The study of economics is important to every society because it
Economics studies how societies use limited resources to meet unlimited wants, focusing on efficient allocation and scarcity management, which is fundamental to societal decision-making.
A consumer with $10 needs a dress, a pair of shoes, a handbag and jewellery costing $20, $10, $7 and $3 respectively. The opportunity cost of buying the pair of shoes is the
Opportunity cost is the value of the next best alternative forgone. With $10, buying shoes ($10) means forgoing the handbag ($7) and jewellery ($3), totaling $10, as the dress ($20) is unaffordable anyway.
The distinguishing function of an entrepreneur is
Entrepreneurs bear the uncertainty and risk of business ventures, combining factors of production for profit, distinguishing them from managers who handle day-to-day operations.
When a commodity market operates without government interference, commodities are distributed through
In a free market, the price mechanism allocates resources through supply and demand interactions, determining production, distribution, and consumption without central control.
One way of obtaining the median of a given data is to
The median is the middle value in an ordered dataset, dividing it into two equal parts; for even numbers, it's the average of the two middle values.
An increase in rice harvest, all things being equal, may cause
An increase in supply (harvest) shifts the supply curve rightward, lowering equilibrium price, assuming demand remains constant (ceteris paribus).
The demand for wood and labour is an example of
Derived demand arises from the demand for the final product (e.g., furniture); wood and labour are demanded because of the need for furniture production.
What will be the reaction of consumers in a market if there is a fall in the price of the substitute of commodity X?
A fall in the price of a substitute increases demand for the substitute, decreasing demand for X, shifting X's demand curve leftward.
An increase in market supply is caused by the following factors except
An increase in commodity price causes a movement along the supply curve (increase in quantity supplied), not a shift in the supply curve.
The coefficient of price elasticity of supply of land is usually
Land supply is fixed in the short run; changes in price do not affect quantity supplied, resulting in zero elasticity.
The price of soap rose from $1 to $20, causing a trader to increase her supply from 50 to 120 boxes per week. This makes supply
%ΔP = (20-1)/1 *100 = 1900%, %ΔQ = (120-50)/50 *100 = 140%, Es = 140/1900 ≈ 0.07 <1, inelastic.
A leftward shift in the supply curve for a commodity indicates
A leftward shift means decrease in supply at each price level, due to factors like higher costs.
Market supply may increase if there is an increase in the
Subsidies lower production costs, shifting supply curve rightward, increasing supply.
Governments can increase farmers' incomes by
Minimum price (floor price) above equilibrium ensures farmers receive higher prices for their produce, boosting incomes.
When market supply increases, the equilibrium price
Increased supply shifts curve right, lowering price and increasing equilibrium quantity.
The supply of mangoes is represented as P = 0.3Q, where P is the price ($) and Q is the quantity. What is P when Q is 50?
P = 0.3 × 50 = 15$.
The output of an extra unit of an input is referred to as
Marginal product is the additional output from employing one more unit of input, holding others constant.
The law of diminishing returns is applicable to the
The law applies when adding more variable input to fixed inputs, eventually leading to decreasing marginal returns.
A firm incurred the following costs in production. Use the information in the table to answer the question below. Output (bags of rice) 0 10 20 30 40 50 60 Total Cost ($) 100 200 300 380 440 520 600 The fixed cost of production is
Fixed cost remains constant regardless of output; at 0 output, total cost = $100, which is fixed cost.
A firm incurred the following costs in production. Use the information in the table to answer the question below. Output (bags of rice) 0 10 20 30 40 50 60 Total Cost ($) 100 200 300 380 440 520 600 The average cost of producing 40 bags of rice is
Average cost = total cost / output = 440 / 40 = $11.
The relationship between the marginal revenue (MR) and the average revenue (AR) of a monopolist is that the marginal revenue curve
In monopoly, to sell more, price is lowered for all units, so MR < AR, and MR curve is below and twice as steep as AR (demand) curve.
A major source of finance to the Railway Corporation in West African countries is
Public utilities like railways are government-owned and financed through budgetary subventions (grants) to cover losses and maintain services.
Separation of ownership of resources and their control is mostly found in a
In joint stock companies (public limited), shareholders own but professional managers control operations, separating ownership and control.
By-passing the middlemen in the chain of distribution can lead to
Eliminating middlemen reduces jobs for distributors, wholesalers, and retailers, potentially causing unemployment in the distribution sector.
Two factors which can improve the market efficiency of labour are
A better work environment and healthier workers increase productivity and efficiency in the labor market by reducing absenteeism and enhancing output.
The age distribution of a country's population is shown below. Use the information to answer the question below. Age group (years) 0-15 16-40 41-60 Over 60 Population (%) 30 45 15 10 What is the percentage of the working population?
Working population (ages 15-64 approx.) = 16-40 (45%) + 41-60 (15%) = 60%.
The age distribution of a country's population is shown below. Use the information to answer the question below. Age group (years) 0-15 16-40 41-60 Over 60 Population (%) 30 45 15 10 What is the dependency ratio?
Dependents = 0-15 (30%) + over 60 (10%) = 40%; working = 60%; ratio = 40:60 = 2:3.
The supply of land for agricultural purpose can be increased through
Reclamation (draining swamps) and irrigation (making arid land fertile) effectively increase cultivable land supply.
Non-economic factors that influence the location of firms include
Political decisions, like government incentives or directives, influence firm location beyond economic factors like resources or markets.
Which of the following is not an argument for the policy of privatization in West Africa?
Privatization transfers control from government to private owners, reducing government participation and control, unlike the other benefits listed.
The following data relates to the national income of a country. Gross domestic product = $2,800 Net factor income from abroad = $250 Depreciation = $700 Indirect taxes = $120 What is the country’s Gross National Product (GNP)?
GNP = GDP + Net factor income from abroad = 2800 + 250 = 3050.
The following data relates to the national income of a country. Gross domestic product = $2,800 Net factor income from abroad = $250 Depreciation = $700 Indirect taxes = $120 What’s the country’s Net National Product (NNP) at factor cost?
GNP = 3050 (mp), NNP (mp) = GNP - Depreciation = 3050 - 700 = 2350, NNP (fc) = 2350 - Indirect taxes = 2350 - 120 = 2230.
The standard of living in two countries can be compared using the
GNP per capita (per head) adjusts for population size, providing a better measure of average income and living standards than total GNP.
Government can curb inflation by
Selling securities (open market operation) reduces money supply by absorbing liquidity, curbing demand-pull inflation.
Functions of money does not include
General acceptability is a quality of money, not a function; functions are medium of exchange, store of value, unit of account, standard of deferred payment.
Demand-pull inflation can be as a result of
Deficit financing increases aggregate demand without matching supply, pulling prices up via excess demand.
An increase in cash ratio by the central bank will
Higher cash reserve ratio ties up more funds in reserves, reducing banks' ability to lend, contracting money supply.
When a government cuts down her expenditure to reduce inflation, she has embarked on
Restrictive fiscal policy reduces government spending to decrease aggregate demand, controlling inflation.
In order to enable the government of a country to increase its tax revenue, it will be advisable for it to increase taxes on
Taxes on inelastic demand goods (like alcohol) generate more revenue as quantity demanded changes little with price rise.
People who dispose of their assets are expected to pay
Capital gains tax is levied on profits from asset sales (disposal), like property or shares.
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