Each question is followed by four options lettered A to D. Find out the correct option for each question and shade in pencil on your answer sheet, the answer space which bears the same letter as the option you have chosen. Give only one answer to each question.
An example is given below.
“Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses;” Ends here refers to
A. input. B. wants. C. choice. D. output.
The correct answer is wants, which is lettered B and therefore answer space B should be shaded.
Think carefully before you shade the answer spaces; erase completely any answer(s) you wish to change.
Do all rough work on this question paper.
Now answer the following questions.
1. The main cause of the basic economic problems facing every society is
Explanation:
The correct answer is:
C
Topic: Basic Economic Problems
⭐ The main cause of economic problems is scarcity. This means that the resources (like money, land, and labor) available to produce goods and services are limited. However, people's wants and needs are endless, which forces societies to make choices about how to use these limited resources.
2. Any point within the Production Possibility Curve (PPC) shows
Explanation:
The correct answer is:
D
Topic: Production Possibility Curve (PPC)
⭐ A point within the PPC shows inefficiency in production, meaning not all resources are being fully used. To produce more of one good, the economy must reduce the production of another good. This is a trade-off, as resources are limited and cannot be used for both goods at the same time.
3. A type of land, as a factor of production, whose supply is not fixed in the long run is
Explanation:
The correct answer is:
D
Topic: Factors of Production
⭐ Iron ore is a type of land whose supply is not fixed in the long run. While rice, natural gas, and coal are finite resources, iron ore can be mined and replaced, thus the supply can increase over time through discovery of new deposits or improved extraction techniques.
4. An economic system in which the state owns and controls all the means of production is
Explanation:
The correct answer is:
B
Topic: Economic Systems
⭐ A socialist economy is one in which the state owns and controls all the means of production, such as factories, land, and resources. This system aims to reduce inequality and provide equal access to resources for all citizens.
5. In capitalism, prices of raw material are mainly determined by the
Explanation:
The correct answer is:
C
Topic: Capitalism and Market Forces
⭐ In a capitalist economy, the prices of raw materials are primarily determined by market forces—supply and demand. These market forces influence how much suppliers are willing to charge for raw materials based on availability, demand, and competition.
6. Eighty students in a school are represented by a sector of 400 in a pie chart. The total population of students in the school is
Explanation:
The correct answer is:
C
Topic: Pie Chart Calculations
⭐ To find the total population of students, we use the following steps:
We know that 80 students are represented by 40 degrees in the pie chart.
So, the number of students represented by 1 degree on the chart is:
students per degree = 2 .
The total number of degrees in a full pie chart is 360 degrees, so the total number of students in the school is:
= 2 students per degree × 360 degrees
= 720 students.
7. When a commodity is demanded for multiple purposes, it has
Explanation:
The correct answer is:
D
Topic: Types of Demand
⭐ Composite demand occurs when a commodity is demanded for multiple uses. For example, if a product like oil is used for both energy production and as an ingredient in other products, its demand is composite because it serves different purposes. The total demand for the commodity is the sum of the demand for all of its uses.
8. The measure of the responsiveness of quantity demanded to a change in its determinants is called
Explanation:
The correct answer is:
B
Topic: Elasticity of Demand
⭐ Elasticity of demand refers to the responsiveness of the quantity demanded of a good to a change in one of its determinants, such as price, income, or the price of related goods. If demand changes significantly with a small change in price, the demand is considered elastic. If the demand changes very little, it is inelastic.
9. If demand is perfectly elastic, a slight increase in price will make consumers to
Explanation:
The correct answer is:
C
Topic: Perfectly Elastic Demand
⭐ Perfectly elastic demand means that consumers are extremely sensitive to price changes. Even a slight increase in price causes the quantity demanded to fall to zero, meaning consumers will stop buying the commodity altogether if the price rises. In this case, any price increase leads to no demand for the product.
The diagram below shows the demand for milk. Use the diagram to answer question 10.
10. The movement from points x to y might have been caused by:
Explanation:
The correct answer is:
A
Topic: Factors Affecting Demand
⭐ The movement from points x to y represents a rightward shift of the demand curve, which indicates an increase in demand. One possible cause for this shift is an increase in the population of buyers, leading to a higher quantity demanded at the same price.
Why the other options are incorrect:
B. A decrease in consumer's income: This would typically cause a leftward shift of the demand curve (decrease in demand), as consumers would have less purchasing power, especially for normal goods.
