WAEC SSCE - Economics - 1997

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The foregone alternative in economics is known as the opportunity cost. It is the cost of the next best alternative that must be foregone to pursue a certain action or decision. In simpler terms, it is the value of the alternative that was not chosen. For example, if a person decides to spend money on buying a new car, the opportunity cost would be the value of the other things that could have been purchased with that money, such as a vacation or a house. The concept of opportunity cost is important in economics as it helps individuals and businesses to make rational and informed decisions by considering the alternatives and their associated costs.

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Free trade refers to the absence of restrictions on international trade, such as tariffs, quotas, or other barriers. In a free trade system, goods and services can move freely between countries without significant government intervention or protectionism. This allows producers and consumers to engage in trade with fewer restrictions and typically results in lower prices and a greater variety of goods and services available to consumers.

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Goods are said to be in competitive demand when they are substitutes, meaning that consumers can choose to buy one or the other based on factors such as price or personal preference. For example, if the price of tea increases, consumers may switch to buying more coffee instead, indicating that tea and coffee are in competitive demand. This is because they serve a similar function as a hot beverage and are easily interchangeable.

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An outward shift in the production possibility curve occurs when a country is able to produce more goods and services with the same resources it had before. Economic growth is the most likely cause of this shift. When a country experiences economic growth, it means that it is producing more goods and services and generating more income. This can be due to various factors, such as increased productivity, new technologies, improved infrastructure, increased investment, or better education and health among the population. As a result of this growth, the country can produce more goods and services, leading to the outward shift in the production possibility curve. Therefore, the correct answer is "economic growth".

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A stock exchange is a market that deals with the purchase and sale of securities. Securities are financial instruments that represent ownership in a company or organization. When a company wants to raise funds, it can issue securities, such as stocks or bonds, which can then be bought and sold on a stock exchange. Investors can buy securities as a way of investing in a company, and they can sell their securities if they need to liquidate their assets. The stock exchange provides a platform for investors to trade securities and allows companies to raise funds through the sale of securities.

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The formula for calculating price elasticity of demand coefficient is the percentage change in quantity demanded divided by the percentage change in price. This formula helps us to determine the sensitivity of demand for a particular good or service to changes in its price. If the coefficient is greater than 1, demand is considered elastic, meaning that a change in price will have a larger effect on the quantity demanded. If the coefficient is less than 1, demand is considered inelastic, meaning that a change in price will have a smaller effect on the quantity demanded. If the coefficient is equal to 1, demand is considered unit elastic, meaning that a change in price will have an equal effect on the quantity demanded.

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The function of commercial banks is to accept deposits from customers, which they then use to lend out to borrowers in the form of loans. This is known as the primary function of commercial banks. By accepting deposits, commercial banks provide a safe place for customers to store their money and earn interest on their savings. They also provide loans to businesses and individuals to help them finance investments or purchases. Commercial banks do not issue currencies; that is the function of the central bank. The central bank also serves as the bankers' bank, not commercial banks. Commercial banks do not determine the rate of interest; they adjust their rates based on market forces. Lastly, the increase of time in learning a trade is not a function of commercial banks.

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Economics is often described as a science because it uses scientific methods to explain observed economic phenomena. It relies on empirical evidence and data analysis to understand how people make choices and how markets operate. While economics does not rely on laboratory experiments or controlled experiments like some other sciences, it still seeks to explain and predict human behavior in a systematic and objective way.

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The indigenisation policy in Nigeria is aimed at increasing equity participation and control by Nigerians in businesses operating in Nigeria. The policy was introduced in the 1970s and aimed to transfer ownership and control of companies operating in Nigeria from foreign investors to Nigerians. The policy required foreign companies operating in Nigeria to sell at least 60% of their shares to Nigerians. The goal was to promote local content and increase economic empowerment of Nigerians. The policy has since been modified and some of its provisions have been relaxed to attract foreign investment, but the overall goal of promoting Nigerian ownership and control of businesses in the country remains.

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Hoarding in distributive trade refers to the practice of withholding goods from the market in order to create an artificial scarcity, which allows sellers to charge higher prices. This means that the goods become less available to consumers, which leads to a decrease in the supply of goods in the market. As a result, consumers may have to pay higher prices for the goods or may even find it difficult to obtain them at all. Therefore, the correct answer is "artificial scarcity of goods."

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The term of trade refers to the ratio between the index of export prices and the index of import prices of a country. In other words, it is a measure of the value of a country's exports relative to its imports. It reflects the amount of imports that a country can purchase with a given quantity of its exports. A favorable term of trade means that a country can purchase a greater amount of imports for a given amount of its exports, while an unfavorable term of trade means that a country can purchase a lesser amount of imports for the same amount of its exports.

