Economics

(a) What is economic integration? (b) Outline any three short-comings of the Economic Community of West African States (ECOWAS) Highlight any three achievements of the Economic Community of West African State (ECOWAS)

(a) What is economic integration?
(b) Outline any three short-comings of the Economic Community of West African States (ECOWAS)
(c) Highlight any three achievements of the Economic Community of West African State (ECOWAS)

(a) What is economic integration? (b) Outline any three short-comings of the Economic Community of West African States (ECOWAS) Highlight any three achievements of the Economic Community of West African State (ECOWAS) Read More »

Distinguish between a: →mortgage bank and a merchant bank →commercial bank and a development bank Explain any four functions of commercial banks

(a) Distinguish between a:
→mortgage bank and a merchant bank
→commercial bank and a development bank
(b) Explain any four functions of commercial banks
Solution & Explanation
(a) →A mortgage bank is a bank or company which offers a loan with their own funds or from warehouse lenders while a merchant bank is a financial institution that provides the services of finance, underwriting, offering business loans, and advice or consultancy on finance.
→Commercial bank is a bank organized to perform public utility banking services, such as accepting deposits, lending money, etc while a development bank refers to a multi-purpose financial undertaking set up to provide financial aid to the industrial and agricultural sector, to encourage development.
(b) – Agency functions: Commercial banks are already agents of the banking system, but they can also be personal agents to their customers. An agent is an individual or institution that carries out activities, in this case, financial operations, on behalf of the principal 9 who is the customer) for a few known commissions.
– Credit creation: Commercial banks are perhaps the only financial institutions with this unique function. Commercial banks create credit by accepting deposits and providing loans, pushing money into the economy.
– Transfer of funds: The transfer of funds from a customer’s account to another account is another vital function of banks. Fund transfer is a valid means of paying for transactions, as well as other financial activities. Transfer of funds can be carried out through several ways such as drafts, standing orders, cheques, USSD platforms, and electronic banking.
– Provision of loans: Besides accepting deposits, another function of commercial banks is the provision of loans. The provision of funds to those who require them for transactions is a vital role commercial banks play. Nowadays, customers can now have access to instant loans from commercial banks

Distinguish between a: →mortgage bank and a merchant bank →commercial bank and a development bank Explain any four functions of commercial banks Read More »

(a) Explain the following types of taxes: →specific tax →value-added tax (bi) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is: perfectly inelastic (ii) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is: perfectly elastic

(a) Explain the following types of taxes:
→specific tax
→value-added tax
(bi) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is:
perfectly inelastic
(ii) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is:
perfectly elastic
Solution & Explanation
(a) →A specific tax is a tax that is levied on a fixed rate per unit of output i.e it is a fixed tax sum imposed per unit of a commodity.
→Value added tax are tax levied on businesses at every stage of production and distribution. VAT was introduced in 1994 to replace sales tax and it is a type of indirect taxes.
(bi) The effects of an indirect tax on a commodity when demand is perfectly inelastic is borne by the consumer. In this case, the whole tax burden can easily be shifted to the consumer by the producer or seller in the form of higher prices because the increase in price does not bring any change in quantity demand.

From the diagram above, the tax is represented by AB. This tax increases the manufacturer’s cost of production. Since the same quantity is purchased irrespective of the price, the manufacturer increases the price of the production from P1 to P2. The consumer bears the full burden represented by rectangle P1BAP2.

(ii) If the demand for a commodity is perfectly elastic, the producer or seller will bear the whole burden of taxation. This is so because any attempt to increase price will make the demand for the product fall to zero. The tax burden under this condition cannot be passed to the consumer.

In the diagram above, the tax is represented by EF. Since the tax increases the manufacturer’s( seller) cost of production, the quantity supplied decreased from Q1 to Q2. However, the price remains at P since any attempt to increase price will make demand to drop to zero. The manufacturer or seller, therefore, bears the whole tax burden represented by rectangle PEFG.

