Scale of preference shows
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.
There is unemployment of resources when production is
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.
A major characteristic of natural resources is that they
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 major disadvantage of a capitalist economy is that it
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.
The mining sector of an economy contributes 60% to the Gross Domestic Product (GDP). If the GDP is $540, what is the contribution of the mining sector?
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.
The increase in the demand for a commodity may lead to a decrease in the demand for another if both are
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.
The demand curve for goods of ostentation is usually
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.
Which of the following factors is not a cause of change in demand? Changes in
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.
If the quantity demanded of a commodity increases from 20 units to 30 units when there is an increase in price from $4.00 to $5.00, the elasticity of demand is
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.
The supply curve of a locally-produced good may shift to the right if
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.
In perfectly elastic supply, the supply curve
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.
An increase in the price of commodity X led to a fall in the supply of commodity Y. commodities X and Y are
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.
The production of rice and yam on the same farmland is an example of
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 consumer of a single commodity is in equilibrium when
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.
If the government imposes a minimum price on a commodity
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 minimum price legislation is also called
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.
Which of the following factors is not a cause of diminishing returns?
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.
In manufacturing, division of labour may be hindered by
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.
The production cost that varies inversely with output is
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 firm that closes down will still incur
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.
The sufficient condition for a firm to be in equilibrium is that the
A student might pick option B, stopping at the necessary condition for profit maximization. Option D is correct because while marginal cost equalling marginal revenue is necessary, the sufficient condition requires the marginal cost curve to intersect marginal revenue from below, confirming that costs are rising through an optimum rather than falling. Common mistake: Confusing the necessary condition of profit maximization with the sufficient condition.
Cooperative societies are formed mainly to
A student might choose option A or B, assuming cooperatives exist primarily to drive commercial profits. Option C is correct because cooperative societies are member-owned entities centered on mutual welfare through affordable credit, supplies, and services, prioritizing democratic member support over profit maximization. Common mistake: Treating cooperative societies like profit-driven corporate businesses.
A disadvantage of a joint-stock company is
A student might select option A or B, confusing the distinct liability rules of corporate structures. Option D is correct because shareholders in joint-stock companies possess limited control over daily management since authority is delegated to directors, which can create agency issues. Common mistake: Confusing limited liability protection with direct managerial control by shareholders.
The middlemen is responsible for
A student might choose option B or C, associating middlemen with raw material purchasing or design. Option D is correct because middlemen perform the critical function of breaking bulk, purchasing massive quantities from producers and selling smaller amounts to retailers or consumers. Common mistake: Confusing manufacturing processes with the distribution role of breaking bulk.
A major function of the retailer is to
A student might pick option C, assuming retailers manage broad distribution costs. Option B is correct because retailers specialize in breaking bulk further down the chain, selling individual units directly to end consumers and providing location convenience and variety. Common mistake: Confusing wholesaler and retailer responsibilities in breaking bulk.
A positive effect of a rapid population increase is
A student might select option B or D, focusing on the negative burdens of rapid population growth. Option C is correct because a rapidly expanding population enlarges the consumer base, forging larger markets that encourage business investment, production, and economies of scale. Common mistake: Overlooking the market expansion benefits of population growth.
Which of the following factors may not affect the efficiency of labour?
A student might choose option A or B, assuming skills or welfare are irrelevant to work output. Option C is the correct answer because labor efficiency relies on skills, motivation, and complementary inputs, making immutable attributes like race and color irrelevant to worker productivity. Common mistake: Assuming demographic traits like race impact labor productivity.
The type of unemployment found among workers who leaves their jobs in search of other jobs is termed
A student might pick option B or D, confusing job transitions with structural shifts or business cycles. Option C is correct because frictional unemployment is a temporary, transitional phase where workers move between jobs while seeking better opportunities, reflecting normal labor market dynamics. Common mistake: Confusing frictional unemployment with structural unemployment caused by mismatched skills.
The main objective of marketing boards is to
A student might mistakenly choose option A by assuming that government revenue accumulation is the primary focus of agricultural regulation, or option B because boards deal directly with crop growers. Marketing boards instead insulate agriculturalists from market volatility. By purchasing crops at guaranteed rates and reselling them on global markets, these agencies absorb price fluctuations, assuring stable financial returns and encouraging continuous output. Common mistake: Confusing the regulatory collection of government funds with the price-insulating mandate of agricultural boards.
