WAEC SSCE - Economics - 2008

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The main concern of economists is to allocate scarce resources to satisfy human wants. This means that economists are focused on studying how society chooses to use its limited resources to produce goods and services that will satisfy people's needs and wants. They analyze how decisions are made about what to produce, how to produce it, and who gets to consume it. Through this analysis, economists provide insights into how to optimize resource allocation and achieve the greatest level of satisfaction for society as a whole. They do not focus on satisfying all human wants or controlling population growth, but rather on the efficient use of limited resources to improve the well-being of society.

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Production is a process of transforming raw materials or inputs into finished goods or outputs that satisfy human wants. Therefore, production always involves the creation of utility and the transformation of inputs into outputs. The options that refer to the manufacturing of a good or the creation of a commodity both involve production. However, the option that states "a commodity is consumed" does not refer to production, since consumption involves the use of goods or services that have already been produced. Therefore, the correct answer is: "Production covers all the following except when a commodity is consumed."

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The price mechanism plays a major role in determining the allocation of resources in a market economy. It is the mechanism by which prices of goods and services are determined through the interaction of supply and demand. When there is a scarcity of a particular good or service, the price will increase, signaling to suppliers that they should produce more to meet the demand. On the other hand, if there is an oversupply of a particular good or service, the price will decrease, signaling to suppliers that they should reduce production. This process helps to ensure that resources are allocated efficiently and effectively to meet the needs and wants of consumers. Therefore, the correct answer is "allocation of resources".

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Agriculture plays a dominant role in our country because it employs more than 50% of the total labour force. This means that a significant percentage of the population is engaged in agricultural activities such as farming and livestock rearing. As a result, the sector contributes significantly to the country's Gross Domestic Product (GDP) and serves as a major source of income for many households. Additionally, agriculture provides food for the growing population, raw materials for the agro-allied industries, and serves as a source of foreign exchange through the exportation of cash crops such as cocoa, groundnut, and palm oil.

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Invisible trade refers to trade in services that cannot be seen or touched. It includes services such as transportation, tourism, banking, insurance, and consulting, among others. These services are often intangible and cannot be physically transported across borders like tangible goods. Invisible trade is an important part of international trade and can contribute significantly to a country's economy. It is sometimes also referred to as "service trade" or "non-merchandise trade."

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Public finance is an area of economics that deals with the study of how governments collect revenue and spend money. It involves the analysis of government budgets, taxation policies, and public debt. Therefore, the answer is that public finance is basically an analysis of the income and expenditure of the government.

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A balance of payment surplus occurs when a country's total earnings from exports of goods and services exceed its total expenditure on imports of goods and services. In other words, a country earns more foreign exchange than it spends, resulting in an inflow of foreign currency. This surplus indicates that the country is exporting more than it is importing, which can be seen as a positive sign for the economy as it helps to build up foreign reserves and can lead to an increase in the value of the country's currency.

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Equilibrium under perfect competition requires that MR (Marginal Revenue) = MC (Marginal Cost) = AR (Average Revenue) = AC (Average Cost). In simpler terms, a firm operating in a perfectly competitive market will produce where the price (which equals AR) is equal to the marginal cost of producing the last unit (MC). At this point, the firm will be maximizing its profit. If the price is higher or lower than this point, the firm will not be maximizing its profit.

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Rent on land is regarded as a fixed cost. A fixed cost is a cost that remains constant in total regardless of the level of production or sales within a certain range of activity. Rent on land is a cost that the business incurs regardless of how much they produce or sell. It is a fixed cost because it does not change based on production or sales levels, but rather on the lease agreement with the landlord.

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Indirect taxes tend to be regressive. This means that as income increases, the proportion of income paid in taxes decreases. Indirect taxes are usually levied on goods and services, such as sales tax or value-added tax (VAT), which are included in the price of the goods or services. As a result, everyone pays the same tax on the same goods or services, regardless of their income level. This tends to affect lower-income individuals more as they spend a larger proportion of their income on these goods and services compared to higher-income individuals. As a result, indirect taxes are considered to be regressive.

