WAEC SSCE - Economics - 1989

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The indicator of the value of money in the market is the general price level. This refers to the average price of goods and services in an economy. It represents the amount of money that is needed to purchase a basket of goods and services at a given time. When the general price level increases, it means that the value of money has decreased, and when it decreases, it means the value of money has increased. The general price level is an important indicator of inflation, which is the rate at which the general price level is increasing over time.

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The option that is not correct is: "Population is affected by the amount of money in circulation." Population refers to the number of people living in a place, and it can change over time due to various factors such as birth, death, migration, and natural disasters. The population of a place is not static, meaning it can increase or decrease over time. Population is known through a census, which is a process of collecting and analyzing demographic data. However, population is not affected by the amount of money in circulation because money supply and population are two separate concepts that do not have a direct causal relationship.

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The hard currency usually used in the pricing of oil at the world market, particularly by the Organization of Petroleum Exporting Countries (OPEC), is the US dollar. This is because the US dollar is widely accepted and used as an international currency for trade and transactions. Since oil is one of the most traded commodities in the world, it makes sense for OPEC to use the US dollar as the standard currency for pricing and trading oil.

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The most important reason why wages differ among occupations is the supply of labor. When there is a higher demand for a certain occupation than the available supply of labor, the wages for that occupation tend to increase. Conversely, when there is an oversupply of labor for a particular occupation, the wages tend to decrease. The supply of labor is affected by factors such as population growth, immigration, education, and changes in the economy. While factors such as the length and cost of training, the attractiveness of the job, the influence of trade unions, and government decisions can also affect wages, they tend to be secondary factors. For example, even if a job is highly attractive or requires extensive training, if there are more people available to fill that job than there are positions available, the wages for that occupation will tend to be lower. Similarly, while trade unions can negotiate higher wages for their members, the availability of labor still plays a significant role in determining wages.

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The correct answer is "Interest". A debenture is a type of bond that a company issues to raise money from the public. Debenture holders are essentially lending money to the company and, in return, receive regular interest payments at a fixed rate. This interest rate is typically set when the debenture is issued and remains fixed for the life of the bond. Unlike shareholders, debenture holders do not have ownership in the company and do not receive dividends or other forms of profit sharing. Therefore, the reward of a debenture holder of a public company is a fixed rate of interest.

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The option that does not hinder the efficient distribution of goods in West Africa is "Government participation in the distributive trade". Government participation in the distributive trade can actually help to improve the efficiency of distribution by providing regulations, infrastructure, and support services that can benefit distributors and consumers. However, the other options listed can all hinder the efficient distribution of goods in West Africa. Inadequate transportation networks can make it difficult to move goods quickly and cheaply between locations, while inadequate storage facilities can lead to spoilage and waste. Inadequate credit facilities can make it difficult for potential distributors to finance their operations and expand their businesses. The tendency to hoard and smuggle can disrupt the normal flow of goods and create artificial shortages, leading to higher prices and reduced availability of goods.

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The factor that is not important in deciding the location of an industry is the native language of the people. The language spoken by the people in a location does not have any direct impact on the location of an industry. While it may be beneficial for a company to have employees who can communicate effectively with each other, this is not a primary consideration when selecting a location for an industry. On the other hand, availability of suitable labor, source of cheap power and raw materials, proximity to similar industries, and proximity to the market are important factors in deciding the location of an industry. These factors affect the cost of production, transportation, and distribution of goods and services, as well as the availability of resources necessary for the operation of the industry. Overall, the location of an industry is a critical decision that can impact the success and profitability of the business. Companies must consider a range of factors when making this decision to ensure that they can operate efficiently and effectively in the chosen location.

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The correct term for the group of exports consisting of tractors, televisions, components, drugs, and cars is "visible exports." Visible exports refer to tangible goods that are physically shipped from one country to another and can be seen or touched, such as machinery, automobiles, and consumer goods. These exports are recorded in a country's balance of trade, which is the difference between the value of its visible exports and visible imports. In contrast, invisible exports refer to intangible goods or services that are not physically shipped but are provided to other countries, such as tourism, education, or consulting services. Capital account items refer to transactions involving capital assets, such as foreign direct investments or loans, while current account items refer to transactions involving trade in goods and services, as well as primary and secondary income.

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Stability in value is not a function of money. Money serves as a medium of exchange, unit of account, and store of value. It also provides a standard for deferred payment and serves as a measure of value. However, while money can maintain its value over short periods of time, it is subject to fluctuations in value due to inflation or deflation over longer periods. The stability of money's value is influenced by a variety of factors, such as government policies, economic conditions, and market forces. Therefore, stability in value is not a function of money, but rather an ideal characteristic that money should possess.