C. An increase in price of milk: This would result in movement along the same demand curve (not a shift), leading to a decrease in quantity demanded, not an outward shift.
D. An increase in tax on milk: Higher taxes on a product often lead to an increase in price, which in turn decreases demand, causing a leftward shift of the demand curve (reduced demand).
11. If flour is used to bake bread, an increase in the demand for bread results in an increase in the demand for flour. This implies that the demand for flour is a
Explanation:
The correct answer is:
C
Topic: Derived Demand
⭐ Derived demand refers to the demand for a factor of production (like flour) that arises because of the demand for another product (like bread). When the demand for bread increases, the demand for flour, which is a necessary ingredient in bread production, also increases. This type of demand is called 'derived' because the demand for flour is directly linked to the demand for bread.
In contrast, competitive demand refers to the demand for goods that are substitutes for one another, composite demand refers to the demand for a good that has multiple uses, and complementary demand refers to the demand for products that are used together, such as printers and ink cartridges.
Therefore, in this case, the demand for flour is derived from the increased demand for bread, making it a clear example of derived demand.
12. The imposition of an indirect tax will generate much revenue if the commodities involved have
Explanation:
The correct answer is:
D
⭐ Indirect taxes generate more revenue when the demand for the goods is inelastic. This is because consumers will not reduce their purchases much even if the price increases due to the tax. With inelastic demand, the quantity demanded remains relatively stable, leading to more tax revenue for the government.
13. A group of workers that are likely to have inelastic supply in the short run are
Explanation:
The correct answer is:
C
⭐ Medical doctors are likely to have inelastic supply in the short run because it takes time to become a doctor, and their supply is limited by the number of trained professionals. In the short term, the supply cannot quickly adjust to changes in demand.
14. If a fall in the price of one commodity, leads to an increase in the supply of another commodity produced from the same raw material, the two commodities have
Explanation:
The correct answer is:
A
⭐ Joint supply occurs when the supply of one commodity is linked to the supply of another because both are produced from the same raw material. A fall in the price of one commodity can lead to an increase in the supply of the other, as they share production resources.
15. The quantity demanded of a commodity and the price a consumer is prepared to pay for each unit mainly depends on
Explanation:
The correct answer is:
C
⭐ The quantity demanded of a commodity and the price a consumer is willing to pay for each unit are mainly influenced by the marginal utility, which is the additional satisfaction or benefit derived from consuming one more unit of the commodity. As marginal utility decreases, consumers are less willing to pay higher prices.
16. The negative slope of the marginal utility curve reflects the law of
Explanation:
The correct answer is:
A
⭐ The negative slope of the marginal utility curve reflects the law of diminishing marginal utility. This law states that as a person consumes more units of a good or service, the additional satisfaction (marginal utility) derived from each subsequent unit decreases.
17. The government policy that prevents price fluctuations of agricultural produce is termed
Explanation:
The correct answer is:
C
⭐ Price ceiling is a government policy aimed at preventing prices from rising too high. It is often used to stabilize agricultural prices and prevent fluctuations by setting a maximum price for goods. This helps ensure that consumers can afford essential goods, even if there are fluctuations in supply or demand.
18. The equilibrium price of apartments is $ 250. If the government fixes rent at $ 200, the market supply of apartments will
Explanation:
The correct answer is:
C
⭐ If the government fixes rent below the equilibrium price (e.g., $200 instead of $250), the supply of apartments will be lower than the equilibrium quantity. This is because landlords may not find it profitable to supply as many apartments at the lower rent, leading to a shortage in the market.
19. Division of labour increases productivity because
Explanation:
The correct answer is:
B
⭐ Division of labour increases productivity because when each worker is assigned a task that suits their skill, they can specialize in that task, improving efficiency and output. This specialization leads to greater overall productivity in the production process.
20. The advantages which a firm enjoys because of the growth in the size of the industry is
Explanation:
The correct answer is:
D
⭐ External economies of scale occur when a firm benefits from the growth of the industry as a whole. As the industry expands, firms within the industry can take advantage of improved infrastructure, specialized labor, and other industry-wide developments that reduce costs and increase productivity.
21. Short-run is a period of time when output can be increased by
Explanation:
The correct answer is:
C
⭐ In the short run, a company can only increase production by using more labor and materials. Fixed factors like machines or buildings cannot be changed in the short run, so the only way to produce more is by adding more of the variable factors, like workers and raw materials.