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In a purely competitive market, firms are price takers, meaning that they have no control over the market price. If a firm's price falls below its average variable cost, it means that the firm is not even able to cover its variable costs, such as labor and materials. In this situation, the firm is better off shutting down and minimizing its losses rather than continuing to operate at a loss. Therefore, the purely competitive firm should close down when its price is less than its average variable cost. This is because continuing to produce and sell at such a price would result in a greater loss than shutting down.

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The main objective of specialization is to increase productivity. Specialization involves workers focusing on a specific task or set of tasks, leading to increased efficiency and proficiency in those tasks. By doing this, the production process becomes more streamlined, reducing the time and resources needed to complete a task, and ultimately leading to an increase in overall productivity.

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The indicator of the value of money is the general price level. The general price level refers to the average price of goods and services in the economy. It is an important indicator of the purchasing power of money. A high general price level means that money can buy fewer goods and services, while a low general price level means that money can buy more goods and services. Inflation, which is a sustained increase in the general price level, reduces the purchasing power of money over time. Conversely, deflation, which is a sustained decrease in the general price level, increases the purchasing power of money over time.

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The gap between the demand and supply curves above the equilibrium price is called "excess supply". In a market, the demand curve shows the quantity of goods or services that buyers are willing to purchase at different prices, while the supply curve shows the quantity of goods or services that sellers are willing to offer at different prices. At the equilibrium price, the quantity demanded equals the quantity supplied. However, if the price is set above the equilibrium price, the quantity supplied exceeds the quantity demanded, resulting in an excess supply or surplus. This indicates that producers are producing more than what consumers are willing to buy at that particular price, and they may need to lower the price to clear the surplus.

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The statement "since money is demanded for what it can buy" implies that the demand for money is derived from the demand for goods and services. Therefore, the answer is "derived". In other words, people demand money in order to buy goods and services, and the demand for money is a result of the demand for these goods and services.

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Revenue is the total amount of money a business earns from the sale of its goods or services. It is calculated by multiplying the price of each unit of product by the quantity sold. Therefore, the correct option is: "price of goods multiplied by the quantity sold".

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The national income of a country can be estimated through the output approach. This approach involves calculating the total value of goods and services produced by all sectors of the economy within a given period, usually a year. This value is known as Gross Domestic Product (GDP) and is considered a measure of the economic activity and size of a country's economy. The output approach involves calculating the value of all final goods and services produced by different sectors of the economy such as agriculture, manufacturing, and services. By adding up the value of all final goods and services produced, we get an estimate of the total output or GDP of the country.

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Industry can be defined as a group of firms or businesses that are involved in the production of similar goods or services. These firms may produce the same or slightly different products, but they all belong to the same industry. For example, the automobile industry comprises of firms that produce cars and trucks, while the textile industry comprises of firms that produce clothing and fabrics. The key point is that they all produce similar products and are involved in the same business.

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The Central Bank can restrict credit through open market operations. Open market operations refer to the buying and selling of government securities in the open market. When the Central Bank sells government securities, it reduces the amount of money in circulation, making it more expensive to borrow money, which can restrict credit. Conversely, when the Central Bank buys government securities, it increases the amount of money in circulation, making it less expensive to borrow money, which can stimulate credit. Therefore, the Central Bank can restrict credit by selling government securities in the open market, which reduces the amount of money in circulation and makes borrowing more expensive.

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A business outfit is said to be a public limited company when it sells its shares to members of the public. In a public limited company, shares of the company can be bought and sold by members of the public through a stock exchange. The company is owned by shareholders who have limited liability and are not personally responsible for the company's debts. Public limited companies are regulated by the government to protect investors and ensure that the company operates fairly and transparently.

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The theory of diminishing marginal utility states that as more units of a commodity are consumed, the satisfaction or utility derived from an extra unit decreases. This means that the more you consume a particular good or service, the less satisfaction or utility you will derive from consuming an additional unit of that good or service. In other words, the more you have of something, the less valuable it becomes to you. This concept is important in economics as it helps explain consumer behavior and demand for goods and services.

