Economics 2021 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. A country may be able to earn more from exports if she_____________

A. increase her export duty
B. devalues her currency
C. increases her import duty
D. allows her currency to appreciate

47. customs union is an economic grouping which has___________

A. free movement of factors of production
B. common tariffs against non-Members.
C. common currency for trading
D. common military defense

48. Balance of payments and trade problems that arose after the world wars were resolved by the____________

A. International Bank tor Reconstruction and Development.
B. International Monetary Fund.
C. African Development Bank.
D. Organization of Petroleum Exporting Countries.

49. Examples of land that are non-renewable include___________

A. marshy and water-logged land.
B. farmland already used for many years.
C. some natural resources such as natural gas.
D. oxygen and carbon dioxide in the atmosphere

50. Abundant natural resources do not contribute to economic growth in developing countries because of_________

A. high rate of inflation
B. urban congestion.
C. over-reliance on multiple commodities.
D. mismanagement and corruption.

Economics 2021 Past Questions Theory

1. Table 1 below shows the distribution of the population of a country in various occupations.
Study it and answer the questions that follow.

OCCUPATION	TOTAL
Shoe Production Banking Fish Processing Warehousing Mining Fish Farming Food Crop Production Baking Laundry	30 million 37 million 19 million 12.2 million 16.1 million 10.8 million 15.6 million 19 million 10.3 million

a) Calculate the size of the entire labour force in the country
b) What percentage of the labour force is engaged in the
(i) Primary sector
(ii) Secondary sector
(iii) Tertiary sector
c) Calculate the ratio of the workers in mining to the workers in shoe production
d) Calculate the percentage of the people engaged in warehousing
e) (i) Identify the type of economy depicted in the table
(ii) Give a reason for your answer in (e)(i)

Solution & Explanation

1(a) Size of the entire labour force in the country = (30 + 37 + 19 + 12.2 + 16.1 + 10.8 + 15.6 + 19 + 10.3) million = 170 million

(b) Percentage of the labour force is engaged in different sector are as follow:

(i) Primary sector include Mining, Fish farming & Food crop production

= 16.1+10.8+15.6×100/170million = 42.5/170 × 100 = 25%

(ii) Secondary sector include shoe production, fish processing & baking

= 30+19+19×100/170million = 68/170×100 = 40%

(iii) Tertiary sector include banking, warehousing & laundry

= 37+12.2+10.3×100/170million = 59.5/170 ×100 = 35%

Mining : Shoe production = 16.1 : 30 or 16.1/30

(d) The percentage of the people engaged in warehousing is:

Workers in warehousing /size of entire labour force X 100 = 12.2million×100/170million = 7.17% or 7.2%

(e)(i) Capital Economy

(ii) Capitalism or capitalist economy is referred to as the economic system where the factors of production such as capital goods, labour, natural resources, and entrepreneurship are controlled and regulated by private businesses

2. Table 2 below show the unit prices and quantities of hats produced by a firm
Study it and answer the questions that follows

Quantity	Unit Price (S)	Total Revenue (S)	Marginal Revenue (S)	Average Revenue (S)
10	180	1800	–	180
20	150	3000	120	X
30	U	3600	60	120
40	100	V	W	Y
50	80	4000	0	80
60	60	3600	40	60

a) Compute the values of U, V, W, X and Y
b) In what type of market is the firm operating? Explain your answer
c) If the firm’s marginal cost is $60.00 at all levels of output, at what level of output will it be in equilibrium? Explain your answer
d) If a total cos of $600,00 is incurred when 50 units of hats are produced. Determine the margin of profit or loss made.
e) What is another name for marginal cost?

Solution & Explanation

(a) Total Revenue (TR)= Quantity x Unit price (U)

therefore, to get U, TR/Q

TR/Q = $3600/$30 = $120

for V, Total Revenue (TR)= Quantity x Unit price (U)

TR = $100 x 40 = $4000

for W,

= MR = Change in TR/Change in Q =

= $4000−$3600/10 = $400/10 = $40

for X, Average Revenue (AR) = TR/Q

= $3000/20 = $150

for Y, Average Revenue (AR) = TR/Q

$4000/40 = $100

Total revenue before price fall = area of OP1 TQ1

Total revenue after price fall = area of OP2 RQ2

(b) The firm is operating in a monopolistic competition / an imperfect market. This is because at each output level, the price is greater than marginal revenue OR the seller has to reduce price in order to sell more. The price is not fixed.