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The grouping of a population into males and females is known as the sex distribution. Sex distribution is an important demographic characteristic used to describe the composition of a population. It refers to the proportion of males and females in a population and can have significant implications for social, economic, and political systems. Sex distribution is typically expressed as a ratio of males to females and can vary depending on a variety of factors, including cultural norms, health status, and migration patterns. The sex distribution of a population can also be used to calculate other demographic indicators, such as the sex ratio at birth and the overall dependency ratio.

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Limitation of markets for industrial products does not encourage industrial development. Industrial development requires a market for the goods produced, and the limitation of markets for industrial products would hinder the growth of industries. Tax exemption, provision of financial institutions, provision of infrastructural facilities, and government direct participation are measures that can encourage industrial development. Tax exemption reduces the cost of production, making the products more competitive. Provision of financial institutions provides easy access to capital for investment in industrial projects. Provision of infrastructural facilities such as electricity, good roads, and communication networks makes it easier to transport goods and raw materials. Government direct participation involves the government investing in industrial projects and providing incentives for private investors to establish industries.

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The normal channel by which commodities reach the final consumer is the Manufacturer-Wholesale-Retailer-Consumer channel. In this channel, the manufacturer produces the goods, then sells them to the wholesaler who buys them in bulk, and then the wholesaler sells them to the retailer who then sells them to the final consumer. This channel is the most common method used for the distribution of goods, and it allows for the goods to be sold at a reasonable price to the consumer.

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The option that does not encourage industrial development is "Limitation of markets for industrial products". This is because a limited market will reduce demand for the products of the industry, which will ultimately lead to reduced production and growth in the sector. The other options listed, such as tax exemption, provision of financial institutions, provision of infrastructural facilities, and government direct participation, all encourage industrial development by providing support and incentives to help businesses grow and operate more efficiently.

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One of the arguments against the presence of middlemen in the distribution chain is that they cause an increase in the price of commodities. Middlemen are intermediaries who buy goods from producers and sell them to consumers. They add their own profit margin to the price of the goods, which increases the final price paid by consumers. This can be particularly problematic in situations where there are many middlemen involved in the distribution chain, as each one will add their own margin, leading to a significant increase in the price of the commodity. Some argue that the elimination of middlemen could result in lower prices for consumers, as there would be fewer people involved in the distribution chain and therefore fewer markups along the way.

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A firm is said to be a Public Joint-Stock Company when it sells its shares to members of the public. This means that the ownership of the company is shared among a large number of people who have bought shares in the company. This is different from a private company, where the ownership is restricted to a small group of individuals or entities. In a Public Joint-Stock Company, the shares are traded on a stock exchange, and the value of the shares is determined by supply and demand in the market. The company is also subject to regulations and disclosure requirements to protect the interests of the shareholders and the public.

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The downward sloping of the Average Revenue curve of a monopolist indicates that they have control over the price of their product. This is because, unlike in a perfectly competitive market where the price is determined by the market forces of supply and demand, a monopolist can set the price at a level that maximizes their profit. The monopolist faces a downward sloping demand curve, which means that they have to lower the price to sell more units of their product. Therefore, the monopolist has the ability to control the price, but it comes at the expense of lower output. Thus, the monopolist can control either the output or the price, but not both, as there is an inverse relationship between price and quantity demanded.

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In economics, scarcity means that resources needed to satisfy human wants are limited. This means that there are not enough resources to produce all the goods and services that people want to consume. Since resources such as land, labor, and capital are limited, it is impossible to produce an infinite amount of goods and services. Scarcity is a fundamental concept in economics because it drives many economic decisions. Since resources are limited, producers and consumers must make choices about how to allocate these resources in the most efficient way possible. This means that some wants and needs may go unmet, as there simply aren't enough resources to produce everything that people want.

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The money paid per hour or week for work done is known as wage rate. It refers to the amount of money paid to an employee for the work they have completed during a specified time period. The wage rate is usually based on the amount of time worked and can be paid on an hourly, daily, or weekly basis. Wage rate is an important concept in employment and labor economics because it is a key factor in determining the cost of labor for businesses. It is also an important factor in determining the standard of living of workers, as their wages directly affect their purchasing power and ability to afford basic needs.

