WAEC SSCE - Economics - 2004

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When a change in price does not affect the quantity demanded of a commodity, the price elasticity of demand is "perfectly inelastic". Perfectly inelastic demand occurs when the quantity demanded of a product remains constant, even if there is a change in price. This means that the price elasticity of demand is zero, indicating that changes in price do not affect the quantity demanded of the product at all. For instance, the demand for life-saving drugs like insulin or heart medications can be considered perfectly inelastic, because their consumption is considered essential, and people are willing to pay any price to get them. Even if the price of insulin doubles, the quantity demanded may still remain the same, as people have no substitute for the drug. Thus, in the case of perfectly inelastic demand, the price elasticity of demand is zero, indicating no change in quantity demanded, regardless of changes in price.

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The distribution of goods is said to be completed when it reaches the consumers. Distribution refers to the process of getting products from the manufacturer or producer to the final consumer. It involves a chain of intermediaries such as wholesalers, retailers, and distributors, who help to move the products from one stage to the next until it reaches the end user. The process of distribution starts from the manufacturer, who produces the goods and then sells them to wholesalers or distributors. The wholesalers or distributors then sell the goods to retailers, who in turn sell the products to the final consumer. The distribution process is complete when the products reach the consumers, who are the ultimate users of the goods. At this stage, the products have passed through all the necessary stages of the distribution chain, and have been made available for purchase and consumption by the end user. It is important to note that the distribution process can be complex and involve many different channels and intermediaries, depending on the type of product, the market, and other factors. However, the ultimate goal of distribution is to get the products to the final consumer in the most efficient and effective way possible.

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Opportunity cost is the value of the next best alternative that must be foregone in order to pursue a certain action. In a firm, resources such as labor, capital and time are limited and therefore, the firm must decide how to allocate them effectively. The concept of opportunity cost helps firms to make the best possible decision on how to allocate resources by considering the cost of not using these resources for alternative uses. For instance, a firm that decides to use its resources to produce product A instead of product B incurs an opportunity cost equal to the benefits foregone by not producing product B. By considering opportunity cost, firms are able to make rational decisions on how to allocate scarce resources to maximize profits and reduce wastage. Therefore, the concept of opportunity cost is important to the firm because it guides firms in allocating scarce resources efficiently.

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Division of labor is limited by the size of the market. When a market is small, there is a limit to how much specialization and division of labor can occur because there may not be enough demand to support a large number of specialized workers. In such a case, workers may have to perform multiple tasks to keep the business going. On the other hand, in a larger market, there is more potential for specialization and division of labor, as there is a greater demand for a variety of goods and services. This can lead to increased productivity, efficiency, and ultimately, economic growth. However, other factors such as the productivity of capital, cost of production, and availability of factors of production also play a role in determining the extent of division of labor in an economy.

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When the demand curve is higher than the supply curve at a given price level, it creates a gap between the two curves below the equilibrium price. This gap represents excess demand in the market, which means that buyers want to purchase more goods than what suppliers are willing to sell at that price. In other words, there are more buyers than there are goods available, and this leads to a shortage of supply in the market. To achieve balance between supply and demand, the price needs to increase until the two curves intersect at a point where the quantity demanded equals the quantity supplied. This intersection point is known as the equilibrium price, which is the price where the market is in balance and there is no excess demand or supply.

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The market structure in which the operations are many and none of them can influence the price is called a perfect market. In a perfect market, there are many buyers and sellers of a product or service and all have access to the same information regarding price and availability. No single buyer or seller has the power to influence the market price as they are all price takers. This means that the market price is determined by the forces of supply and demand. In a perfect market, there are no barriers to entry or exit, and firms are free to enter or leave the market without any restriction.

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In a capitalist system, the means of production is owned and controlled by private individuals. This means that individuals, rather than the government or workers, own the factories, land, and other resources necessary to produce goods and services. The goal is to make a profit by producing goods and services that people are willing to pay for, rather than producing goods that the government or a central authority determines are needed. This allows for competition among producers, which is thought to increase efficiency and innovation.

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When the general price level persistently falls, it causes a situation known as deflation. In such a situation, people's purchasing power increases, and they can buy more goods and services with the same amount of money. As a result, the demand for goods and services decreases, which can cause businesses to reduce their production and, in turn, decrease employment opportunities. Therefore, the rate of unemployment tends to rise when the general price level persistently falls.