At that point MR = MC = $60

d) Profit 50 = TR – TC5 = $4000 – $600 = $3400
e) Increment cost or Differential cost

3. (a) What Is economies of scale?

(b) Outline three internal economics of scale a firm can enjoy

(a) Define product retailing

(b) Outline any three roles performed by the wholesaler to the manufacturer

Solution & Explanation

3(a) What is economies of scale? Economics of scale refer to the benefits a firm derives as a result of expanding its productive capacity or the concentration of firms of an industry in an area which lead to an increase in output and a fall in production cost per unit of output.

(b) Outline three internal economies of scale a firm can enjoy:

(i) Financial: Large businesses are better able to raise funds from other sources by selling shares or borrowing from banks and can negotiate for lower interest rales on loans.

(ii) Technical: A firm that is large can apply mechanized/modern technology to increase its output.

(iii) Marketing: Large firms can buy raw materials in bulk at good discounts. afford to advertise often, can package their goods better and reduce transport costs considerably.

(iv) Risk- bearing: Large firms can deal with the risks of trading by diversifying their products and market base lo international markets as Well.

(v) Research: Large firms can carry out research into new areas to improve production by Employing experts and setting up laboratories.

(vi) Administrative/Managerial: Because of its sound financial base. a large firm can employ competent manage to oversee the affairs of the company.

(vii)Welfare: Large firms can motivate their staff with better accommodation. scholarship for children, opportunities for training. etc.

(i) Availability and cost of raw materials/availability of natural Resources e.g gold. diamond. etc.

(ii) Access to the source of power/regular power supply

(iii) Proximity to the market( due to fragility, perishability or bulkiness of the final product).

(iv) Access to specialized transport e.g rail services, etc

(v) Availability of labour (skilled and unskilled)

4. (a) Define price elasticity of demand

(b) Distinguish between elastic demand and Inelastic demand

(C) Using diagrams. explain what happens to a traders total revenue demand for his product is:
(i) elastic
(ii) inelastic

Solution & Explanation

4(a) Price elasticity of demand is the ratio of the percentage change in quantity demanded of a product to the percentage change in price.

(b) An elastic demand is one in which the change in quantity demanded due to a change in price is large. An inelastic demand is one in which the change in quantity demanded due to a change in price is small.

(c) (i) Elasticity of demand is illustrated in diagram below. Note that a change in price results in a large change in quantity demanded. An example of products with an elastic demand is consumer durables. These are items that are purchased infrequently, like a washing machine or an automobile, and can be postponed if price rises. For example, When the price decreases from $10 per unit to $8 per unit, the quantity sold increases from 30 units to 50 units. The elasticity coefficient is 2.25, as a result, total revenue increase Q4i

(c)(ii) Inelastic demand is shown in Figure 2. Note that a change in price results in only a small change in quantity demanded. In other words, the quantity demanded is not very responsive to changes in price. Examples of this are necessities like food and fuel. Consumers will not reduce their food purchases if food prices rise, although there may be shifts in the types of food they purchase. Also, consumers will not greatly change their driving behavior if gasoline prices rise.

5. (a) Define product retailing

(b) Outline any three roles performed by the wholesaler to the manufacturer

Solution & Explanation

(a) Define product retailing: Product retailing are those activities involved in product distribution from either the producer/the wholesaler/the retailer to the final consumers, roles performed by the wholesaler to the manufacturer:

(b) Wholesalers provide warehousing facilities for the manufacturer thereby relieving him of the duty of providing the warehouse.

(ii) Wholesalers finance the manufacturer by paying in advance of the product

(iii) They provide information to the manufacturer about the state of demand in the market.

(iv) They relieve manufacturer of the costs of transporting the products to retailers in different countries

(v) Advertising and sales are handled by wholesalers and this relieves the manufacturer of the costs involved.

(vi) Packaging. blending and branding of products are done by wholesalers

(i) Poor or high cost of transportation: Road. rail and air transport networks are poorly developed. It is also very expensive to Transport goods from one place to another.