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A person who buys goods in large quantities and then sells them in smaller quantities is called a retailer. Retailers typically purchase products from manufacturers or wholesalers in large quantities and then sell them to consumers in smaller quantities. They may operate physical stores, online stores, or both. The retailer's main function is to make goods available to the general public, offering a wide range of products that are attractive, affordable, and easily accessible.

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Among the given options, the cost of rent on land is regarded as a fixed cost. Fixed costs are those expenses that do not vary with the level of production or sales in a business. They are considered to be the basic expenses that must be paid, regardless of the level of output. In the case of rent on land, the cost remains the same regardless of the amount of output produced or sold. In contrast, costs such as raw materials, fuel, light, and labour wages are variable costs because they vary depending on the level of production or sales. As production or sales increase, these costs also increase proportionally.

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Data presented in tables are usually arranged in rows and columns. Tables are a convenient way of organizing and presenting data in a clear and concise manner. Rows are horizontal lines of data, while columns are vertical lines of data. Tables are commonly used in research studies, reports, and publications to present large amounts of data in an organized and easy-to-understand format. They can also be used to compare and contrast data across different categories or variables.

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The depreciation method is not appropriate in calculating national income figures. Depreciation is a measure of the wear and tear on capital goods, such as machinery and equipment, over time. It represents the decline in the value of these assets as they are used in the production process. While depreciation is an important concept in accounting and financial analysis, it is not included in national income figures because it is not a measure of current production or income. Instead, national income figures are calculated using methods that focus on current output, income, and expenditure, such as the output method, income method, expenditure method, and value added method.

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The greatest disadvantage of a barter system is the need for double coincidence of wants. This means that in order for a transaction to occur, both parties involved must have something the other wants. For example, if a farmer has wheat and wants meat, they must find someone who has meat and wants wheat. This can be difficult, time-consuming, and inefficient, especially in larger economies where a wide range of goods and services are produced and exchanged. Therefore, the lack of double coincidence of wants makes barter system impractical and inefficient as a means of exchange.

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The best description for an inflation in which prices rise steadily at an average rate of about 2% per annum is "creeping inflation." This type of inflation is also known as a "moderate inflation." It is characterized by a slow and steady increase in the general price level of goods and services over a period of time. In a creeping inflation, the increase in prices is relatively low and predictable, making it easier for people to adjust their spending habits accordingly. This type of inflation is often targeted by central banks, which aim to keep inflation within a target range of around 2-3% per annum.

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The clearing house of all commercial banks in Nigeria is the Central Bank. The Central Bank is the apex financial institution in Nigeria responsible for regulating and supervising the activities of commercial banks and other financial institutions. It acts as the banker to the government and also regulates the country's monetary policy. One of the major functions of the Central Bank is to provide a clearinghouse for all commercial banks in Nigeria. The clearinghouse is a mechanism that facilitates the exchange of checks and other payment instruments between banks. It ensures that payments made by customers of one bank to customers of another bank are settled in an efficient and secure manner. In this way, the Central Bank plays a crucial role in maintaining the stability and integrity of Nigeria's financial system.

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Money supply at any given point in time refers to the total amount of money in circulation in an economy. It includes bank notes, coins, and demand deposits held by individuals, firms, and institutions. This money is available for spending and investment, and its level is a key indicator of the overall health of an economy. Money received as gifts or hoarded money is not included in the money supply as it is not in circulation in the economy.

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A table which shows the price of a commodity and the quantity of it that is demanded per unit time is called a demand schedule. It is used to depict the relationship between the price of a good or service and the quantity of that good or service that consumers are willing to buy at that price, holding other factors constant. The demand schedule is the basis for the demand curve, which is a graphical representation of the same information. The demand curve shows the relationship between the price of a good and the quantity demanded on a two-dimensional graph.

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To calculate the average cost of producing one unit, we need to add the fixed cost and the variable cost, and then divide that sum by the total number of units produced. So, the total cost would be: Fixed cost + Variable cost = N500 + N1,500 = N2,000 And the average cost would be: Total cost / Number of units produced = N2,000 / 50 units = N40.00 per unit Therefore, the answer is option D, N40.00.

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Cooperative thrift is not a source of finance to a Joint Stock Company. Cooperative thrift is a savings scheme where members pool their resources to create a common fund that can be loaned out to members at a low interest rate. While cooperative thrift can be a source of finance for individuals or small businesses, it is not a formal source of finance for a Joint Stock Company. On the other hand, bank loans, equity shares, debentures, and preference shares are all common sources of finance for a Joint Stock Company. Bank loans provide short-term or long-term financing to companies, while equity shares, debentures, and preference shares are types of securities that can be issued by companies to raise funds from investors.