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One disadvantage of direct tax is that it can discourage people from engaging in additional work. Direct taxes are taxes that are paid directly by individuals or companies to the government based on their income or profits. When direct taxes are high, people may be less motivated to work more or earn more income, since they know that a significant portion of their income will be taken away as taxes. This is because direct taxes can reduce the incentive to work or invest, as individuals may feel that the rewards for their efforts are not worth the tax burden they face. As a result, people may choose to work less or not take on additional work, which can negatively impact the economy and reduce the government's revenue in the long run. It is important to note that this disadvantage of direct tax may not always apply, as the effects of taxation on individual behavior can be complex and dependent on a variety of factors, such as the overall tax system, economic conditions, and individual preferences. However, in general, high direct taxes can discourage work and investment, which can have negative consequences for both individuals and the economy as a whole.

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Open Market Operation (OMO) is a monetary policy tool used by central banks to regulate the money supply in the economy. It involves the buying and selling of government securities, such as Treasury bills or bonds, by the central bank in the open market. When the central bank buys government securities, it injects money into the economy, thereby increasing the money supply. Conversely, when it sells government securities, it withdraws money from the economy, thereby decreasing the money supply. By using OMO, the central bank can influence short-term interest rates in the economy. For example, if the central bank wants to lower interest rates, it can buy government securities, which increases the money supply and lowers the demand for loans. This, in turn, leads to lower interest rates. Conversely, if the central bank wants to raise interest rates, it can sell government securities, which decreases the money supply and increases the demand for loans, thereby leading to higher interest rates. In summary, Open Market Operation (OMO) is a monetary policy tool used by central banks to influence the money supply and short-term interest rates in the economy through the buying and selling of government securities in the open market.

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The number of people who are qualified to work and who offer themselves for employment are called the working population. The working population refers to the group of people within a certain age range who are available for work and actively seeking employment. This includes people who are currently employed, as well as those who are unemployed but actively seeking work. The working population is an important demographic for economists and policymakers, as it provides a measure of the potential workforce that can be utilized to produce goods and services. It is also used to calculate important economic indicators such as the unemployment rate and the labor force participation rate. Migrant labor refers to workers who move from one region or country to another in search of employment opportunities. Labor turnover refers to the rate at which employees leave a job and are replaced by new workers. Mobility of labor refers to the ease with which workers can move between different jobs or industries. Therefore, the number of people who are qualified to work and who offer themselves for employment are called the working population.

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As a firm expands, it enjoys some advantages called internal economies of scale. These are cost advantages that a firm gains as it increases its scale of operations. Internal economies of scale arise due to factors such as specialization of labor, purchasing power, technological improvements, managerial efficiency, financial economies, and marketing economies. As the scale of production increases, the firm is able to spread its fixed costs over a larger output, leading to a reduction in average costs. This allows the firm to offer its products at a lower price while still maintaining a profit margin.

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A mixed economy is a system where both private enterprises and the government have control over the means of production. This means that some industries and services are owned and operated by private individuals or companies, while others are owned and run by the government. In a mixed economy, the government may regulate certain industries and provide public services like healthcare and education, while other sectors such as retail and manufacturing are left to private businesses. The idea behind a mixed economy is to combine the advantages of both capitalism and socialism, creating a balance between private enterprise and government intervention to promote economic growth and social welfare.

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A surplus in the balance of payment occurs when a country's exports are greater than its imports, resulting in more foreign currency coming into the country than leaving it. To utilize this surplus, the country can invest the excess funds in a variety of ways, including buying foreign assets such as stocks and bonds, building up its foreign currency reserves, investing in infrastructure development within the country, or providing aid and grants to other countries. The decision on how to use the surplus will depend on the country's economic priorities and goals.

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The market where different currencies are bought and sold is known as the foreign exchange market. It is a decentralized market, which means that it does not have a central physical location, and it is made up of a network of dealers who are connected electronically. In this market, individuals, businesses, and governments can exchange one currency for another, based on the current exchange rate. The foreign exchange market is also known as the forex market or FX market.