(ii) Poor market information due to inadequate means of Communication.

(iii) Numerous middlemen in the channel of distribution make product prices to be high.

(iv) wholesalers and retailers do not have adequate capital to start or to run the business.

(v) Inadequate warehousing or storage facilities results in damage to products and scarcity of some products during off seasons

(vi) Hoarding of goods by middlemen to create artificial scarcity which results in profiteering

(vii) Lack of aids to trade: Aids to trade are not well provided, eg banking, insurance, shipping services, among others are poorly developed

6. (a) State three characteristics of perfect competition,

(b) With the aid of diagrams, explain equilibrium positions of a perfectly competitive firm in the: (i) short-run: (ii) long-run

Solution & Explanation

(a)(i) Large numbers of buyers and sellers such that no single buyer or seller

(ii) Homogeneous products: The products are identical.

(iii) Free entry and exit of firms. Firms are free to enter when profits are made and are free to exit when losses are incurred

(iv) Identical cost conditions : There are no differences in the cost of production of firms, e.g. no transport cost etc

(v) No governmental control: Forces of demand and supply regulate prices in the market.

(vi) Perfect knowledge: Producers and consumers have perfect knowledge of market conditions

(b) (i) In the short run, a perfectly competitive firm attains equilibrium at an output where MC-MR
The firm is able to earn above normal profits as illustrated below.

The equilibrium output is Q. The firm earns abnormal profit as shown by the shaded portion where AR is greater than AC

(ii) In the long run, the perfectly competitive firm earns only by normal profit, where P = AR = AC =MR = MC and produces at the optimal point E as illustrated below

The firm is at equilibrium at the optimal point E where P = AC = AR = MR = MC. Equilibrium output is Q

7. (a) Explain how the Central Bank controls money supply through the use of: (i) open market operation (ii) bank rate.

(b) Outline four functions performed by the Central Bank of your country.

Solution & Explanation

(a)(i) Open market: This involves the sales of securities e.g Treasury bills through the commercial banks. If the Central Bank wants to increase money supply, it will purchase securities from the public through the commercial banks. This way. the reserves of the commercial banks will increase. Thereby increasing their ability to grant more credit and vice versa.

(ii) Bank rate: This is the rate at which the Central Bank lends to the commercial banks and discounts bills of exchange so as to influence the money supply. To increase money supply. the Central Bank will reduce the bank rate. This will in turn lower the lending rates of commercial banks. causing the public to demand for more loans and vice versa. It controls research on the economy. It is the lender of last resort.

(b) (i) It acts as agent. banker and adviser to the government.

(ii) It controls the money supply / maintains price stability / determines monetary policy.

(iii) lt issues currency.

(iv) It is a banker to the other financial institutions

(v) lt operates a clearing house system

(vi) lt manages the public national debt.

(vii) It controls foreign currency.

8. a) Distinguish between domestic trade and external trade.

(b) Distinguish between terms of trade and balance of trade

Solution & Explanation

(a) Distinguish between domestic trade and external trade: Domestic trade is the exchange of goods and services within the borders of a country and involves the use of only one currency, etc. External trade is the exchange of goods and services across the borders of a country and involves the use of different currencies.

(b) Distinguish between terms of trade and balance of trade: Terms of trade is the rate at which a country’s export is exchanged for its imports OR Terms of trade = lndex of exports prices/Index of import X 100
Balance of trade is the difference between the value of a country’s visible exports and its visible Imports over a time period.

(i) Increased demand for foreign consumer goods due to high taste for foreign goods.

(ii) Demand for foreign capital goods due to rapid industrialization.

(iii) Unfavorable terms of trade because of falling commodity prices.

(iv) Decrease in the demand for local exports as a result of emergence of synthetic substitutes.

(v) Export of unprocessed primary products which attract lower prices in the world market.

(vi) Debt servicing due to borrowing from foreign lenders and inability to raise enough capital from domestic sources.

Economics 2021 Past Questions | WAEC

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Correct Option: Answer is C

Correct Option: Answer is C

Correct Option: Answer is C

Correct Option: Answer is C

Correct Option: Answer is C

Economics 2021 Past Questions Theory

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