WAEC SSCE - Economics - 2007

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The three principal economic units in any system are households, firms, and governments. Households are the primary consumers and own the factors of production, such as labor and capital. They buy goods and services produced by firms and supply their labor to firms in exchange for wages. Firms are the primary producers of goods and services, and they hire labor and buy capital from households. Firms are motivated by profits and aim to maximize them by producing goods and services that are in demand by households and other firms. Governments play a crucial role in the economy by regulating and overseeing economic activity, providing public goods and services, and levying taxes to finance government spending. Overall, the interactions between households, firms, and governments determine the overall level of economic activity and the distribution of goods and services in an economy.

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A country with a buoyant economy is likely to have a strong currency. A strong economy typically means that there is a high demand for the country's currency, which in turn raises the exchange rate. This can make imports cheaper, which can help to further stimulate economic growth. Additionally, a strong currency can attract foreign investment and can also help to improve the country's balance of payments. Therefore, a strong currency is generally seen as a positive sign for a country's economy.

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If a country doesn't have enough people to work and make full use of its natural resources, it is said to have under-population. This means that there are not enough workers to fully utilize the resources available in that country. It can be a hindrance to the country's economic growth and development because they may not be able to take advantage of their natural resources to their full potential.

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The Net National Product (NNP) is the Gross National Product (GNP) minus the depreciation of capital during a specific period. GNP is the total value of goods and services produced by the nationals of a country, either inside or outside the country's borders, within a particular period. In contrast, NNP is the total income earned by the nationals of a country, including depreciation, within the same period. Depreciation refers to the wear and tear of capital goods such as machinery, equipment, and buildings used in production during a specific period. Since capital goods depreciate over time, their value decreases as they are used. Thus, depreciation represents the reduction in the value of capital during a particular period. Therefore, the correct option is "depreciation."

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Revenue is the total money realized from sales of goods or services. It is the income a company or organization generates from its business activities before deducting any expenses or costs. Revenue is a key financial metric that is used to measure the financial performance of a business. It is calculated by multiplying the price of each unit sold by the total number of units sold. For example, if a company sells 100 units of a product at $10 per unit, its revenue would be $1,000. Revenue is an important factor in determining a company's profitability and financial health.

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A summary of all the receipts and payments of a country in international transactions is called the balance of payment. It is a record of all the economic transactions between residents of a country and the rest of the world over a given period, typically a year. The balance of payments is divided into two main accounts: the current account and the capital account. The current account measures the flow of goods and services in and out of a country, while the capital account measures the flow of investment and financial transfers. The balance of payments is used to determine whether a country has a surplus or deficit in its international transactions, which can have important implications for its economy.

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The most important quality of money is that it must be generally acceptable. This means that people should be willing to accept it as a medium of exchange in transactions. Without this quality, money would not be useful as a means of payment for goods and services. Money can be scarce, portable, and durable, but if people do not accept it as a valid form of payment, it would not function as money. Therefore, being generally acceptable is the most important quality that money must possess.

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Joint venture is the practice whereby a business is owned by two or more independent firms. In a joint venture, two or more companies agree to combine their resources, knowledge, and expertise to undertake a particular business venture or project. Each company shares the risks and rewards of the venture and has a stake in its success. Joint ventures are common in international business, where companies from different countries come together to explore new markets, develop new products, or gain access to new technology.

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Under rapid inflation, people hardly want to lend money. This is because the value of money decreases rapidly, and so the money that is lent out may not be worth as much when it is repaid. This makes lending money a risky proposition, and so people may avoid doing it. Additionally, people may prefer to spend their money rather than lend it out, as the cost of goods and services may increase rapidly, making it more expensive to buy them later. Therefore, they may prefer to use their money to purchase goods and services immediately rather than hold onto it.

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The expression TRn - TR (n-1) represents the change in total revenue resulting from an increase in the level of output from n-1 units to n units. Therefore, this expression is used to calculate the marginal revenue of producing the additional unit of output. Marginal revenue is the additional revenue generated from selling one more unit of a product. Hence, TRn - TR (n-1) is the formula for calculating marginal revenue.

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Monetary control measures are coordinated by the central banks. Central banks are responsible for formulating and implementing monetary policy to achieve certain macroeconomic objectives such as price stability, full employment, and economic growth. They use various monetary control measures such as adjusting interest rates, reserve requirements, and open market operations to influence the money supply and credit conditions in the economy. Commercial banks and other financial institutions may implement these measures, but they do so under the guidance and supervision of the central bank.