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Printing more money is not an effective way to control inflation because it will increase the money supply, leading to more money chasing the same amount of goods and services, causing prices to rise. Reducing the rate of taxes may increase disposable income and stimulate demand for goods and services, leading to more economic activity and potentially higher prices, which can worsen inflation. Reducing the level of expenditures can be an effective way to control inflation because it can decrease demand for goods and services, leading to lower prices. However, it may also lead to a decrease in economic activity and employment. Establishing more banks may increase the availability of credit, but it is unlikely to have a direct impact on inflation. The government may use monetary policy tools such as adjusting interest rates and reserve requirements to influence the money supply, which can help control inflation. Additionally, the government may use fiscal policy tools such as taxation and government spending to stimulate or cool down the economy, which can also impact inflation.

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An ageing population refers to an increase in the proportion of elderly people in a population over time. One major effect of ageing population is a reduced labour force, as more people retire and leave the workforce. This can lead to a shortage of workers in certain industries, which can have negative effects on economic growth and productivity. Additionally, an ageing population may also increase the demand for healthcare services and social welfare programs, which can lead to a rise in the price of commodities and increased strain on government budgets. However, a reduced infrastructure and neglect of agriculture are not necessarily direct effects of an ageing population.

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The National Youth Service Corps (NYSC) is not a direct effort to increase agricultural production. The NYSC is a one-year mandatory program for Nigerian graduates under the age of 30, aimed at promoting national unity and development. While some corps members may be deployed to work on agricultural projects during their service year, the program itself is not focused solely on agricultural production. On the other hand, options A, B, and C are all direct efforts to increase agricultural production. Operation Feed the Nation was a program launched in Nigeria in 1976 to increase food production and reduce dependence on imported food. The use of improved seedlings and increased loans to farmers and co-operative societies are also direct efforts to increase agricultural production by improving the quality of inputs and increasing access to credit for farmers.

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The act of selling goods in foreign markets at prices below those charged in the home market is called dumping. It is usually done with the aim of gaining a larger share of the foreign market or driving out competitors in that market. Dumping can be a controversial trade practice as it can harm domestic industries and lead to trade disputes between countries.

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An economic good is described as a good that yields utility and commands a price. An economic good is any product or service that people want or need and is limited in supply, meaning that there is a price associated with it. The concept of utility refers to the satisfaction or benefit that a person derives from consuming or using the product or service. For example, food, clothing, and housing are all examples of economic goods because they are useful to people and they are limited in supply, meaning that people must pay a price to acquire them. In contrast, goods that have an unlimited supply, such as air or sunlight, are not considered economic goods because they are not limited in supply and do not command a price.

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The national income of a country can be estimated by the "expenditure method". The expenditure method measures the total amount of spending in the economy by households, businesses, governments, and foreigners. This includes consumption expenditures, investment expenditures, government purchases, and net exports. By summing up all these expenditures, economists can estimate the total output and income of a country over a given period of time. Thus, the expenditure method is one of the most commonly used methods for estimating the national income of a country.

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A major achievement of the Organization of Petroleum Exporting Countries (OPEC) is that the price of crude oil has remained relatively stable. OPEC is an organization of 14 major oil-exporting countries, and one of its main functions is to regulate the supply of crude oil in the world market to maintain stable prices. OPEC uses various strategies such as production quotas and price targets to manage the global supply and demand of crude oil. As a result of these efforts, the price of crude oil has remained relatively stable over the years, which has helped to promote economic growth and stability in both oil-producing and oil-consuming countries.

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The three broad categories of production are primary, secondary, and tertiary. 1. Primary production involves extracting raw materials from the natural environment, such as farming, fishing, and mining. 2. Secondary production involves transforming raw materials into finished goods through manufacturing and construction. 3. Tertiary production involves providing services to consumers and businesses, such as retail, transportation, and healthcare. These categories are used to classify economic activities and understand the different stages of production involved in creating goods and services.

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International trade is an application of the principle of comparative cost advantage. This means that countries specialize in producing goods and services that they can produce at a lower opportunity cost than other countries. By doing so, countries can increase their production and efficiency, and trade with other countries to obtain goods and services that they cannot produce efficiently themselves. The principle of comparative cost advantage allows for more efficient use of resources and ultimately leads to greater economic growth and prosperity.

