to 300 bags. This movement from A to B along the demand curve DD is called an extension or expansion in quantity demanded.
Conversely, if the price rises from $150 to $200, quantity demanded falls from 300 bags to 200 bags. The movement from B to A along the same demand curve is called a contraction in quantity demanded.
Question 57 Report
Highlight any five objectives of price control.
Price control is government regulation of the price of goods and services, usually by fixing a maximum (ceiling) or minimum (floor) price. Its objectives include:
- To prevent exploitation of consumers: a maximum price stops sellers from charging excessively high prices for essential goods.
- To check inflation: holding prices down helps to control a general rise in the price level.
- To protect low-income earners: it keeps essential goods within the reach of the poor.
- To ensure fair distribution of goods: controlled prices, often with rationing, spread scarce goods more evenly.
- To stabilise prices: a minimum price protects producers (for example farmers) from ruinously low prices and steadies their incomes.
(Other valid objectives: to discourage hoarding and profiteering, and to reduce the general cost of living.)
Answer Details
Price control is government regulation of the price of goods and services, usually by fixing a maximum (ceiling) or minimum (floor) price. Its objectives include:
- To prevent exploitation of consumers: a maximum price stops sellers from charging excessively high prices for essential goods.
- To check inflation: holding prices down helps to control a general rise in the price level.
- To protect low-income earners: it keeps essential goods within the reach of the poor.
- To ensure fair distribution of goods: controlled prices, often with rationing, spread scarce goods more evenly.
- To stabilise prices: a minimum price protects producers (for example farmers) from ruinously low prices and steadies their incomes.
(Other valid objectives: to discourage hoarding and profiteering, and to reduce the general cost of living.)
Question 58 Report
The pie chart here represents the hypothetical output of farmers in a country in a particular year. The total output of the crops was 72,000 tonnes.
(a) Calculate the quantity of each product.
(b) (i) By what quantity is the export crops greater than the food crops?
(ii) Which crop contributed the least and by what quantity?
(iii) Which crop has the highest output?
Total output = 72,000 tonnes.
For each sector of the pie chart:
\[\text{Quantity} = \frac{\text{Angle of sector}}{360^\circ}\times 72,000\]
(a) Quantities of the products
| Product | Angle | Calculation | Quantity (tonnes) |
|---|---|---|---|
| Cocoa | 117° | \(\frac{117}{360}\times72,000\) | 23,400 |
| Rubber | 96° | \(\frac{96}{360}\times72,000\) | 19,200 |
| Beans | 50° | \(\frac{50}{360}\times72,000\) | 10,000 |
| Cotton | 42° | \(\frac{42}{360}\times72,000\) | 8,400 |
| Rice | 55° | \(\frac{55}{360}\times72,000\) | 11,000 |
(b)(i) Export crops are cocoa, rubber and cotton:
\[23,400+19,200+8,400=51,000\text{ tonnes}\]
Food crops are beans and rice:
\[10,000+11,000=21,000\text{ tonnes}\]
\[51,000-21,000=30,000\text{ tonnes}\]
Therefore, export crops exceed food crops by 30,000 tonnes.
(b)(ii) Cotton contributed the least, with 8,400 tonnes.
(b)(iii) Cocoa has the highest output, with 23,400 tonnes.
Answer Details
Total output = 72,000 tonnes.
For each sector of the pie chart:
\[\text{Quantity} = \frac{\text{Angle of sector}}{360^\circ}\times 72,000\]
(a) Quantities of the products
| Product | Angle | Calculation | Quantity (tonnes) |
|---|---|---|---|
| Cocoa | 117° | \(\frac{117}{360}\times72,000\) | 23,400 |
| Rubber | 96° | \(\frac{96}{360}\times72,000\) | 19,200 |
| Beans | 50° | \(\frac{50}{360}\times72,000\) | 10,000 |
| Cotton | 42° | \(\frac{42}{360}\times72,000\) | 8,400 |
| Rice | 55° | \(\frac{55}{360}\times72,000\) | 11,000 |
(b)(i) Export crops are cocoa, rubber and cotton:
\[23,400+19,200+8,400=51,000\text{ tonnes}\]
Food crops are beans and rice:
\[10,000+11,000=21,000\text{ tonnes}\]
\[51,000-21,000=30,000\text{ tonnes}\]
Therefore, export crops exceed food crops by 30,000 tonnes.