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Long-term loans can be secured from development banks. Development banks are financial institutions that provide long-term loans to businesses and governments for development projects such as infrastructure, education, and healthcare. Unlike commercial banks that mainly provide short-term loans, development banks have a specific mandate to provide long-term financing to support economic development. They often offer lower interest rates and longer repayment periods compared to other financial institutions. Therefore, businesses and governments looking for long-term financing to invest in development projects often turn to development banks as a source of funding.

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The financial institution that was originally known as a Building Society is the Mortgage Bank. A Building Society is a type of financial institution that provides loans to individuals for buying or building houses. It raises funds by accepting deposits from its members, which it then uses to provide mortgage loans at low-interest rates. As the name suggests, a Mortgage Bank is a financial institution that specializes in providing mortgage loans to individuals and businesses. It raises funds by issuing bonds, accepting deposits, and borrowing from other financial institutions. Therefore, the correct option is "Mortgage banks."

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To promote the development of the agricultural sector, governments of West African countries should support the marketing of farm produce. This can be done through creating efficient and affordable transportation systems to connect farmers to local and international markets. Governments can also provide storage facilities and promote the use of modern farming technologies to improve productivity and increase yield. By doing so, farmers will be encouraged to produce more, earn more income, and ultimately contribute to the economic growth of their countries. Discouraging foreign investment and reducing tariffs on food imports may lead to a reduction in demand for locally grown produce, and may negatively affect the agricultural sector in the long run. Encouraging rural-urban drift may also be counterproductive, as it may result in a depletion of the agricultural labor force, which is critical to the sector's development.

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ECA stands for Economic Commission for Africa. It is a United Nations regional commission established in 1958 with the mandate of promoting the economic and social development of its member states, fostering intra-regional integration, and promoting international cooperation for Africa's development. Its headquarters is in Addis Ababa, Ethiopia, and it has 54 member states.

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One advantage of international trade is that it makes a variety of goods available to consumers. Countries can produce goods they are most efficient in and trade them with other countries, leading to a wider variety of products available to consumers. This allows consumers to have access to goods they would not be able to produce domestically, either due to lack of resources, technology or expertise. In addition, international trade promotes competition, which can lead to lower prices and improved quality of goods, as domestic producers compete with foreign producers. Thus, international trade not only provides consumers with more choices but also improves the quality and affordability of the products they buy.

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Per capita income is calculated by dividing the Gross National Product (GNP) by the population of a country. If the population of a country is low and the Gross National Product (GNP) is high, it means that there is a small number of people who are producing a high amount of goods and services, which leads to a high per capita income. In this scenario, there is a higher share of national income per person, which could translate into better living standards, higher purchasing power, and a higher overall quality of life. Therefore, the answer is "high."

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When population is classified according to professions, it is called occupational distribution of population. This refers to the distribution of people across various occupations or job categories within a particular geographical location or country. This type of classification allows us to understand the distribution of skills, expertise and labour across different sectors of the economy, and is used by policymakers and researchers to make decisions regarding workforce development, training, and economic planning. It also helps to identify areas where there may be labour shortages or surpluses, and to address issues of income inequality and access to employment opportunities.

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A retailer is a middleman in the chain of distribution. They purchase goods from wholesalers or producers and sell them directly to consumers. The retailer serves as a link between the producers and the consumers by providing a convenient location for customers to purchase goods and a means for producers to reach a wider market. Retailers may add value to the products they sell by providing services such as packaging, promotion, and after-sales support.

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The answer is "transaction demand for money." Transaction demand for money is the amount of money that an individual or business needs for everyday transactions, such as buying goods and services. It is a form of demand for money that arises out of the need to conduct regular economic transactions. The other types of demand for money are the precautionary demand for money, which is the need for money to meet unexpected contingencies, and the speculative demand for money, which is the need for money to make financial investments.

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The characteristic of monopoly is "a single seller." A monopoly is a market structure where only one company or entity controls the supply of a particular good or service. Since there is no competition, the monopolist has the power to set prices and control the market. This is different from a market with many sellers, known as a perfect competition, where no single company has the power to influence prices or control the market.

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A foreign exchange market is a market where currencies from different countries are bought and sold. It is a global decentralized market that determines the exchange rate between different currencies. Individuals, companies, and governments participate in the foreign exchange market to buy and sell currencies for various reasons, such as trade, investment, tourism, or speculation. The exchange rate is determined by the supply and demand of each currency in the market. Therefore, the correct option is "currencies".

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A producer good is a type of good that is used to produce other goods and services rather than for consumption. An example of a producer good is a hammer, as it is a tool used by workers to produce other goods such as furniture, buildings, or machinery.

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The value of money is generally measured in relation to the general price level. In other words, the value of money is determined by the amount of goods and services it can buy. If the price of goods and services goes up, the value of money goes down because it can buy less. Conversely, if the price of goods and services goes down, the value of money goes up because it can buy more. This relationship between the value of money and the general price level is known as purchasing power.