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Taxes levied on commodities are indirect taxes. Indirect taxes are those taxes that are not directly levied on individuals or businesses but are imposed on goods and services. These taxes are ultimately passed on to the consumer, meaning the end-user pays the tax. In the case of taxes levied on commodities, the tax is imposed on the goods themselves, such as a tax on cigarettes or alcohol, rather than on the person buying them.

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The capital account of the balance of payments tracks the movement of capital between countries. It includes transactions such as investments, loans, and transfers of assets. Out of the options provided, repayment of foreign loans is under the capital account of the balance of payments. Repayment of foreign loans is a capital outflow because it involves paying back money that was borrowed from a foreign entity. It is a transaction that involves the movement of capital from one country to another, and therefore falls under the capital account. On the other hand, visible imports and invisible exports are part of the current account of the balance of payments. Visible imports refer to physical goods that are purchased from foreign countries, while invisible exports refer to services that are provided to foreign countries, such as consulting, tourism, or software development. Cocoa exports, specifically, would be considered a type of visible export, as it is a physical good that is being sold to foreign countries.

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The value of money is best determined by the purchasing power. This means that the value of money is determined by the amount of goods or services that can be purchased with it. In other words, the purchasing power of money is the amount of goods or services that can be acquired with a unit of currency. For instance, if the purchasing power of a currency is high, people can buy more goods or services with a smaller amount of that currency. Therefore, the value of money is best determined by the amount of goods or services that can be purchased with it, which is known as the purchasing power.

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The economic activity among the given options is the payment of school fees. An economic activity is any activity that involves the production, distribution, and consumption of goods and services to satisfy the needs and wants of people. In this case, paying school fees involves the exchange of money for the service of education. Education is a service that is produced by schools and consumed by students. By paying school fees, parents or guardians are contributing to the production and distribution of education, which is an essential service for human development and progress. In contrast, attending a town's meeting, visiting a stadium, and arresting a petty thief do not directly involve the production or consumption of goods and services and are therefore not considered economic activities.

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An entrepreneur is likely to make more profits when their revenue is greater than their total costs. In other words, the difference between the entrepreneur's total revenue and total cost (profit) is maximized when revenue is high and costs are low. Therefore, out of the options given, the entrepreneur is more likely to make more profits when the costs per unit output falls. This is because when costs per unit output fall, the total cost of producing a given quantity of output decreases. Thus, the entrepreneur is able to maintain or lower their selling price while earning a higher profit per unit sold. The other options listed would not lead to an increase in profits. If expenditure is more than revenue, the entrepreneur is making a loss rather than a profit. If competitors charge lower prices, the entrepreneur may have to lower their own prices, which would decrease their profit margins. If the quantity of output reduces, the entrepreneur's revenue would decrease, and their fixed costs (such as rent or salaries) would be spread across fewer units, increasing their total costs per unit and decreasing their profit margin.

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Profit maximizing output for both the monopolist and the perfectly competitive firm occurs at the point where the marginal cost curve cuts the marginal revenue curve from below. In other words, the level of output where the additional cost of producing one more unit (marginal cost) is equal to the additional revenue earned from selling one more unit (marginal revenue). This is because at this point, the firm is producing the optimal quantity of goods that maximizes its profit.

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Middlemen refer to individuals or firms that operate between manufacturers or producers and consumers in the distribution of goods. One of the problems associated with middlemen is that they may engage in hoarding goods. Hoarding occurs when middlemen buy large quantities of goods, stock them, and withhold them from the market. This action is usually done with the intention of creating an artificial scarcity of the goods and driving up their prices, leading to higher profits for the middlemen. This, in turn, can lead to price instability and an unfair distribution of goods in the market, ultimately leading to economic inefficiency.

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The Economic Community of West African States (ECOWAS) has been slow in achieving its objectives due to various reasons, such as political instability in member states, the activities of multinational corporations, inadequate personnel at the secretariat, and inadequate international support. Political instability in member states can affect the implementation of regional policies and programs. When there is instability in a country, the government may not be able to focus on regional integration or prioritize the needs of the regional community. Multinational corporations can also hinder the progress of ECOWAS because they may prioritize their own interests over the needs of the region. This can include exploiting natural resources and labor, avoiding taxes, and engaging in corruption. Inadequate personnel at the secretariat can also be a challenge for ECOWAS because it can impact the organization's capacity to coordinate and implement regional programs effectively. Without sufficient personnel, there may be delays in decision-making and implementation of regional policies. Finally, inadequate international support can also affect the progress of ECOWAS. The organization relies on funding and support from international partners to implement its programs and initiatives. Without adequate support, it may be challenging to achieve the goals and objectives of the organization.