(a) Explain the following types of taxes: →specific tax →value-added tax (bi) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is: perfectly inelastic (ii) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is: perfectly elastic Read More »

(a) What is a demand schedule?
(b)Explain each of the following terms:
→effective demand
→composite demand
→derived demand
(ci) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its:
substitute
(ii) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its:
complement
Solution & Explanation

(a) What is a demand schedule?

A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to buy at different prices. It is a graphical representation of the law of demand, which states that as the price of a good or service increases, the quantity demanded will decrease.

(b) Explain each of the following terms:

Effective demand is the amount of goods and services that consumers actually buy. It is determined by the willingness and ability of consumers to buy, as well as the prices of goods and services.
Composite demand is the demand for a good or service that has multiple uses. For example, the demand for wheat can be used to make bread, biofuels, or animal feed. The demand for wheat will depend on the prices of all of these products.
Derived demand is the demand for a good or service that is used to produce another good or service. For example, the demand for steel is derived from the demand for cars. As the demand for cars increases, the demand for steel will also increase.
(ci) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its:

Substitute: A substitute is a good or service that can be used in place of another good or service. For example, coffee and tea are substitutes. If the price of coffee increases, consumers may switch to tea, which will increase the demand for tea.

Complement: A complement is a good or service that is used together with another good or service. For example, cars and gasoline are complements. If the price of cars increases, the demand for gasoline will decrease, because fewer people will be able to afford to buy cars.

(ii) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its:
Substitute: A change in the price of a substitute will cause the demand for the original good to shift in the opposite direction. For example, if the price of coffee increases, the demand for tea will shift to the right.

Complement: A change in the price of a complement will cause the demand for the original good to shift in the same direction. For example, if the price of cars increases, the demand for gasoline will shift to the left.

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Distinguish between labour force and efficiency of labour Describe five factors which determine the size of the labour force in a country

(a) Distinguish between labour force and efficiency of labour
(b) Describe five factors which determine the size of the labour force in a country
Solution & Explanation
(a) Labour force and efficiency of labour

Labour force refers to the number of people who are available for work, whether they are employed or unemployed.
Efficiency of labour refers to the productivity of the labour force, or the amount of output that can be produced by a worker in a given amount of time.
The main difference between labour force and efficiency of labour is that labour force is a measure of the size of the workforce, while efficiency of labour is a measure of how productive the workforce is.

(b) Factors which determine the size of the labour force in a country

The size of the labour force in a country is determined by a number of factors, including:

The size of the population. The larger the population, the larger the potential labour force.
The age structure of the population. The proportion of the population that is of working age (15-64 years old) will affect the size of the labour force.
The participation rate. The participation rate is the proportion of the working-age population that is either employed or unemployed.
The unemployment rate. The unemployment rate is the proportion of the labour force that is unemployed.
The number of immigrants. The number of immigrants can also affect the size of the labour force.

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Define the term limited liability Describe four differences between a public joint-stock company and a private joint-stock company Outline three sources of finance available to sole proprietorship

(a) Define the term limited liability
(b) Describe four differences between a public joint-stock company and a private joint-stock company
(c) Outline three sources of finance available to sole proprietorship

Solution & Explanation
(a) Limited liability is a business ownership structure that protects shareholders’ personal assets from losses and debts. The liability is limited to the amount invested in the company. Owners and partners are not accountable for the firm’s losses and debts.
(b) – For a private company, the minimum membership is 2 while the maximum is 50 and for a public, the minimum is 7 while the maximum has no limits.
– In a private joint stock, the number of directors is at least 2 while for a public, the number of directors is at least 3.
– There is no need for directors to file anything i.e no restriction on the appointment of directors in a private company while in a public joint company, directors must file a consent to act as directors or sign an MOA or enter for contract for qualification shares.
– In a private joint stock company, the transfer of shares is restricted while in a public joint stock company, there is no restriction of shares.
(c) -Personal capital: The sole proprietorship can invest his own savings into his business for expansion. This prevents him from the burden of interest payment and allows him to retain full control over the business.
– Retained profit: A profitable business generated a positive net income every year. Instead of drawing out large sums of money, a sole trader may opt to retain the earnings for business expansion
– Sale of assets: When a sole trader is short of personal capital and retained earnings and there’s a need to further investment in the business, he may decide to sell some of his assets.