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The Malthusian theory of population is a theory about the relationship between population growth and resources. It states that population grows geometrically, while resources (especially food) grow arithmetically. The theory emphasizes the existence of positive checks (such as famine, disease, and war) that limit population growth. However, the theory does not concern itself with the development and growth of manpower, which is more related to the economic growth of a society.

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The institution that assists the government in managing the national debt is the Central bank. The Central bank is responsible for implementing monetary policy on behalf of the government. One of the key functions of the Central bank is to regulate the money supply and interest rates in the economy. This involves managing the national debt, which refers to the total amount of money owed by the government to its creditors. The Central bank plays a key role in managing the national debt by buying and selling government securities, which helps to control the supply of money in the economy and influence interest rates. This in turn affects the cost of borrowing for the government and its ability to manage its debt.

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International trade depends on the concept of comparative cost advantage. This means that different countries have different production costs and therefore can produce certain goods more efficiently and at a lower cost compared to other countries. When countries specialize in producing goods they have a comparative cost advantage in, they can trade with other countries to obtain goods they don't produce efficiently or at all. For example, if Country A is better at producing wheat and Country B is better at producing cloth, Country A can specialize in producing wheat and trade it with Country B in exchange for cloth. This allows both countries to consume more goods at a lower overall cost compared to producing everything domestically. Comparative cost advantage helps to increase efficiency and maximize production across different countries, leading to increased economic growth and development.

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Patents are examples of legal barriers to entry. A patent is a legal right granted to an inventor or assignee that gives them exclusive rights to make, use and sell their invention for a certain period of time, usually 20 years from the date of filing. By having a patent, the inventor can prevent others from making, using or selling their invention without their permission, which can create a legal barrier to entry for potential competitors. This means that the inventor has a temporary monopoly on their invention and can potentially earn higher profits. Overall, patents are a way to encourage innovation by protecting the rights of inventors and providing them with the potential to earn returns on their investment. They also serve as a legal barrier to entry, limiting competition and potentially allowing the inventor to establish a dominant position in the market.

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The reward which accrues to labour for participating in production is a "wage". Wages are the payment that workers receive for their labor, usually in the form of money. It is the compensation given by the employer to the employee in exchange for the work done. Wages are generally paid on an hourly, daily, or weekly basis, and are usually set by negotiation between the employer and employee, or determined by industry standards or government regulations.

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Transfer payments refer to payments made without any corresponding goods or services in return. Therefore, the only option listed that fits the definition of a transfer payment is "gifts and donations." Rents and rates refer to payments made in exchange for the use of land or property. Profits and dividends refer to payments made to the owners of a company or investment. Internal and external debts refer to money owed by a borrower to a lender, with interest charged for the use of that money.

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An insurance company is a non-bank financial intermediary which is regarded as a pool of risks. This is because an insurance company pools together premiums from individuals and businesses, and uses that money to pay out claims to those who experience losses or damages covered by their policies. By doing this, the insurance company spreads the risk of loss among many policyholders, reducing the financial impact on any individual. The insurance company is able to operate in this way because it uses statistical data to calculate the likelihood of various events occurring and sets premiums accordingly.

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Among the options given, tourism is likely to contribute the highest amount of foreign exchange to the economy of West African nations. This is because West Africa is home to several popular tourist destinations, including beautiful beaches, wildlife parks, cultural sites, and historical landmarks. Tourists from all over the world visit West Africa to experience its unique culture, history, and natural beauty, and in turn, they spend money on hotels, transportation, food, souvenirs, and other local goods and services. This creates jobs and income for the local population and generates foreign exchange for the economy. While other sectors such as extraction and farming are also important, they may not generate as much foreign exchange as tourism due to factors such as fluctuating commodity prices and global demand.

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The practice of selling goods overseas and often below the cost of production is known as "dumping." Dumping occurs when a company exports a product to another country at a price that is lower than the price charged for the same product in its domestic market. This can be done for a variety of reasons, such as to gain market share, to eliminate competition, or to dispose of excess inventory. Dumping is often viewed as an unfair trade practice, as it can harm domestic producers and create an uneven playing field in the global market.

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The main objective of privatizing a government business is to increase the level of efficiency. When a government-owned business is privatized, it is transferred to private ownership and management. Private companies are motivated by profit and are therefore more likely to operate the business more efficiently, reducing costs and improving productivity. Private companies are also able to access capital markets more easily than government-owned businesses, enabling them to invest in new technology and expand operations. As a result, privatization can lead to increased competition, improved services, and lower prices for consumers. However, it is worth noting that privatization may not always lead to positive outcomes, and the decision to privatize should be carefully considered based on the specific circumstances of the business in question.

