Economics 2020 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. The foremost objective of the International Bank of Reconstruction and Development (IBRD) is to

A. help promote private and public investments

B. assist members achieve a balance of payments stability
C. grant long term loans for infrastructure
D. maintain stability of foreign exchange

47. In order to discourage the importation of manufactured goods, a country should adopt

A. import promotion strategy

B. export led strategy
C. liberal foreign exchange
D. import substitution strategy

48. Free trade is one in which

A. each member operates its own barriers against non-members
B. factors of production are mobile

C. members adopt a common external tariff against non- members
D. members adopt common fiscal and economic policies

49. The exploitation of mineral resources constitutes which form of production?

A. Primary production
B. Secondary production
C. Tertiary production

D. Services production

ECONOMICS THEORY PAST QUESTIONS 2020 WITH SOLUTION

1. The table below shows the workers engaged by an agricultural firm over a period of time. Study it and answer the questions that follow;

Number of workers	Total product	Marginal product	Average product
0	0	0	0
1	20	20	20
2	50	30	z
3	70	20	23.3
4	80	y	20
5	80	0	16
6	x	-9.8	11.7

(a) Calculate the values of X, Y, and Z.

(b) At what level of employment of labour does the firm experience:

increasing returns
ii. decreasing returns
ii. negative returns

(d) i. On a graph sheet, draw the total product and marginal product curves.

State any two relationships between the two curves in (d)(i) above

Solution & Explanation:

b) i. Increasing returns: 1 – 2 units of labour.
Decreasing returns: 3 – 4 units of labour

iii. Negative returns: 6 units of labour

(c) The law of diminishing returns states that as more and more units of a variable factor are combined with a fixed input, the marginal product increases and after a certain point begins to decline.

(d) i.

From the graph, as the variable input labour increases i.e up to 2 units of labour. At 3 units of labour, TP still increases, but MP attains a maximum of 30 and begins to fall. As MP falls up to 5 units of labour, TP has reached its maximum at 80. When MP turns negative, TP begins to fall to 70.2.

2. (a) What is the opportunity cost of:
i. producing 30 units of cocoa;
ii. increasing textile production from 30 to 40 bales?

(b) interpret the following points as found in the graph:
i. point Y
ii. point G
iii. point X

(d) State two basic economic concepts illustrated in the diagram above.

(e) i. Define production possibility curve
ii. What does the slope of the production possibility curve Indicate?

Solution & Explanation:

(a)i. The opportunity cost of producing 30 tons of cocoa IS sacrificing 60 bales of textile.

The opportunity cost of increasing textile production from 30 t0 40 bales is sacrificing/reducing cocoa production by 5 tons or from 25 to 20 tons or (25-20)

(b) i. Point Y represents the underemployment of resources since it lies within the curve.

Point G represents full employment of resources because it lies on the curve.

iii. Point X represents an unattainable point because it lies outside the curve.

Research and Inventions.

iii. New discovery of resources

Increased investment
Reduction in waste or misallocation of resources.
Growth in the economy

vii. Human resource development.

(d) Scarcity, choice, opportunity cost.

(e) i. The production possibility curve is a curve that shows the various combinations of goods and services that a country can produce, using available resources and the most efficient production technique.

The slope of the production possibility curve indicates that to produce more of one commodity (textile), units of the other commodity (cocoa) must be sacrificed, or there is an opportunity cost involved in the reproduction of textile and cocoa.

. (a) Define consumer goods.

(b) Explain the following forms of capital with an example each:
i. fixed capital
ii. social capital
iii. circulating capital

Solution & Explanation:

(a) Consumer goods are goods produced for the direct satisfaction of the wants of an individual.

(b)) Fixed capital: These are long-term assets of a firm that are very durable and are not used up in the course of production. they do not change their form as well, e.g. land, Buildings., Machinery, equipment tools, motor vehicles, etc.

Social capital:-This refers to capital that is collectively owned by society but is provided by the government. It is also called social infrastructure, e.g. roads, electricity, hospitals, schools, Water rail system, etc

Circulating capital: This form of capital changes its form and is used up in the production process, e.g.stock of partly-finished goods, fuel, raw materials money for paying wages and salaries, etc.

The dependency ratio is high because the Working group is smaller compared to the youth and the aged.

iii. Most people have the tendency to consume rather than to save, engaging in prestigious but non-productive ventures, e.g. funerals, parties, weddings, etc

There is little incentive to save since the interest rate on savings is low and also most institutions finally wind up, taking along customers savings with them.
The cost of living is high because prices of goods and services keep rising People are therefore left with nothing to save.

The demand by banks is sometimes cumbersome because large initial deposits are required and other information that clients cannot provide.

4. (a) Distinguish between the following pairs of terms:
i. capital expenditure and recurrent expenditure:
ii. fiscal policy and monetary policy.

Explain four reasons why the government of a country imposes taxes.

Solution & Explanation:

(a) i. Capital expenditure: These are expenses made by the government on physical assets that are durable in nature, On the other hand, Recurrent expenditure: Those are expenses that are made by the government on regular basis.

Fiscal policy: This is the use of taxation and government spending to achieve desired economic objectives while Monetary policy involves the use of instruments such as interest rates; open market operations, etc. to regulate money Supply to achieve desired economic objectives.

(b) i. To raise revenue for administration, defense and to provide social services.