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Productive resources are the resources used in the production of goods and services. They can also be referred to as factors of production. These factors of production include land, labor, capital, and entrepreneurship. Land refers to natural resources, such as forests and minerals, while labor refers to the human effort required in production. Capital refers to man-made resources, such as machines and tools, while entrepreneurship refers to the ability to combine the other three factors of production to produce goods and services. Therefore, the correct option is "factors of production".

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A medium of exchange which is generally acceptable is "money". Money is a widely accepted medium of exchange that facilitates transactions between buyers and sellers. It is used to purchase goods and services, pay off debts, and store value. Money can take different forms such as paper currency, coins, or digital currency, and it must be easily recognizable, divisible, durable, and portable. Money serves as a means of payment and a unit of account, enabling the pricing of goods and services in a standardized manner.

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If the coefficient of elasticity of demand is 1.5, it means that for a 1% change in price, the quantity demanded will change by 1.5%. This level of responsiveness is considered elastic. In other words, a small change in price will result in a relatively larger change in quantity demanded. Therefore, the answer is "elastic".

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In the long run, all factors of production are considered to be variable. This means that all inputs used in the production process can be adjusted or changed to meet the needs of the business. This is in contrast to the short run where at least one input is considered fixed, usually capital or land. In the long run, a business can change the amount of labor, capital, and land that it uses to produce its goods or services, and can even change its production process altogether. Therefore, the long run is a period of time during which a business can make all necessary adjustments to its inputs and production process, and all factors of production are variable.

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The factor that does not cause a change in demand is the price of the commodity itself. The price of a commodity affects the quantity demanded, but not the demand itself. Other factors such as taste and fashion, vagaries of weather, and price of other commodities can affect the demand for a particular product or service.

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An important feature of economic development is a high literacy level. This means that the population is educated and skilled, which leads to a more productive and efficient workforce. With a higher literacy level, people can understand complex issues, have better decision-making skills, and engage in innovation and technological advancement. This can lead to a more diversified economy with higher levels of production and income. Additionally, a high literacy level can lead to better health outcomes, increased political participation, and overall societal progress. Therefore, promoting education and literacy is essential for sustainable economic development. The other options, such as population explosion, reduction in exports, and low exports, are not necessarily features of economic development and can even hinder it.

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A market situation with a larger number of firms selling closely related but differentiated products is known as monopolistic competition. In this market structure, each firm has some control over its price due to product differentiation, but there is also a degree of competition as there are substitutes available. This market structure is characterized by easy entry and exit, as well as non-price competition such as advertising and product differentiation.

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The supply of money in the economy includes bank notes, coins and bank deposits. Bank notes and coins are physical currency while bank deposits are virtual money held in bank accounts. The money supply is important in determining the level of economic activity in a country and is controlled by central banks through monetary policy tools.

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A continuous fall in the general price level is called deflation. Deflation is the opposite of inflation, which is the continuous rise in the general price level. Deflation can be caused by a decrease in the money supply, a decrease in government spending, or an increase in productivity. Deflation can have negative effects on the economy, such as a decrease in consumer spending and an increase in debt burdens. However, it can also have positive effects, such as an increase in the purchasing power of consumers and a decrease in the cost of borrowing.

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Trades among nations is desirable because it makes it possible for people in a country to enjoy the goods and services produced in other countries. This can lead to greater variety, lower prices, and higher quality products for consumers. It also encourages specialization and efficiency, as countries can focus on producing the goods and services that they are best at, and trade with other countries for goods and services that they are not as efficient at producing. This can lead to increased productivity and economic growth. Additionally, trade can help build relationships and understanding between countries, as people interact and exchange ideas and cultures through trade.

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Unemployment does not directly affect a country's population. Birth rate, death rate, and emigration all directly affect the number of people in a country, while unemployment relates to the availability of jobs and the economy.