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One of the advantages of capitalism is that it assures efficient allocation of resources. Capitalism allows individuals and businesses to make their own economic decisions based on market demand and supply. Competition between businesses in a capitalist system drives innovation and efficiency, which leads to the production of goods and services that are demanded by consumers at the lowest possible cost. In a free market capitalist system, resources are allocated based on their most productive use, meaning that resources are not wasted and are utilized to their maximum potential. As a result, capitalism helps to create wealth and raise living standards for individuals and society as a whole.

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To obtain the total cost of producing a certain quantity of output, you need to add the fixed cost to the variable cost. Fixed costs are the costs that do not change with the level of output, such as rent, insurance, or salaries. Variable costs, on the other hand, are the costs that vary with the level of output, such as the cost of raw materials, labor, or electricity. Thus, adding the fixed cost to the variable cost will give you the total cost of producing a specific level of output. Therefore, the correct option to choose is "fixed cost" to get the total cost.

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One characteristic of labor is that it is mobile. This means that workers have the ability to move between different jobs, industries, and locations based on their skills, preferences, and the availability of employment opportunities. The mobility of labor is an important feature of modern labor markets, as it allows workers to find employment that matches their skills and interests, and helps firms to find workers with the skills they need. However, the mobility of labor can be limited by factors such as geographic location, language barriers, and immigration policies. In addition, certain types of jobs may require specific skills or training, which can make it difficult for workers to switch between industries or occupations. Overall, the mobility of labor is an important characteristic that helps to ensure that labor markets are efficient and that workers and firms are able to find the best possible matches for their needs.

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The presence of a large number of middlemen in the distributive network can lead to a higher price of goods, which is a negative effect. Middlemen add their own profit margin to the cost of goods, increasing the final price that consumers pay. This can result in inflated prices that are not reflective of the actual cost of production or distribution. As a result, consumers may end up paying more for goods than they would if there were fewer middlemen involved in the process. This can be especially problematic for consumers in low-income households, who may be disproportionately affected by high prices.

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Income tax is an example of a direct tax. Direct taxes are taxes that are paid directly by individuals or entities to the government, based on their income or assets. Income tax is a tax on an individual's income and is calculated as a percentage of their income. Direct taxes are considered progressive, as they are based on the ability to pay, meaning that those who earn more income pay a higher percentage of their income as tax compared to those who earn less income. Import duties, export duties, and purchase tax are examples of indirect taxes, which are taxes that are collected by intermediaries such as manufacturers, wholesalers, and retailers and passed on to consumers as part of the price of goods and services.

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The satisfaction derived from the use of a commodity is its utility. Utility refers to the level of satisfaction or pleasure that an individual derives from the consumption or use of a particular commodity or service. It is a subjective measure and varies from person to person. The concept of utility is important in economics because it helps to explain why individuals make certain choices when they have limited resources. Consumers tend to choose goods and services that provide them with the highest level of utility or satisfaction, given their income and the prices of goods and services in the market. Therefore, the concept of utility plays a central role in the study of consumer behavior and demand in economics.

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If tax takes a large proportion of the income of people with lower income, the tax is considered regressive. This means that the burden of tax falls heavier on lower income earners than higher income earners. In other words, the tax rate decreases as income increases. This type of tax system is often criticized for being unfair as it puts a heavier burden on those who can least afford it.

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The demand function for beans in bags is given as: Q - 36 + 0.4P = 0 We are given P = 20 naira, therefore: Q - 36 + 0.4(20) = 0 Q - 36 + 8 = 0 Q = 28 bags Therefore, when the price of beans in bags is 20 naira, the quantity demanded is 28 bags. Hence, the answer is 28 bags.

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To calculate the national income, we can use the formula: National Income = Per Capita Income x Population Using the information given in the question, we can substitute the values and get: National Income = $2,050 x 50,000,000 National Income = $102,500,000,000 Therefore, the national income of the country in that year was $102,500 million, which is option C in the given choices. In simple terms, we can say that the national income is the total income earned by all the residents of a country, including individuals, businesses, and the government. It is calculated by multiplying the per capita income, which is the average income earned per person, by the total population of the country.

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The return of investment that is just enough to make a business owner satisfied is called "normal profit." It is the minimum amount of profit required to keep the business running and compensate the owner for their time and effort. Normal profit takes into account the opportunity cost of the owner's time and capital, which means the amount they could have earned by investing their resources elsewhere. Normal profit is different from economic profit or excess profit, which represents the profit earned over and above the normal profit level.

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