The use of mass advertising media will enable a firm to enjoy
A student might incorrectly select financial economies or managerial economies by confusing general business cost reductions with promotional cost distributions. As a business expands its promotional reach, mass media campaigns spread total promotional expenditures over a vastly larger audience and greater output volume. This growth directly drives down per-unit marketing expenses as a direct scale economy in promotion. Common mistake: Mistaking promotional cost distribution over large outputs for financial or managerial scale benefits.
Which of the following industries will add more value to primary products?
A student might select the mining industry or construction industry, thinking that extracting or building with raw materials constitutes value enhancement. Manufacturing and refinement operations are what truly elevate worth. Processing industries specifically convert raw, unprocessed primary items such as crude oil into fully finished petroleum goods, significantly increasing their market value through industrial transformation. Common mistake: Believing that merely extracting or gathering raw materials adds more value than manufacturing transformations.
Gross National Product (GNP) less the provision for the wear and tear of assets is the
A student might mistakenly choose net present value or net factor income, associating the term 'net' with financial investment or factor earnings rather than physical asset depreciation. Gross National Product accounts for total output, but capital goods experience wear and tear over time. Subtracting this capital consumption allowance from GNP yields Net National Product, which measures sustainable income available after replacing worn-out assets. Common mistake: Confusing capital depreciation adjustments with investment discounting or factor earnings.
An example of transfer payments in national income accounting is
A student might incorrectly pick the amount paid to a worker on transfer or international money movements, confusing job relocations or banking transactions with government welfare. Transfer payments are government redistributions that are not earned through current production. Examples like unemployment allowances are excluded from national income aggregates while still counting in personal income calculations. Common mistake: Mistaking workplace transfers or bank wire movements for unearned government welfare payments.
Increasing national income without effective control of population size in a country can lead to
A student might select higher per capita income or underutilization of resources by failing to account for how rapid population expansion affects aggregate output gains. If population growth outstrips income growth, per capita income declines, straining resources and public services. This dynamic ultimately raises poverty levels despite overall economic gains. Common mistake: Assuming aggregate economic growth automatically raises individual living standards regardless of population expansion.
An example of commodity money is
A student might mistakenly choose currency notes or mobile money, overlooking the requirement for intrinsic physical value. Commodity money differs from fiat currency notes, whose value relies solely on government decree. Silver functions as commodity money because it possesses inherent intrinsic worth and can be used directly in exchange. Common mistake: Confusing fiat currency and digital credits with goods that possess intrinsic material worth.
If inflation is anticipated, people may
A student might mistakenly select save more money or give out more loans, assuming that economic caution during inflation leads to increased saving. When price increases are anticipated, the real value of money erodes over time. This prospect prompts consumers to spend sooner on goods and assets to preserve purchasing power, thereby accelerating the velocity of money. Common mistake: Believing that rising price levels encourage individuals to hoard cash rather than spend it immediately.
If the Central Bank increases its bank rate
A student might incorrectly choose customers will borrow more from banks or interest changes by banks will fall, assuming central bank rate hikes ease borrowing conditions. When the central bank raises its lending rate, it increases the cost for commercial banks to borrow funds. Consequently, commercial banks hike their own lending rates, which discourages borrowing and contracts the overall money supply. Common mistake: Assuming central bank rate hikes lead to lower borrowing costs for commercial customers.
Commercial banks are different from development banks in that the latter
A student might select lend on short-term basis or are costly joint-stock companies, missing the distinct deposit-handling and project-funding roles of different financial institutions. Unlike commercial banks, which offer everyday deposit services like interest-bearing current accounts, development banks focus exclusively on long-term project financing and do not manage standard deposit accounts. Common mistake: Assuming all banking institutions handle everyday retail deposits and current accounts identically.
The use of the bank rate, cash ratio and open market operations constitute
A student might mistakenly select fiscal policy, confusing central bank tools with government budgeting actions. These particular instruments are quantitative tools used exclusively by the central bank to regulate money supply, interest rates, and credit availability to achieve broad economic stability. Common mistake: Confusing central bank monetary controls with government taxation and spending policies.
Fiscal policy measures imply a change in
A student might pick option A or option C by mistakenly assuming that fiscal measures involve exclusively taxation or exclusively expenditure. Fiscal policy broadly involves adjustments in both government spending and taxation revenue to influence aggregate demand, economic growth, and stabilize business cycles. Common mistake: Forgetting that fiscal policy encompasses both government revenue and expenditure simultaneously.
Now practice in exam mode
You've studied the answers — now test yourself under real exam conditions with the timer running.
Start WAEC Economics 2022 Quiz