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Wages are to some extent determined by the marginal productivity of labour. This means that the wage rate paid to a worker is based on the amount of output or value of goods and services that the worker can produce in a given period of time. The higher the marginal productivity of labour, the higher the wage rate. This is because employers are willing to pay more for workers who can produce more output and generate more revenue for the company. However, other factors such as the demand and supply of labour, the level of skills and education of workers, and the bargaining power of labour unions can also affect the determination of wages.

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The reason that explains the upward sloping of the supply curve in a competitive market is that, ceteris paribus, marginal cost increases as output increases. This means that as firms produce more, they need to employ additional resources, such as labor and capital, which may not be as efficient as the resources they initially used. As a result, the additional units of output become more expensive to produce, and firms require a higher price to cover their costs and earn a profit. This relationship between marginal cost and output is reflected in the upward slope of the supply curve.

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Industry can be simply defined as a firm or group of firms that are involved in producing similar goods or services. In other words, industry refers to the production of goods or services by firms with the aim of making a profit. The firms involved in an industry may produce identical or similar goods and services, and may operate in the same geographical location or across different regions. The key point is that they are all engaged in the same type of economic activity.

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The demand relation is \( Q = 60 - \tfrac{1}{3}P \). Substitute each price to find the quantity demanded.

(a)(i) When \( P = 30 \): \( Q = 60 - \tfrac{1}{3}(30) = 60 - 10 = 50 \) units.

(a)(ii) When \( P = 210 \): \( Q = 60 - \tfrac{1}{3}(210) = 60 - 70 = -10 \) units.

(a)(iii) When \( P = 0 \): \( Q = 60 - \tfrac{1}{3}(0) = 60 \) units.

(b) Comment on (a)(ii): A quantity of \( -10 \) is economically meaningless because quantity demanded cannot be negative. It shows that at a price of N210 the price is so high that no quantity is demanded; the demand curve has effectively reached zero before this price. In practice quantity demanded stops at zero, so we take demand as \( 0 \), not \( -10 \).

(c) Now \( P = 180 - 3Q \).

(i) When \( Q = 0 \): \( P = 180 - 3(0) = N180 \).

(ii) When \( Q = 60 \): \( P = 180 - 3(60) = 180 - 180 = N0 \).

(iii) When \( Q = 59 \): \( P = 180 - 3(59) = 180 - 177 = N3 \).

Notice that (c) is simply the first relation rearranged to make \( P \) the subject, so the price and quantity pairs are consistent: high quantity goes with low price and vice versa, confirming the law of demand.

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To improve the marketing of her agricultural produce, both locally and for export, Nigeria has taken several measures over the years:

1. Establishment of marketing boards / commodity boards. Government set up boards to buy, grade, store and sell major export crops (cocoa, groundnut, palm produce, cotton), guarantee minimum prices to farmers and stabilise their incomes against world-price swings.
2. Construction of storage and processing facilities. Building of silos, warehouses, cold stores and processing plants to reduce post-harvest losses of perishable and bulky produce and to add value before sale.
3. Improvement of transport and feeder roads. Building and repairing rural feeder roads, railways and haulage links to move produce cheaply from farms to markets and ports.
4. Provision of price support and guaranteed minimum prices. Government price-support schemes and buffer stocks to protect farmers from ruinous price falls and to encourage production.
5. Grading and standardisation of produce. Enforcing uniform grades, quality standards and inspection so that Nigerian produce meets export requirements and commands better prices.
6. Provision of credit and cooperatives. Encouraging marketing cooperatives and providing agricultural credit (for example through the Nigerian Agricultural and Cooperative Bank) so farmers can market jointly and bargain better.
7. Market information and research. Supplying farmers with price and market information and supporting research bodies (such as the Nigerian Stored Products Research Institute) to reduce losses and guide selling.
8. Development programmes. Programmes such as Operation Feed the Nation, the Green Revolution and Agricultural Development Projects (ADPs) that included marketing and distribution components.

Examination reminder: group the measures into three themes - institutions (boards, cooperatives), infrastructure (storage, transport) and price and quality support (guaranteed prices, grading) - to present a well-organised answer.