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The correct answer is (C) I and II only. In the long run, potential Gross National Product (GNP) is variable because of technological change and the fact that the quantity of labor and capital is not fixed. Technological change leads to an increase in productivity, which in turn leads to an increase in output. Also, the quantity of labor and capital can be increased through investment and population growth, respectively. This means that the potential output of an economy can increase over time. On the other hand, unemployment is not directly related to potential GNP and can be affected by a variety of factors, such as changes in government policies or the business cycle. Therefore, option III is incorrect. In summary, the correct answer is (C) I and II only, because potential GNP can vary due to technological change and changes in the quantity of labor and capital.

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When the demand for goods and services increases, this can lead to an increase in prices, which results in demand-pull inflation. One way to curb this type of inflation is by increasing the level of output of goods and services, as this will help to meet the increased demand and reduce the pressure on prices. By increasing the production of goods and services, the supply of goods and services will increase, and this will help to reduce the demand for goods and services, which will in turn reduce the pressure on prices. Therefore, increasing the level of output is an effective way to curb inflation caused by an increase in demand.

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Labour has a derived demand. This means that the demand for labour is not for its own sake, but for the goods or services it helps to produce. For example, a bakery may demand labour to produce bread, but it is not the labour that is desired, but the bread that the labour produces. The demand for labour is thus derived from the demand for the goods or services that it helps to produce.

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When the death rate for old people and the infant mortality rate are high, it means that a large number of old people and babies are dying. If there is no migration, this would result in a higher number of younger people in the population. This is because when the infant mortality rate is high, a large number of babies are dying which reduces the number of children in the population. Similarly, when the death rate for old people is high, it reduces the number of old people in the population. Therefore, the remaining population would mostly consist of younger people.

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International trade is different from internal trade because it involves the exchange of goods and services between different countries, while internal trade involves the exchange of goods and services within the same country. The difference is not based on the manufactured goods involved or homogeneity/heterogeneity of products or uniformity of prices, but rather the involvement of currency differentials. In international trade, currencies of different countries are used, and exchange rates play a significant role in determining the prices of goods and services being traded. In contrast, internal trade is conducted using the same currency, and exchange rate fluctuations do not affect prices.

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When there is a shift in supply curve to the right, it indicates that the producers are willing to supply more goods at each given price level. As a result, the equilibrium quantity of the product will increase, leading to a fall in price and an increase in supply. This is because the producers are producing more goods and selling them at a lower price to remain competitive in the market. Therefore, the correct option is: a fall in price but an increase in supply.

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Marginal utility is the additional satisfaction obtained from consuming an additional unit of a commodity. The marginal utility of a commodity depends on the price of the commodity and the marginal utility of the other commodities. To maximize the total utility, the consumer needs to allocate their income between the two commodities in such a way that the marginal utility per unit of money spent on each commodity is equal. Therefore, the marginal utilities of two commodities, A and B, are maximized when the ratio of the marginal utility to the price of each commodity is equal: MA/PA = MB/PB This is known as the condition of consumer equilibrium, and it ensures that the consumer is allocating their income in the most efficient way possible to maximize total utility. Any other ratio of marginal utility to price for the two commodities will result in a lower total utility.

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In a public company, entrepreneurial functions are performed by the board of directors. The board of directors is responsible for making important decisions that affect the company's direction, such as setting goals, developing strategies, and making major investments. They also have the responsibility of hiring and firing top-level executives, and ensuring that the company complies with all relevant laws and regulations. Overall, the board of directors plays a crucial role in the success of a public company, and their entrepreneurial functions are key to driving the company's growth and profitability.

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Development banks are essentially different from commercial banks because they provide medium and long-term loans for developmental projects such as industries, infrastructure development, agriculture, and housing, whereas commercial banks provide short-term loans and accept deposits from the public. Development banks are established to promote economic development in the country and provide financial assistance for long gestation projects, which commercial banks may not be willing to finance. They also provide technical assistance, consultancy services and managerial expertise to borrowers. Therefore, the primary focus of development banks is to promote economic development and social welfare, whereas the primary focus of commercial banks is to earn profit by providing banking services.

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The correct option is "bank sellers" because it is not a form of money. Bank notes, demand deposits, coins, and currency are all forms of money that can be used for transactions. Bank notes are physical currency issued by a central bank, while demand deposits are funds held in a checking account that can be easily accessed. Coins are small pieces of physical currency that are used for smaller transactions. Currency refers to any form of money that is widely accepted as a medium of exchange, including bank notes and coins. On the other hand, bank sellers are not a form of money, but rather individuals or institutions that sell financial products or services such as stocks, bonds, or insurance.