22. If the fixed cost of a firm is $200, variable cost is $600, and output is 40 units, the average cost of producing one unit is
Explanation:
The correct answer is:
C
⭐ To calculate the average cost, you use the following formula:
Substituting the values:
23. Selling the same product at different prices to different buyers is best referred to as
Explanation:
The correct answer is:
D
⭐ Price discrimination is the practice of selling the same product at different prices to different buyers. This can be based on factors like age, location, or purchase volume, where the seller maximizes profit by charging different prices to different groups.
24. The barrier to entry in monopoly market may be as a result of
Explanation:
The correct answer is:
B
⭐ In a monopoly market, a common barrier to entry is the government's grant of exclusive rights to production, such as patents or licenses. This prevents other firms from entering the market and competing with the monopolist.
25. Which of the following is not a feature of a Private Limited Company?
Explanation:
The correct answer is:
B
⭐ A Private Limited Company cannot sell its shares on the stock exchange. Unlike a public limited company, the shares of a private company are not available for public trading, and they are typically sold privately or to a limited number of individuals.
26. An advantage of sole proprietorship is that it
Explanation:
The correct answer is:
C
⭐ In a sole proprietorship, the owner has complete control and can make quick decisions without needing approval from others. This is one of the advantages of a sole proprietorship, as it allows for flexibility and faster responses to changes in the market.
27. Warehousing facilities in the distribution and marketing of products are mainly provided by
Explanation:
The correct answer is:
B
⭐ Wholesalers are the key players in providing warehousing facilities. They store large quantities of products before they are distributed to retailers or directly to consumers. Warehouses help manage inventory and ensure that products are available for future sale.
28. Malthus' preventive checks did not include
Explanation:
The correct answer is:
D
⭐ Malthus' preventive checks referred to actions taken to reduce birth rates, such as late marriages, moral restraint, and family planning. The outbreak of diseases was considered a "positive check," which increases death rates, not a preventive measure to control population growth.
29. A country can have a youthful population, ceteris paribus, if there is
Explanation:
The correct answer is:
A
⭐ An increase in immigration can contribute to a youthful population because younger individuals moving into the country can raise the proportion of young people in the population, especially if the immigrants are predominantly young.
30. Efficiency of a worker is best measured in terms of
Explanation:
The correct answer is:
C
⭐ The efficiency of a worker is typically measured by the output they produce per unit of time, commonly known as output per man-hour. This measure reflects how effectively the worker uses their time and skills to produce goods or services.
31. Mechanized farming is difficult to practice in West Africa mainly because of
Explanation:
The correct answer is:
B
⭐ Land fragmentation is a major issue in West Africa that makes mechanized farming difficult. The small and scattered plots of land hinder the use of large machinery, which requires larger, continuous plots of land to operate efficiently.
32. Many West African farmers cannot obtain credit from banks mainly because
Explanation:
The correct answer is:
B
⭐ Many West African farmers cannot obtain credit because they are unable to provide the necessary collateral security. Banks require collateral as a guarantee for the loan, but many farmers do not have assets that can serve as collateral, making it difficult for them to access financial resources.
33. Gross Domestic Product (GDP) measures the output of a country's
Explanation:
The correct answer is:
A
⭐ GDP measures the total value of goods and services produced within a country by its residents at market prices. It includes the output of both citizens and non-citizens living in the country, but it is focused on the geographical area rather than the nationality of the producers.
34. Of the items below, the one that is not considered a transfer payment is
Explanation:
The correct answer is:
D
⭐ A transfer payment refers to a payment made without any exchange of goods or services, such as a pension, charity, or pocket money. A daily wage, however, is a payment for work or services rendered, so it is not considered a transfer payment.
35. The standard of living of a country can be measured by
Explanation:
The correct answer is:
C
⭐ The standard of living is commonly measured by the Gross Domestic Product (GDP) per head, also known as GDP per capita. This metric provides an average of the economic output per person, which reflects the overall wealth and living conditions in a country.
36. Goods can be bought on credit because money serves as a
Explanation:
The correct answer is:
A
⭐ Money serves as a standard for deferred payment, meaning that it allows for the purchase of goods with the agreement to pay later. This makes credit transactions possible, as the value of money can be used to settle debts in the future.