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A wholesaler is a middleman who buys goods in large quantities from producers (manufacturers) and sells them in smaller quantities to retailers. In the chain of distribution the wholesaler stands between the producer and the retailer, and in doing so performs several useful economic functions:

1. Breaking bulk. He buys in large quantities and sells in smaller lots to retailers, sparing producers the trouble of dealing with countless small buyers and enabling retailers to buy quantities they can handle.
2. Storage (warehousing). He holds stocks of goods in warehouses between production and sale, so producers can produce steadily while goods are released to the market as needed; this also helps stabilise prices between seasons.
3. Finance. He pays the producer promptly (often in cash) for large purchases and may grant credit to retailers, thereby financing both ends of the chain and freeing the producer's capital.
4. Bearing risk. He carries the risks of price changes, deterioration, damage, theft and changes in fashion while the goods are in his hands, relieving the producer and retailer of these risks.
5. Transport and distribution. He often collects goods from producers and delivers them to scattered retailers, and helps distribute goods over a wide area.
6. Preparation of goods for sale. He may grade, sort, pack, brand or blend goods and sometimes advertises them, making them ready for the retail market.
7. Provision of market information. He advises producers on consumers' tastes and demand and informs retailers about new products, linking the two ends of the market.

Examination reminder: the wholesaler's core justification is that he relieves the producer of holding stocks, granting credit and bearing risk, which is why manufacturers still use him despite direct-selling alternatives.

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Principles (canons) of taxation are the qualities a good tax system should possess. The classic canons are:

• Equity: taxes should be fair; people should pay according to their ability, so higher incomes bear a heavier burden.
• Certainty: the amount, time and manner of payment should be clear and known in advance to the taxpayer.
• Convenience: tax should be levied at a time and in a manner convenient to the payer, for example deducting income tax when wages are paid.
• Economy: the cost of collecting the tax should be small relative to the revenue raised.
• Productivity: a tax should yield sufficient revenue for the government.
• Flexibility: it should be easy to adjust rates to changing economic conditions.
• Neutrality/simplicity: it should not distort economic choices unduly and should be easy to understand.

Reasons why Nigerians are taxed:

• To raise revenue to finance government spending on defence, roads, schools and hospitals.
• To redistribute income and reduce inequality, using progressive taxes to transfer resources to the poor.
• To control inflation by reducing excess purchasing power in the economy.
• To discourage the consumption of harmful goods (for example heavy duties on tobacco and alcohol).
• To protect local industries through import duties.
• To correct a balance of payments deficit by taxing imports.
• To achieve social and economic objectives such as directing resources to priority sectors.

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Countries impose restrictions on international trade (through tariffs, quotas, embargoes, exchange control and outright bans) for several economic and non-economic reasons:

• To protect infant industries: young domestic industries need shelter from established foreign competitors until they grow strong enough to compete.
• To reduce unemployment: restricting imports shifts demand to home-produced goods, raising domestic output and jobs.
• To correct a balance of payments deficit: cutting imports reduces foreign-exchange outflows and improves the external accounts.
• To raise government revenue: import and export duties are an important source of income, especially in developing economies.
• To prevent dumping: to stop foreign firms selling below cost and destroying local producers.
• To improve the terms of trade: a large country can use restrictions to force down import prices in its favour.
• To protect strategic and health interests: to safeguard defence-related industries and to keep out harmful, substandard or dangerous goods.
• To discourage the consumption of harmful or luxury goods and conserve scarce foreign exchange.
• For retaliation: to respond to restrictions imposed by trading partners.

The underlying reasoning is that free trade, though efficient overall, can expose a developing economy to job losses, external deficits and loss of control over strategic sectors, so governments intervene to protect national economic interests.

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The mode is the value that occurs most frequently in a set of data. In a grouped frequency distribution it is the value corresponding to the class with the highest frequency (the modal class). Unlike the mean, it is not calculated from every value but identified as the most common observation.

When the mode is a suitable average to use:

• When the most typical or most popular item is needed, for example the most common shoe size a trader should stock or the most frequently demanded commodity.
• When the data are qualitative or in categories that cannot be added, such as the most popular brand.
• When a quick, simple measure of the typical value is required.
• When the distribution has extreme values that would distort the mean, since the mode is unaffected by them.

Disadvantages of the mode:

• It ignores all values except the most frequent one, so it does not use all the data.
• A distribution may have no mode, or two or more modes (bimodal or multimodal), making interpretation difficult.
• It is not suitable for further mathematical or statistical treatment.
• It can be unrepresentative when the most frequent value lies far from the centre of the data.
• For grouped data its value depends on how the classes are formed.