To regulate the importation of some commodities considered harmful. The taX makes the goods expensive to deter consumers.

iii. To redistribute income between the rich and the poor. This is done through the PAYE System where the rich pay higher tax than the poor.

To protect local infant industries from foreign competition.
To correct a balance of payments problem by imposing taxes on imports to increase their prices to discourage imports.
To check deflation or inflation

5. (a) Define tariff.

(b) State the following laws:
i. The law of absolute cost advantage:
ii. The law of comparative cost advantage.

Solution & Explanation:

(a) A tariff is a tax imposed on goods imported into a country

(b) i. The law of absolute cost advantage states that a country should produce and export those goods in which it has an absolute advantage over its trading partners and imports those goods in which it has an absolute disadvantage compared with its trading partners.

The law of comparative cost advantage states that a country should produce and export those goods in which it has a Comparative advantage and import those goods in which it has a comparative disadvantage.

Labour is the only factor of production and they are of uniform quality within each country.

iii. There is perfect mobility of labour within each country whereas labour cannot move freely between the two countries.

Costs of production are Constant. The costs remain the same whatever the quantities produced.
There are no costs of transportation.

6. What is money?

Explain the following concepts:
i. value of money:
ii. demand for money,

Solution & Explanation:

(a) Money is anything that is generally accepted as a medium of exchange and used in the settlement of debts.

(b) i. The value of money is the number of goods and services a given monetary unit can buy. The greater the number of goods and services that can be purchased with a given unit of money, the greater the value of money and vice versa.

The demand for money is a derived demand. It is the desire to hold money in liquid form rather than investing it in stocks and bonds. People hold money for transactions, precautionary and speculative motives

(c) i. Level of income: The higher the amount of income one earns, the higher the amount of money that would be held to meet day-to-day expenses.

Interval between paydays: The shorter the interval between paydays, the lower the amount of money to be held while the longer the amount of money to be held while the lul the interval, the more the amount to be held

iii. The rate of interest: The higher the rate of interest, the lower the amount held for transactions and vice versa.

The price level: If the price level is high, more money has to be held to meet daily transactions and vice versä.
Status in society: A well-placed man in society is expected to hold a large sum of money tO maintain his status.

The size of one’s family: A person with a large family is expected to hold more money and vice versa.

(vii) Personal tastes: A person with a high taste for goods will normally hold more money.

viii. Availability of credit facilities reduces the tendency to hold more money for transactions.

7. (a) Distinguish between competitive demand and joint demand.

(b) Using diagrams, explain how the following factors will affect the equilibrium price and quantity of commodity R in the market
i. an increase in the price of the Complement of commodity R:
ii. an increase in the price of a substitute of commodity R
iii. imposition of an indirect tax on commodity

Solution & Explanation:

(a) Competitive demand is the demand for commodities that can be used interchangeably. An increase in the demand for one will lead to a decrease in the demand for its substitute. Joint demand on the other hand is the demand for commodities that are used together to satisfy a want. An increase in the demand for one will lead to an increase in the demand for the other.

(b) i. From the diagram above (figure 1), an increase in the price of the complement of commodity R from P11 to P22 has resulted in a fall in quantity demanded from Q11 to Q. Demand for commodity R shifted from D11 to D22 and the equilibrium price fell from P11 to P22 and quantity from Q11 to Q22

An increase in the price of a substitute of Commodity R will result in a fall of its quantity demanded from Q1to Q2. (in figure 3). As a result of this, demand for commodity R will increase, Shown by the demand curve shifting from D1D1to D2D2 in figure 4. The equilibrium price will increase from P11 to P2 and equilibrium quantity from Q1 to Q2

iii. The imposition of an indirect tax on commodity R will result in a shift of the supply curve from S1S1 to S2S2 in figure 5. with demand unchanged, the equilibrium price will increase from P11 to P1 but the equilibrium quantity will fall from Q1 to Q2.

8. (a) Differentiate between subsistence farming and commercial farming.

(b) State four features of subsistence farming.

Solution & Explanation:

(a) Subsistence farming: This form focuses on growing food to feed one’s family.

Commercial farming: This is concerned with the production of food crops and livestock on a large scale with the aim of making profits

(b) i. It is done on a small scale.

Simple tools like hoe and cutlass are used

iii. Relies solely on the weather.

Little or no pesticides are used.
It relies on family labour.

Food crops are mainly Cultivated for home consumption and not for sale.

vii. Mixed farming and mixed cropping are practised

viii. Individual farmers are owners of the fam.

It is a source of foreign exchange.
It serves as employment.

It is a source of raw material for local industries
Government generates revenue in the form of royalties.
Contributes to infrastructural development

Contributes towards community development.
Source of energy as e.g. Coal.-
Avenue for transfer of technology.

Negative effects:

It leads to loss of farms land
It leads to pollution of water bodies.

It leads to the loss of lives when people fall into abandoned pits.
It increases expenditure for the government in land reclamation.
Able-bodied young men venture into it and abandon farming

it destroys animals and tree species
Contributes to corruption.
It has led to the neglect of other sectors.

Depletion t non-renewable resources

Economics 2020 Past Questions | WAEC

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Correct Option: Answer is C

Correct Option: Answer is D

Correct Option: Answer is B

Correct Option: Answer is A

ECONOMICS THEORY PAST QUESTIONS 2020 WITH SOLUTION

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