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The main characteristics of ordinary shares are: maximum risk, variable dividends, and voting rights. Ordinary shares represent ownership in a company, and their value fluctuates depending on the company's performance. Shareholders are entitled to receive a portion of the company's profits in the form of dividends, but the amount of dividends can vary depending on the company's earnings. Ordinary shareholders also have the right to vote on matters such as the election of the board of directors and major company decisions. Since ordinary shares are the most common type of shares issued by companies, they are often referred to as "common shares".

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A tax on petrol will have a more destabilizing effect on the economy. When a tax is levied on petrol, it leads to an increase in the price of petrol, which affects the transportation sector and indirectly impacts other sectors of the economy that rely on transportation, such as the agriculture and manufacturing sectors. This, in turn, leads to an increase in the price of goods and services and inflation. Additionally, an increase in the price of petrol reduces the purchasing power of consumers, who may need to allocate a larger share of their income to fuel expenses, resulting in lower consumption and decreased economic activity. Therefore, a tax on petrol has a more destabilizing effect on the economy compared to the other options.

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The slope of the transformation curve indicates the opportunity cost of producing one commodity in terms of the other. Opportunity cost refers to the cost of forgoing the next best alternative. In this case, it refers to the cost of producing one commodity instead of the other. The slope of the curve represents the rate at which one commodity can be exchanged for the other. Therefore, the steeper the slope, the higher the opportunity cost of producing one commodity in terms of the other. Conversely, the flatter the slope, the lower the opportunity cost of producing one commodity in terms of the other.

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The trade unions in West Africa have achieved several benefits for workers such as increased wages, better conditions of service, and improved welfare facilities. However, they have not achieved competitive determination of wage rates. This means that the wages and salary structure in West Africa are still mostly influenced by the employers rather than by market forces. Trade unions have been able to negotiate better pay and conditions for their members, but they have not been able to achieve a truly competitive labor market where wages are set by supply and demand.

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Commercial banks can create money by lending to borrowers. When a bank receives a deposit from a customer, it is required to hold only a fraction of that deposit as cash reserves, known as the reserve ratio. The remaining portion can be lent out to borrowers as loans. When a loan is made, the bank credits the borrower's account with the loan amount, creating new money in the process. This new money is then spent or deposited in other banks, and the process can repeat, further increasing the money supply in the economy. Therefore, the act of lending to borrowers is how commercial banks create money.

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The employer's demand curve for labor is represented by the marginal product curve of labor. The marginal product curve shows the additional output that can be produced when one more unit of labor is employed, while holding all other inputs constant. The employer will continue to hire more labor up to the point where the marginal cost of hiring an additional worker (wage) equals the marginal product of labor (the additional output the worker produces). Therefore, the marginal product curve represents the employer's demand for labor.

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The Economic Commission for Africa (ECA) is an agency of the United Nations (UN). It was established by the UN in 1958 as one of the regional commissions to promote economic and social development in Africa. The ECA's mandate is to promote the economic and social development of its member states, foster intra-regional integration, and promote international cooperation for Africa's development. Its headquarters is located in Addis Ababa, Ethiopia.

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Data presented in tables are usually arranged in rows and columns. Tables are a common way of presenting data in an organized and systematic manner, allowing for easy comparison and analysis of data. The data is arranged in rows, which are horizontal, and columns, which are vertical. Each row typically represents a single observation, while each column represents a particular variable or category. This format makes it easy to read and interpret large amounts of data quickly and efficiently.

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The determinant of supply that cannot be predicted easily is national emergencies. This is because national emergencies, such as natural disasters or political crises, can occur unexpectedly and disrupt the supply of goods or services. For example, a flood may destroy crops, leading to a decrease in the supply of food. Since national emergencies are unforeseeable, it is difficult to plan or make predictions about their impact on the supply of a commodity. On the other hand, factors such as the price of the commodity, new techniques of production, and mobility of labor can be predicted to a certain extent and can be accounted for in supply projections.

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