37. Transactions demand for money will be high if
Explanation:
The correct answer is:
A
⭐ Transactions demand for money is higher when income levels are high because individuals and businesses make more transactions, which require a larger amount of money to be in circulation for day-to-day purchases and activities.
38. If the supply of money increases and output of goods decreases, there will be
Explanation:
The correct answer is:
B
⭐ An increase in the money supply with a decrease in output leads to inflationary pressure. More money in circulation means that, with fewer goods available, the demand for goods exceeds supply, causing prices to rise.
39. Which of the following functions is not performed by commercial banks?
Explanation:
The correct answer is:
D
⭐ Commercial banks do not formulate monetary policy. This is the responsibility of central banks, like the Central Bank of Liberia. Commercial banks perform activities such as distributing currency, selling foreign exchange, and acting as trustees, but they do not set monetary policy.
40. If the Central Bank increases the cash-deposit ratio, the
Explanation:
The correct answer is:
C
⭐ When the Central Bank increases the cash-deposit ratio, banks are required to hold a larger portion of their deposits as cash reserves. This reduces the amount of money available for lending, thus decreasing the money in circulation in the economy.
41. A country experiences a budget surplus when her
Explanation:
The correct answer is:
D
⭐ A country experiences a budget surplus when its total revenue (from taxes, duties, etc.) exceeds its total expenditure (spending on public services, infrastructure, etc.). This means the government has more income than it is spending, resulting in a surplus.
42. For the burden of tax to fall wholly on the consumer, the demand for a good must be
Explanation:
The correct answer is:
A
⭐ For the burden of a tax to fall wholly on the consumer, the demand for the good must be perfectly inelastic. This means that consumers will continue to purchase the good even if the price increases due to the tax, leading them to bear the full tax burden.
43. Economic growth is best defined as an increase in the
Explanation:
The correct answer is:
C
⭐ Economic growth refers to an increase in the output of goods and services in a country over time. It reflects the expansion of a nation's productive capacity and is typically measured by the rise in GDP (Gross Domestic Product).
44. Which of the following is a feature of a developing nation?
Explanation:
The correct answer is:
B
⭐ A developing nation typically has low per capita income. This is a characteristic of a country that is in the process of improving its standard of living, industrial base, and infrastructure. In contrast, higher per capita income is a feature of developed nations.
44. Which of the following is a feature of a developing nation?
Explanation:
The correct answer is:
B
⭐ Developing nations usually have low per capita income, meaning that the average income of people is lower compared to developed countries.
Per capita income is calculated by dividing a country's total income (usually GDP) by its total population. This indicates the average income per person and reflects the standard of living in a country.
45. The difference between the values of the visible goods exported and imported is the
Explanation:
The correct answer is:
B
⭐ The balance of trade refers to the difference between the value of visible goods (tangible goods like cars, machinery, etc.) a country exports and imports. If exports exceed imports, the country has a trade surplus; if imports exceed exports, the country has a trade deficit.
46. A deficit on the balance of payments account can be corrected by
Explanation:
The correct answer is:
B
⭐ A deficit on the balance of payments can be corrected by reducing the value of the domestic currency (devaluation). This makes exports cheaper and more attractive to foreign buyers, potentially increasing export revenues and correcting the deficit.
47. A benefit of trade protection is that it will
Explanation:
The correct answer is:
B
⭐ Trade protection, such as tariffs and quotas, tends to make local industries less competitive with foreign industries. This allows them to charge higher prices for their products, as consumers have fewer cheaper alternatives from foreign markets.
48. Harmonisation of economic policies among member countries is a key feature of
Explanation:
The correct answer is:
A
⭐ An economic union is when countries agree to have similar economic rules and policies. This means they work together on things like trade and money, creating a closer economic connection between them.
49. The International Monetary Fund (IMF) was not set up for the purpose of
Explanation:
The correct answer is:
B
⭐ The IMF was not set up to provide long-term loans for development projects. Its main purpose is to promote international monetary cooperation, ensure stability of exchange rates, provide temporary financial assistance to countries with payment problems, and help correct balance of payments issues.
50. Companies that are involved in mining activities usually pay
Explanation:
The correct answer is:
B
⭐ Companies involved in mining typically pay royalties to the government or landowners. Royalties are payments made in exchange for the right to extract natural resources from the land.