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The diagram above shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow. Identify the curves labelled X,Y,Z

(ai) The diagram above shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.
Identify the curves labelled X,Y,Z
(aii) The diagram below shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.

State the direction of change in price and quantity with the introduction of subsidy
(bi) The diagram below shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.

Calculate the total revenue of the producers before the introduction of subsidy
(bii) The diagram below shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.

Calculate the total revenue of the producers after the introduction of subsidy
(c) The diagram below shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.

Calculate the percentage increase or decrease in total revenue of the producers with the introduction of subsidy
(d) The diagram below shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.

If the quantity demanded of maize increases from 20 to 40 bags as a result of a fall in price from $15 to $10, calculate the price elasticity of demand.
(e) The diagram below shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow.

State the type of elasticity of demand in 2(d).
Solution & Explanation
(ai) – The curve X represents the demand curve
– The curve Y represents the old supply curve
– The curve Z represents the new supply curve
(aii) Subsidy will shift the supply curve to the right causing price to fall and the quantity demanded to increase
(bi) Total revenue = Price x Quantity
Before subsidy, TR = 20 x 15
= $300
(bii) After subsidy, TR = 10 x 40
= $400
(c) % increase in revenue = 400 – 300/300 x 100
= 33.33%
(d) e = ∆Qd/∆P x P/Qd
e = 40 – 20/10 – 15 x 15/20
e = 20/-5 x 15/20
e = – 3 since elasticity is always positive. Therefore, e = 3
(e) It is an elastic demand because an increase in quantity demanded leads to a fall in the price of maize.

The diagram above shows the effects of the introduction of a subsidy on the production of maize. Study the diagram and answer the questions that follow. Identify the curves labelled X,Y,Z Read More »

A hypothetical national income data for a country in particular year is presented below:

ECONOMICS 2022 WAEC THEORY

(a) A hypothetical national income data for a country in particular year is presented below:
ITEM $MILLION
Wages and salaries 250
Income paid abroad 75
Income from self-employment 120
Stock appreciation 5
Interest 10
Income received from abroad 50
Rent 25
Depreciation allowance 3
Royalties 2
Profits and dividends 35
From the data, answer the following questions.

Calculate the: Gross Domestic Product (GDP)
(b) A hypothetical national income data for a country in particular year is presented below:
ITEM $MILLION
Wages and salaries 250
Income paid abroad 75
Income from self-employment 120
Stock appreciation 5
Interest 10
Income received from abroad 50
Rent 25
Depreciation allowance 3
Royalties 2
Profits and dividends 35
From the data, answer the following questions.

Calculate the: Gross National Product (GNP)
(c) A hypothetical national income data for a country in particular year is presented below:
ITEM $MILLION
Wages and salaries 250
Income paid abroad 75
Income from self employment 120
Stock appreciation 5
Interest 10
Income received from abroad 50
Rent 25
Depreciation allowance 3
Royalties 2
Profits and dividends 35
From the data, answer the following questions.

Calculate the: Net National Product (NNP)
Solution & Explanation
(a) GDP = Wages and salaries + Income from self employment + Rent + Interest + Royalties + Profit & dividend
= 250 + 120 + 25 + 10 + 2 + 35
= 442
(b) GNP = GDP + Net factor income
= 442 + ( 50 – 75)
= 442 – 25
= 417
(c) NNP = GNP – Depreciation
NNP = 417 – 3
NNP = 414

A hypothetical national income data for a country in particular year is presented below: Read More »

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