Economics 2019 Past Questions | WAEC

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Study the following Economics past questions and answers for JAMB, WAEC NECO and Post-JAMB. Get prepared with official past questions and answers for upcoming examinations.

46. Which of the following institutions is Concerned with expanding developing countries’ commodity trade

A. World Trade Organization (WTO)

B. United Nations Conference on Trade and Development (UNCTAD)
C. Economic Commission for Africa (ECA)
D. African Development Bank (AfDB)

47. The major achievement of the Economic Community of West African States (ECOWAS) is that it has

A. made capital more mobile
B. made possible the use of common currency

C. increased members’ allegiance to former colonial masters
D. widened the market for goods produced

48. One measure for financing a country’s balance of payments deficit is through

A. export diversification
B. import substitution
C. short-term borrowing from IMF

D. internal borrowing from commercial banks

49. Exploitation of forest resources becomes a major problem when

A. communities fight over ownership

B. they are not renewed
C. they are neglected
D. the supply is fixed in the long-run

50. Natural resources that are renewable are found in the

A. mining sector

B. traditional sector
C. agricultural sector
D. secondary sector

ECONOMICS THEORY PAST QUESTIONS 2019 WITH SOLUTION

The diagram above represents the equilibrium position of a firm in a perfectly competitive industry. Study it carefully and answer the questions that follow.
1. (a) i. At what level of output and prices is the firm in equilibrium?
2. Calculate the firm’s profit in equilibrium
iii. What type of profits is it?
(b) i. Why is the average revenue (AR) function horizontal?
(c) State any two ways in which marginal cost (MC) and average total cost (ATC) are related.

Solution & Explanation:

(a) i. Equilibrium output is 50kg and equilibrium price is $20.00.

(ii) Firm’s profit = TR-TC
TR = 50kg x $20.00 = $1000.00
TC = 50kg x $12.00 = $600.00
= $1000.00-$600.00
Profit = $400.00

Profit = (AR- AC) x Q
= ($20.00-$12.00) x 50
= $8.00x 50
= $400.00

(iii) Abnormal/economic/supernormal profit: This is because the profit is earned at a point where the price (AR) is greater than AC.

(b) The average revenue function is horizontal because, in perfect competition, AR which is also the price is constant/fixed.

(ii) When MC is equal to ATC, ATC is at its minimum.

(iii) When MC is greater than ATC, ATC s rising

The extract from a country’s balance of payments account is shown below

Item	Imports ($ million)	Export ($)
Agricultural products	–	200
Mineral products	–	300
Consumer goods	250	–
Capital goods	400	–
Insurance	50	25
banking	75	30
Transportation	85	25
Loans	150	60

Using the table above, calculate the:

(a) balance of trade
(b) invisible trade balance
(c) balance on current account

Solution & Explanation:

(a) Balance of trade = visible exports – visible imports
Visible exports = $200.00 + $300.00
= $500.00 million

Visible imports = $250.00 + $400.00
= $650.00 million

Balance of trade = $500.00 – $650.00
= $150.00 million

(b) invisible trade balance of trade = invisible exports – invisible imports

Invisible exports = $25.00 + $30.00 + $25.00
$80.00 million

Invisible imports = $50.00 + $75.00 + $85.00
= $210.00 million

invisible trade balance = $80.00 – $210.00 = – $130.00

= -$150.00 +(- $130.00)
= -$150.00 + $130.00
= – $280.00

Total exports – Total imports

$(200 + 300 + 25 + 30 + 25) – $(250 + 400 + 50 + 75 + 85)
= $580 – $860
= – $280

3. Define distribution of goods.

Illustrate the normal chain of distribution of goods.

Describe a consumers’ cooperative society.

Outline any four roles performed by a consumers’ cooperative society

Solution & Explanation:

(a) i. Distribution of goods is a process of making goods available to the final consumer.

Goods are transferred from the producer or manufacturer to the wholesaler who in turn transfers the goods to the retailer and from the retailer to the final consumer OR Producers/manufacturers – > Wholesalers ->Retailers ->Consumers.

(b) A consumer cooperative society is an association formed by a group of consumers with similar interests for their mutual benefit. They pool their resources to buy goods in large quantities from the distributors or manufacturers or from government agencies. They sell mainly to their members. Members participate in the running of the society and are rewarded according to patronage and interest is paid on capital contributed.

They make essential commodities supplied by government agencies available to their members at affordable prices.

iii. They help in breaking the bulk and sell to members at retail quantities and prices.

They protect their members from exploitation by middlemen who may want to sell at exorbitant prices.
They act as agents to government agencies to market and distribute their products.
They assist members by selling products to them on credit.

vii. They educate and train their members.

4. What is an industry?

Explain the following:
i. division of labor
ii. economies of scale

Outline any four internal economies of scale.

Solution & Explanation:

(a) An industry is a group of related firms classified according to the type of goods and services produced OR it is a group of fims producing similar commodities or offering similar senvices.

(b) i. Division of labor is the breaking down of a production process into different stages such that each part is handled by a particular individual, unit, or department.

Economies of scale are the internal and external cost-saving benefits that accrue to a firm as it expands in size.

(c) i. Marketing economies: Larger firms can buy inputs in bulk and enjoy discount and also employ an efficient and well organised marketing strategy and also afford to advertise more.

Risk-bearing economies: Larger firms can diversify their products so that they will not suffer unduly if one line of production becomes unprofitable.

iii. Financial economies: larger firms can easily access loans from banks and other financial institutions at lower interest rates because they have collateral and are more credit worthy.