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(a) A development plan is a deliberate, coordinated government programme that sets out the economic and social targets a country intends to achieve over a specified period (usually three to five years), together with the projects, policies and resources required to reach those targets. It states objectives such as raising national output, reducing unemployment and improving welfare, and it allocates funds across sectors to achieve them.

(b) Ways of financing economic development in Nigeria:

• Taxation: revenue from direct taxes (personal income tax, company income tax) and indirect taxes (VAT, customs and excise duties) funds public investment.
• Oil and mineral revenue: royalties, rents and profits from crude oil and gas provide a large share of government finance.
• Internal (domestic) borrowing: the government raises money from citizens and institutions through treasury bills, treasury certificates and development stocks or bonds.
• External borrowing: loans from foreign governments and multilateral bodies such as the World Bank, IMF and African Development Bank.
• Foreign aid and grants: bilateral and multilateral assistance that need not be repaid.
• Foreign direct investment: capital brought in by multinational companies to establish or expand production.
• Surpluses of public enterprises: profits from state corporations reinvested in development.
• Deficit financing: the central bank creating money or the government spending beyond current revenue to stimulate activity, used cautiously to avoid inflation.

A sound plan combines several of these sources so that the country is not over-dependent on volatile oil earnings or on debt that raises future repayment burdens.

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Devaluation. Devaluation is a deliberate official reduction in the external value (exchange rate) of a country's currency in terms of other currencies or gold, carried out by the government or monetary authority under a fixed or managed exchange-rate system. After devaluation the country's exports become cheaper to foreigners and its imports become dearer to residents. (A fall in value caused by market forces under a floating system is called depreciation, not devaluation.)

Its aim is usually to correct a deficit in the balance of payments by encouraging exports and discouraging imports.

Conditions under which devaluation improves the balance of payments.

1. Favourable elasticities of demand (the Marshall-Lerner condition). The sum of the elasticity of demand for exports and the elasticity of demand for imports must be greater than one. If demand for exports and imports is sufficiently elastic, the fall in export prices raises export earnings and the rise in import prices cuts import spending, improving the balance.
2. Elastic domestic supply of exports. The country must be able to expand production of exportable goods to meet the extra foreign demand; if supply is fixed or inelastic, extra orders cannot be filled.
3. Availability of import substitutes. Residents must be able to switch from now-dearer imports to home-produced substitutes, otherwise import spending stays high.
4. Other countries do not retaliate. Trading partners must not devalue their own currencies or raise trade barriers in response, which would cancel the advantage.
5. Domestic prices (inflation) are controlled. If devaluation sets off internal inflation that raises export costs, the initial price advantage is quickly eroded, so inflation must be checked.

Examination reminder: the central condition is the elasticity (Marshall-Lerner) requirement; if demands are inelastic, devaluation can actually worsen the balance of payments.

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For a pie chart, the angle for each sector is:

\[\text{Sector angle}=\frac{\text{Number of people in the group}}{\text{Total population}}\times360^\circ\]

The number aged 60 and above is \(8.25\) million, since \(20.90+13.75+12.10+8.25=55.00\) million.

Age group	Population (million)	Working	Angle for pie chart
Under 20	20.90	\(\frac{20.90}{55.00}\times360^\circ\)	\(136.8^\circ\)
20–29	13.75	\(\frac{13.75}{55.00}\times360^\circ\)	\(90.0^\circ\)
30–59	12.10	\(\frac{12.10}{55.00}\times360^\circ\)	\(79.2^\circ\)
60 and above	8.25	\(\frac{8.25}{55.00}\times360^\circ\)	\(54.0^\circ\)
Total	55.00		\(360.0^\circ\)

The completed pie chart is shown below.

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Because resources are scarce relative to unlimited wants, every society must make choices. These choices give rise to three basic (fundamental) economic problems:

• What to produce and in what quantities: since resources cannot satisfy all wants, society must decide which goods and services to produce (for example food versus military hardware) and how much of each. Choosing to produce one good means giving up another, which is the opportunity cost.
• How to produce: society must decide the method and combination of resources to use, for example labour-intensive versus capital-intensive techniques, so that output is obtained at the least cost.
• For whom to produce: society must decide how the goods produced are shared among the people, that is, the distribution of output, which depends on incomes and the pricing of factors.

Two further problems are often added:

• Efficiency in the use of resources: ensuring that resources are fully and efficiently employed so that no output is wasted.
• Growth of resources over time: deciding how much to save and invest now in order to expand future productive capacity.

The root of all these problems is scarcity, which forces choice, and every choice carries an opportunity cost, the value of the next best alternative forgone.