(b)(ii) Cotton contributed the least, with 8,400 tonnes.
(b)(iii) Cocoa has the highest output, with 23,400 tonnes.
Question 59 Report
Why should a country measure her national income?
A country measures its national income for the following reasons:
- To assess economic performance: national income shows the total output of the economy and whether it is growing or declining.
- To compare standards of living: per-capita income allows comparison of welfare over time and between countries.
- To aid economic planning: reliable income figures guide the government in preparing budgets and development plans.
- To measure the contribution of sectors: it shows how much agriculture, industry and services each add to output.
- To study income distribution: it reveals how income is shared among the people and regions.
- To guide policy: it helps government decide on taxation, spending and other measures.
- For international purposes: it is used to assess a country's ability to contribute to, or receive aid from, international bodies.
Answer Details
A country measures its national income for the following reasons:
- To assess economic performance: national income shows the total output of the economy and whether it is growing or declining.
- To compare standards of living: per-capita income allows comparison of welfare over time and between countries.
- To aid economic planning: reliable income figures guide the government in preparing budgets and development plans.
- To measure the contribution of sectors: it shows how much agriculture, industry and services each add to output.
- To study income distribution: it reveals how income is shared among the people and regions.
- To guide policy: it helps government decide on taxation, spending and other measures.
- For international purposes: it is used to assess a country's ability to contribute to, or receive aid from, international bodies.
Question 60 Report
(a) What is mobility of labour?
(b) What factors serve as obstacles to occupational mobility of labour?
a. Mobility of labour. Mobility of labour is the ease or freedom with which workers can move from one job or occupation to another (occupational mobility) or from one geographical location to another (geographical mobility).
b. Obstacles to occupational mobility of labour.
- Lack of required skill or training: a worker cannot move into a job that demands qualifications he does not have.
- Cost of training: the money and time needed to acquire a new skill may be beyond the worker's reach.
- Natural ability or talent: some occupations need special aptitudes (for example, music or surgery) that not everyone possesses.
- Ignorance of job opportunities: workers may not know that vacancies exist in other occupations.
- Professional and trade-union barriers: entry requirements, licences or union rules restrict movement into certain jobs.
- Discrimination: on grounds of sex, tribe, age or religion, some workers are denied certain jobs.
- Cost of tools and equipment: some occupations require expensive equipment the worker cannot afford.
Answer Details
a. Mobility of labour. Mobility of labour is the ease or freedom with which workers can move from one job or occupation to another (occupational mobility) or from one geographical location to another (geographical mobility).
b. Obstacles to occupational mobility of labour.
- Lack of required skill or training: a worker cannot move into a job that demands qualifications he does not have.
- Cost of training: the money and time needed to acquire a new skill may be beyond the worker's reach.
- Natural ability or talent: some occupations need special aptitudes (for example, music or surgery) that not everyone possesses.
- Ignorance of job opportunities: workers may not know that vacancies exist in other occupations.
- Professional and trade-union barriers: entry requirements, licences or union rules restrict movement into certain jobs.
- Discrimination: on grounds of sex, tribe, age or religion, some workers are denied certain jobs.
- Cost of tools and equipment: some occupations require expensive equipment the worker cannot afford.
Question 61 Report
What form of business enterprise would you recommend for a tailor? Give reasons for your answer.
Recommendation: a tailor should operate as a sole proprietorship (one-man business).
Reasons.
- Small capital required: tailoring needs only a sewing machine, tools and a small workshop, which one person can finance.
- Easy to establish: there are few legal formalities, so the business can start quickly.
- Direct personal service: the tailor deals face to face with customers and can meet their individual tastes and measurements.
- Quick decision-making: the owner is the sole decision-maker and can respond promptly to customers' needs.
- The owner enjoys all the profit: there is no sharing of profit with partners or shareholders.
