WAEC Economics 2022
Questions & Answers

Students might mistakenly pick opportunity cost of goods consumed or incomes of consumers, looking at monetary metrics rather than personal urgency. A scale of preference is a list of wants arranged in order of importance, reflecting the relative urgency of needs, which helps in rational decision-making under scarcity by prioritizing the most pressing wants first. Common mistake: Confusing a priority ranking of desires with income levels or exact opportunity costs.

Students might mistakenly pick outside the production possibility curve, which is typically unattainable with current resources. The production possibility curve (PPC) represents maximum efficient output; points inside the curve indicate underutilization or unemployment of resources, as production could be higher without increasing inputs. Common mistake: Confusing resource unemployment with unreachable over-capacity production points.

Students might mistakenly pick have high cost of production, assuming scarce inputs are always costly to produce. Natural resources like land, minerals, and forests are provided by nature without human effort, making them free gifts, though their use may involve opportunity costs or extraction expenses. Common mistake: Overlooking the natural origin of raw environmental assets due to extraction pricing.

A student might incorrectly choose option A or B by assuming economic growth always stalls in capitalist frameworks or that massive government infrastructure is required. The correct answer is D because private ownership and profit-driven motives naturally funnel wealth disproportionately to capital owners, driving a wider chasm between the affluent and impoverished citizens. Common mistake: Confusing the presence of free markets with equitable resource distribution.

A test-taker could mistakenly select option A or B by miscalculating percentages or using an incorrect decimal placement. Option C is correct because multiplying the Gross Domestic Product of $540 by 60% yields $324, representing the exact value added to total economic output by the mining sector. Common mistake: Failing to convert the percentage properly to a decimal before multiplying.

A student might mistakenly select option A, thinking that any two goods linked in the market must react identically. The correct option is D because competitive goods act as substitutes, meaning that as buyers increase their purchases of one item, their preferences shift away from the alternative, resulting in a drop in its demand. Common mistake: Confusing complementary goods with substitutes in competitive demand.

A student might choose option A by assuming standard downward-sloping curves apply to all purchases. Option B is correct because Veblen goods possess an upward-sloping demand curve, where higher price tags boost prestige and luxury appeal, drawing in status-seeking buyers and defying standard economic laws. Common mistake: Applying the conventional law of demand to luxury and ostentatious items.

A candidate might mistakenly select option A or B, thinking that consumer tastes or income shifts operate identically to price alterations. Option C is the correct answer because price variations trigger a movement along the existing demand curve rather than shifting it, whereas non-price factors cause shifts in demand. Common mistake: Failing to distinguish between a shift in demand and a movement along the curve caused by price.

A student might select option A or B by misapplying the formula or inverting the quantity and price variables. Option C is correct because dividing the percentage change in quantity demanded (10 units over 20, which is 0.5) by the percentage change in price ($1 over $4, which is 0.25) yields an elasticity of 2.00, showing elastic demand where quantity shifts more than proportionally to price. Common mistake: Inverting the percentage changes of price and quantity in the elasticity formula.

A student could mistakenly choose option A or D, believing that higher input taxes or price hikes stimulate supply. Option B is correct because government subsidies lower production expenses, motivating firms to supply a greater quantity at every price level and shifting the supply curve rightward. Common mistake: Confusing a price-induced movement along the supply curve with a rightward shift caused by subsidies.

A student might mistakenly choose option A by confusing a vertical line with infinite responsiveness. Option B is correct because a perfectly elastic supply denotes infinite responsiveness where suppliers provide any amount at the prevailing market price but nothing above it, forming a horizontal supply curve. Common mistake: Mixing up the graphical representation of perfectly elastic supply with perfectly inelastic supply.

A student might pick option C or D by assuming goods linked in production are always joint or derived. Option A is correct because competitive goods share similar production resources, meaning that a higher price for commodity X diverts those inputs toward its creation, thereby cutting the supply of commodity Y as producers shift to the more lucrative choice. Common mistake: Confusing joint supply with competitive supply when resources are diverted.

A student might mistakenly pick option A, thinking that producing two crops together always means they are jointly supplied. Option C is correct because a single parcel of land has alternative uses for either rice or yam, creating a situation where choosing one crop diminishes the opportunity to produce the other, exemplifying competitive supply. Common mistake: Assuming multi-crop farming automatically constitutes joint supply instead of competitive resource allocation.

A student might select option D by assuming a consumer stops buying when satisfaction drops to zero. Option B is correct because consumer equilibrium happens when marginal utility equates to price, giving a marginal utility to price ratio of 1 that maximizes overall satisfaction without wasting extra expenditure. Common mistake: Believing consumer equilibrium occurs at zero marginal utility rather than when marginal utility equals price.

A student might select option C by confusing a price floor with a price ceiling or a shortage. Option A is correct because setting a minimum price above the equilibrium discourages buyers while encouraging sellers, producing an excess supply or market surplus. Common mistake: Confusing the surplus caused by a minimum price with the shortage caused by a maximum price.

A student might pick option A, confusing minimum price legislation with price ceilings. Option B is correct because a price floor is a government-mandated minimum price designed to stop prices from dropping too low in markets like agriculture or labor, contrasting directly with price ceilings. Common mistake: Mixing up price floors and price ceilings.

A student might choose option A or B, thinking that adding variable inputs or dividing land causes diminishing returns. Option D is the correct answer because technological innovations enhance overall efficiency and push the production function upward, which directly counters and prevents diminishing returns. Common mistake: Assuming technological advancements contribute to diminishing returns rather than counteracting them.

A student might choose option A or C, assuming high demand or excess labor limits specialization. Option B is correct because division of labour relies on specialized machinery and automation, meaning that a low level of technology restricts task specialization and coordination, undercutting productivity gains. Common mistake: Overlooking the essential role of technology in enabling task specialization.

A student might select option A or B, confusing total fixed costs with costs that change per unit. Option C is correct because average fixed cost equals total fixed cost divided by output, meaning it drops as output climbs because fixed expenses are spread across a larger number of units. Common mistake: Confusing total fixed cost behavior with average fixed cost behavior relative to output.

A student might pick option A, thinking variable costs persist during a shutdown. Option B is correct because fixed costs like rent and salaries must be paid regardless of whether production is active, whereas variable costs drop to zero when output stops. Common mistake: Assuming all business expenses continue even after production completely halts.