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A policy by which government restricts the amount of foreign currencies bought and sold is known as exchange control. Exchange control is a type of government intervention in the foreign exchange market, which is the market where currencies are bought and sold. The aim of exchange control is to restrict the amount of foreign currency that can be bought or sold by residents of a country. This is usually done by imposing restrictions on the amount of foreign currency that individuals or companies can purchase, or by requiring that all foreign currency transactions go through a government-controlled exchange rate. The government may also limit the amount of foreign currency that can be taken out of the country. Exchange control is often used as a way of managing a country's foreign exchange reserves, which are the foreign currencies held by a country's central bank. By restricting the amount of foreign currency that can be bought or sold, the government can control the flow of foreign currency into and out of the country, which can help to stabilize the exchange rate and protect the value of the country's currency. Therefore, exchange control is a policy by which government restricts the amount of foreign currencies bought and sold.

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One main benefit of a partnership is that members can specialize in various functions. This means that each partner can bring their unique skills, knowledge, and experience to the partnership, allowing them to effectively divide tasks and responsibilities. By doing so, partners can work together to achieve common goals, such as growing the business or increasing profitability, while minimizing the risk of errors and mistakes due to a lack of expertise or experience. This also helps to foster a sense of collaboration and cooperation among partners, which can lead to a stronger and more successful partnership overall.

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Trade among West African countries is poor because communication links are weak. In many cases, countries in the region lack proper infrastructure such as good roads, bridges, and ports, which makes it difficult for traders to move goods across borders. Additionally, there may be language barriers, cultural differences, and political instability that can further hinder trade between countries. These factors can discourage businesses from pursuing trade opportunities in the region, leading to poor trade relations among West African countries.

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The type of economic planning that looks at the economy as a whole, considering all the different sectors and how they interrelate, is called aggregate economic planning. It involves analyzing different aspects of the economy such as GDP, employment, inflation, and trade, to come up with policies and strategies that will improve the overall economic performance of a country. This type of planning is often done by government agencies and policymakers who use the information to make decisions on things like taxes, spending, and regulations. So, to summarize, aggregate economic planning is all about taking a big-picture view of the economy to plan for its overall development.

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Natural growth rate refers to the rate at which a population increases or decreases due to the difference between the birth rate and the death rate. In other words, it is the difference between the number of babies born per year and the number of people who die each year. This rate does not take into account the impact of migration, meaning it only considers natural factors that affect population growth. So, the correct option is "birth rate less death rate."

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The transfer of payments is excluded when making national income. Transfer payments refer to money received without providing any good or service in exchange, such as social security benefits or welfare payments. Since transfer payments do not involve the production of goods and services, they are not included in the calculation of national income. Wage and salaries, profits, and dividends are all examples of payments for goods and services that are included in the calculation of national income.

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Privatisation can ensure efficiency in the industrial sector of a country. Privatisation refers to the process of transferring ownership and control of state-owned enterprises to private individuals or entities. When this happens, private owners have a profit motive that incentivizes them to maximize efficiency and productivity in order to increase profits. This can result in increased competition, innovation, and investment, which can ultimately lead to improved efficiency in the industrial sector. On the other hand, nationalization and indigenization involve the transfer of ownership and control of industries from private individuals or entities to the state or indigenous people, respectively. While these may be important for social or political reasons, they can often result in inefficiencies due to lack of competition and the potential for political interference in management decisions. Finally, liquidation involves the closure of a business, which is not a desirable outcome for the industrial sector as it can lead to job losses and economic decline. Therefore, privatisation is the best option for ensuring efficiency in the industrial sector of a country.

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The reward for land as a factor of production is rent. Rent is the payment made for the use of land. Land as a factor of production is a natural resource, and its supply is considered fixed. Therefore, its rent is determined by the demand for its use. As the demand for land increases, its rent also increases. This is because land is a limited resource and its use for one purpose often means it cannot be used for another. The payment of rent for land is one of the primary ways in which landowners earn income.

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