Technical economies: As a firm expands the size, it can afford advances technology and sophisticated plants and machinery, leading to increased output at a lower unit cost.

Managerial economies: Larger firms can employ well-qualified and competent personnel to supervise various departments.
Welfare economies: Larger firms can provide better packages for employees to boost their morale, e.g. subsidised housing, canteen services, etc.

vii. Research and development economies: Larger firms have the resources to set up their own research departments or units which promote innovation and inventions.

5. Define a joint venture.

identify any three merits of a private company over a partnership.

State any three sources of finance to a public enterprise

Solution & Explanation:

(a) A joint venture is a form of business that is jointly owned by two or more independent firms that continue in their original business but pool their resources in another line of business.

(b) i. A private company can raise capital more easily than a partnership. It can Issue debentures or borrow more easily from banks.

The shareholders enjoy limited liability since they cannot lose more than the capital invested while in a partnership, there is an unlimited liability since partners’ assets can be sold to offset business debts.

iii. The business is a separate legal entity the owners are different from the business in law while in a partnership the business is not a separate entity.

The business has a greater perpetual existence while a partnership can easily be dissolved.
The business enjoys internal economies of scale because it operates on a larger scale than a partnership.

They can raise funds from the capital market by issuing bonds.

iii. Business assets can be sold to raise funds

Rents paid on properties owned by an enterprise can also serve as a source of capital
Revenue from services rendered to the public can also serve as a source of capital.
They can also buy goods on credit and make payments later.

vii. Assets can easily be obtained from hire purchase companies

viii. Public enterprises can plough back profits.

ix They can raise loans from financial institutions

6. Distinguish between the following pairs of concepts

elastic demand and inelastic demand

Income elasticity of demand and cross elasticity of demand.

Using diagrams, explain how an increase in price will affect the total revenue of a producer if demand for his product is:
i. price elastic
ii. price inelastic

Solution & Explanation:

(a)) Demand is elastic if a change in the price of a commodity results in a more than proportionate change in quantity demanded. On the other hand, demand is inelastic if a change in the price of a commodity results in a less than proportionate change in quantity demanded.

Income elasticity of demand refers to the degree of responsiveness of quantity demanded of a commodity to a change in the income of the consumer. Cross elasticity of demand on the other hand is the degree of responsiveness of quantity demanded of one commodity to a change in the price of another commodity.

(b) i. If the demand is elastic, an increase in price will result in a more than proportionate fall in the quantity demanded. By this, the producer’s revenue will fall. As shown in the diagram below, the quantity demanded falls from 0Q11 to 0Q2 after the price increased from 0P1 to 0P2.

TR22 before the price increased in the area of rectangle 0P2NQ2.

Clearly, 0Q11 MP1 > 0Q2NP0Q2. i.e, TR1 > TR2

(i) If the demand is inelastic, an increase in price will result in a less than proportionate fall in quantity demanded. By this, the producer’s total revenue will rise. As shown in the diagram below, quantity demanded falls from 0Q11 to 0Q22 after a price increase from 0P11 to 0P22.

TR before the price increase is the area of rectangle 0P2 SQ2. TR after the price increase is the area of rectangle 0P2 SQ2.

7. What is public debt?

Outline any three reasons why counties borrow.

Highlight any three effects of a huge national debt on the economy of a country.

Solution & Explanation:

(a) Public debt is the total amount owed by a country that is made up of internal and external debts.

(b)(i) To finance emergencies like flood, earthquakes, etc.

(ii) To finance wars.

(iii) To service loans.

(v) To finance huge capital projects.

(v) To finance the balance of payments deficit.

(vi) To support a country’s budget

(ii) If a large internal debt is sustained by a high rate of interest, it will reduce private investment that is needed to accelerate growth and development.

(iii) A large domestic debt will influence the distribution of income in a country

Reduced the availability of foreign exchange.

(v) The servicing of external debt will involve an outflow of resources that can otherwise be used in economic development.

(vi) Servicing of debt will limit the government’s ability to provide social capital.

8. Distinguish between:
Growing population and a declining population

overpopulation and under population.

Explain any four disadvantages of a rapidly growing population in an economy

Solution & Explanation:

(a) i. A growing population is one which has a large proportion of young people. A declining population, on the other hand, is one with a large proportion of old/aged people.

(i) Overpopulation exists if the population is so large n relation to the country’s resources and level of technology to the extent that output per head is below the O Under population exists if the population is too small in relation to a country’s resources and eve or technology such that output per head is below the optimum.

(b) (i) There will be pressure on the existing social amenities Such as water, electricity, health facilities, etc.

(ii) There will be congestion in urban areas.

(iii) a large population may result in greater unemployment.

(iv) Per capita income may fall which will result in a fall in the standard of living, due to high cost of living.

(v) A rapidly growing population will result in a high dependency ratio.

(vi) High dependency ratio may result in low savings by the labor force and hence low capital formation in the economy.

(vii) Rapid population growth may result in high environmental pollution.

(viii) There will be an increase in government expenditure in the provision of social amenities.

(ix) It will lead to rural-urban migration with its attendant problems, as well as emigration with its problem of brain drain.

(x) High demand for goods and services, if not matched by increased output will result in inflation

(xi) Government will be compelled to import more consumer goods which will adversely affect the balance of payments.

Economics 2019 Past Questions | WAEC

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Correct Option: Answer is D

Correct Option: Answer is D

Correct Option: Answer is C

Correct Option: Answer is D

Correct Option: Answer is A

ECONOMICS THEORY PAST QUESTIONS 2019 WITH SOLUTION

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