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One of the instruments of protection of infant industries is a tariff. A tariff is a tax imposed on imported goods to make them more expensive and less competitive with domestically produced goods. This is done to protect the domestic industries, including those which are still in their infancy, from being outcompeted by foreign firms. By increasing the price of imported goods, a tariff makes it easier for domestic industries to compete, thus allowing them to grow and develop without being driven out of business by foreign competition. Therefore, tariffs are commonly used as a form of protectionist trade policy, especially in developing economies that have relatively young and small industries.

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Emigration will not increase the population of a country because emigration refers to the movement of people out of a country to reside in another country. This means that people are leaving the country, which decreases the population. The other options, such as an increase in birth rate, decrease in death rate, better medical services, and immigration, would all contribute to an increase in the population of a country.

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The given scenario demonstrates that when the price of the product is reduced, the quantity demanded increases. This implies that the consumers are sensitive to the price changes of the product, and a small change in price leads to a relatively larger change in the quantity demanded. Therefore, the product's demand is elastic.

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The problem of inflation is not a problem in a barter economy. In a barter economy, goods and services are exchanged directly without the use of money. Inflation is a general increase in prices of goods and services in an economy over time. Since there is no money involved in a barter system, there cannot be inflation. The other options listed, such as double coincidence of wants, indivisibility of goods and services, bulkiness of commodities, and multiple exchange rates are all challenges faced in a barter economy.

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A tariff is a type of tax that a government levies on imports and sometimes exports of goods. It is a form of trade barrier that is intended to protect domestic industries and jobs from foreign competition. When a country imposes a tariff on imported goods, it makes those goods more expensive to purchase in the domestic market, which may lead to a decrease in their demand. This may lead to an increase in demand for domestically produced goods, which may result in increased production and employment in the domestic market. However, it may also lead to retaliatory tariffs from other countries, which can harm international trade and economic growth.

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The optimum population of a country is reached when the output per head is at its highest with a given volume of resources. This means that the country has reached a point where its population is neither too large nor too small for the available resources to support. At this point, every individual in the population is able to produce and consume at the highest level possible, without putting too much strain on the available resources. Any increase or decrease in population from this point will lead to a decrease in output per head, which will ultimately lead to a decrease in the standard of living.

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When government expenditure exceeds its revenue, it leads to a budget deficit. This means that the government is spending more than it is earning. The deficit can be caused by factors such as high government spending on public projects, low tax revenue or both. The government can borrow money to finance the deficit, which can lead to an increase in public debt. The opposite of a budget deficit is a budget surplus, which occurs when government revenue exceeds expenditure. A balanced budget is when government expenditure is equal to government revenue. A budget statement is a document that outlines the government's plans for revenue and expenditure for a given period. An unfavorable budget is one that has more negatives than positives for the economy, such as higher taxes, reduced spending on social programs, or inefficient use of resources.

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Scarcity in economics means that resources are limited relative to wants. This means that there are not enough resources available to satisfy all the unlimited human wants and needs. Since resources such as land, labor, capital, and entrepreneurship are scarce, choices must be made regarding how to allocate these resources efficiently to produce the goods and services that will best satisfy the most urgent wants and needs. This necessitates making trade-offs and prioritizing wants and needs, which is the fundamental problem of economics.

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The division of labour is a system of work where tasks are divided into smaller and specialized tasks, with each worker responsible for a specific task. One of the disadvantages of this system is that it makes work monotonous. This is because workers are repeatedly performing the same task repeatedly and may get bored, which could lead to a decrease in productivity. However, the division of labour also has advantages, such as saving time, allowing greater use of machinery, encouraging full utilization of capital, and making workers skilled at their work.

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Hoarding in distributive trade refers to the practice of withholding goods from the market with the intention of creating artificial scarcity and driving up prices. This can lead to a decrease in the supply of goods, which can cause prices to rise and make the goods less affordable or unavailable for consumers. Therefore, the correct option is "artificial scarcity of goods."

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The largest employment sector in a typical West African country is likely to be agriculture. Agriculture has historically been a major sector in most West African countries, with many people involved in subsistence farming or small-scale commercial farming. In addition, many large-scale commercial farms also operate in the region, contributing to the overall employment numbers in the sector. While other sectors such as manufacturing, transportation, construction, and petroleum may also provide employment opportunities, they are generally smaller in scale and may not employ as many people as agriculture.

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