- Ease of management and flexibility: the business is small and simple to control, and the owner can easily change designs or working hours.
Because tailoring is a small-scale, skill-based, personal service, the one-man business suits it better than a partnership or company.
Answer Details
Recommendation: a tailor should operate as a sole proprietorship (one-man business).
Reasons.
- Small capital required: tailoring needs only a sewing machine, tools and a small workshop, which one person can finance.
- Easy to establish: there are few legal formalities, so the business can start quickly.
- Direct personal service: the tailor deals face to face with customers and can meet their individual tastes and measurements.
- Quick decision-making: the owner is the sole decision-maker and can respond promptly to customers' needs.
- The owner enjoys all the profit: there is no sharing of profit with partners or shareholders.
- Ease of management and flexibility: the business is small and simple to control, and the owner can easily change designs or working hours.
Because tailoring is a small-scale, skill-based, personal service, the one-man business suits it better than a partnership or company.
Question 62 Report
Give five reasons for the low rate of industrial growth in your country.
The low rate of industrial growth in a developing country such as Nigeria is caused by:
- Inadequate capital: shortage of funds to build factories and buy machinery limits industrial expansion.
- Poor infrastructure: unreliable electricity, bad roads and poor water supply raise costs and discourage industry.
- Low level of technology: outdated machinery and methods keep productivity and quality low.
- Shortage of skilled labour and managers: too few trained technicians and entrepreneurs to run modern industry.
- Small market and low demand: low incomes mean weak demand for manufactured goods, and competition from cheap imports further reduces sales.
(Other valid reasons: political instability, inadequate local raw materials, and unfavourable government policy.)
Answer Details
The low rate of industrial growth in a developing country such as Nigeria is caused by:
- Inadequate capital: shortage of funds to build factories and buy machinery limits industrial expansion.
- Poor infrastructure: unreliable electricity, bad roads and poor water supply raise costs and discourage industry.
- Low level of technology: outdated machinery and methods keep productivity and quality low.
- Shortage of skilled labour and managers: too few trained technicians and entrepreneurs to run modern industry.
- Small market and low demand: low incomes mean weak demand for manufactured goods, and competition from cheap imports further reduces sales.
(Other valid reasons: political instability, inadequate local raw materials, and unfavourable government policy.)
Question 63 Report
Explain each of the following:
(a) Indigenisation policy
(b) Localization of industry
(c) Economies of scale
(d) National budget.
a. Indigenisation policy. This is a government policy that transfers the ownership and control of business enterprises from foreigners to citizens (nationals) of the country, so that indigenes participate more fully in and dominate the economy.
b. Localisation of industry. This is the concentration of a particular industry in a specific geographical area, arising from advantages such as nearness to raw materials, availability of labour, market, power or good transport in that area.
c. Economies of scale. These are the cost advantages, that is, the fall in average (unit) cost of production, that a firm enjoys as it expands its scale of output. They may be internal (arising within the firm, such as bulk buying and better machines) or external (arising from the growth of the whole industry).
d. National budget. This is a financial statement showing the government's estimated revenue and proposed expenditure for a given period, usually one year. It may be balanced (revenue equals expenditure), a surplus budget (revenue exceeds expenditure) or a deficit budget (expenditure exceeds revenue).
Answer Details
a. Indigenisation policy. This is a government policy that transfers the ownership and control of business enterprises from foreigners to citizens (nationals) of the country, so that indigenes participate more fully in and dominate the economy.
b. Localisation of industry. This is the concentration of a particular industry in a specific geographical area, arising from advantages such as nearness to raw materials, availability of labour, market, power or good transport in that area.
c. Economies of scale. These are the cost advantages, that is, the fall in average (unit) cost of production, that a firm enjoys as it expands its scale of output. They may be internal (arising within the firm, such as bulk buying and better machines) or external (arising from the growth of the whole industry).
d. National budget. This is a financial statement showing the government's estimated revenue and proposed expenditure for a given period, usually one year. It may be balanced (revenue equals expenditure), a surplus budget (revenue exceeds expenditure) or a deficit budget (expenditure exceeds revenue).
