Sample WAEC-style Practice Questions (Original Content)
WAEC Style
Question 1
The act of choosing one out of many alternatives is called
A. Scarcity
B. Scale of preference
C. Choice
D. Opportunity cost
Answer: C. Choice
Explanation: Choice arises because resources are limited and human wants are many.
Question 2
Which of the following is an example of a capital resource?
A. Raw land
B. Unskilled labor
C. A factory building
D. Sunshine
Answer: C. A factory building
Explanation: Capital refers to man made assets used in the production of more wealth.
Question 3
In a free market economy, the problem of what to produce is solved by
A. The government
B. The price mechanism
C. Tradition
D. Trade unions
Answer: B. The price mechanism
Explanation: Market forces of demand and supply determine which goods are produced based on consumer preference.
Question 4
The demand for two goods that are used together is known as
A. Composite demand
B. Joint demand
C. Competitive demand
D. Derived demand
Answer: B. Joint demand
Explanation: This occurs when two goods like car and petrol are needed at the same time to satisfy a want.
Question 5
According to the law of supply, as the price of a commodity increases
A. Supply decreases
B. Quantity supplied increases
C. Demand increases
D. Quantity demanded increases
Answer: B. Quantity supplied increases
Explanation: Producers are motivated to sell more when prices are high to gain more profit.
Question 6
An increase in the price of raw materials will cause the supply curve to
A. Shift to the right
B. Shift to the left
C. Remain unchanged
D. Become horizontal
Answer: B. Shift to the left
Explanation: Higher production costs make it less profitable to produce the same quantity at previous prices.
Question 7
The point where quantity demanded equals quantity supplied is the
A. Surplus point
B. Shortage point
C. Equilibrium point
D. Break even point
Answer: C. Equilibrium point
Explanation: At this point, the market price is stable and there is no excess supply or demand.
Question 8
A price floor is a minimum price set by the government that is usually
A. Below the equilibrium price
B. Above the equilibrium price
C. Equal to the equilibrium price
D. Zero
Answer: B. Above the equilibrium price
Explanation: This is done to protect producers, like farmers, by ensuring they receive a fair price.
Question 9
The total satisfaction a consumer gets from consuming a specific amount of a good is
A. Marginal utility
B. Average utility
C. Total utility
D. Price utility
Answer: C. Total utility
Explanation: Total utility is the sum of satisfaction derived from all units consumed.
Question 10
The law of diminishing marginal returns states that as more units of a variable factor are added to a fixed factor
A. Total output falls immediately
B. Marginal product will eventually decrease
C. Average product will always increase
D. Price will remain the same
Answer: B. Marginal product will eventually decrease
Explanation: Overcrowding of fixed factors by variable factors leads to less efficient production.
Question 11
Which of the following business units has the feature of separate legal entity?
A. Sole proprietorship
B. Partnership
C. Limited liability company
D. Petty trading
Answer: C. Limited liability company
Explanation: The company is seen as a person in the eyes of the law, distinct from its owners.
Question 12
A partnership can have between 2 and
A. 5 members
B. 10 members
C. 20 members
D. 50 members
Answer: C. 20 members
Explanation: Standard partnerships are limited to 20 people except for professional firms like law or accounting.
Question 13
The main reason for the establishment of public corporations is to
A. Maximize profit
B. Provide essential services to the public
C. Compete with foreign firms
D. Employ only government relatives
Answer: B. Provide essential services to the public
Explanation: Public corporations provide services like water and electricity where private profit motives might fail.
Question 14
If a firm produces 100 units at a total cost of $500, the average cost is
A. $50
B. $5
C. $500
D. $0.5
Answer: B. $5
Explanation: Average cost is found by dividing total cost by total quantity produced.
Question 15
A market structure with only a few large sellers is
A. Monopoly
B. Perfect competition
C. Oligopoly
D. Monopolistic competition
Answer: C. Oligopoly
Explanation: Oligopoly is characterized by few firms that are interdependent in their pricing policies.
Question 16
Money is anything that is generally accepted as a
A. Measure of poverty
B. Medium of exchange
C. Sign of luxury
D. Gift from the bank
Answer: B. Medium of exchange
Explanation: Money facilitates the buying and selling of goods and services.
Question 17
Inflation that occurs when the demand for goods is greater than the supply is
A. Cost push inflation
B. Demand pull inflation
C. Creeping inflation
D. Hyperinflation
Answer: B. Demand pull inflation
Explanation: This happens when consumers have more money to spend than there are goods available.
Question 18
The rate at which the Central Bank lends money to commercial banks is the
A. Interest rate
B. Bank rate
C. Exchange rate
D. Tax rate
Answer: B. Bank rate
Explanation: Also known as the discount rate, it is used as a tool of monetary policy.
Question 19
Commercial banks help in capital formation by
A. Printing money
B. Encouraging savings and granting loans
C. Reducing the interest rate to zero
D. Fixing the price of goods
Answer: B. Encouraging savings and granting loans
Explanation: By mobilizing deposits and lending to investors, banks help build the nation's capital stock.
Question 20
GDP measured at current prices without adjusting for inflation is
A. Real GDP
B. Nominal GDP
C. Per capita GDP
D. Net GDP
Answer: B. Nominal GDP
Explanation: Nominal GDP uses the prices of the actual year the goods were produced.
Question 21
A country with a very high birth rate and a falling death rate will experience
A. Population decrease
B. Population explosion
C. Zero growth rate
D. Underpopulation
Answer: B. Population explosion
Explanation: This rapid increase occurs when many children are born and more people survive due to better healthcare.
Question 22
The total number of people who are willing and able to work is the
A. Population
B. Labor force
C. Working class
D. Employment rate
Answer: B. Labor force
Explanation: The labor force includes both the employed and those actively seeking work.
Question 23
Division of labor is limited by the
A. Number of machines
B. Extent of the market
C. Type of labor
D. Government policy
Answer: B. Extent of the market
Explanation: If the market is small, there is no need for large scale specialization.
Question 24
Which of the following is a tertiary industry?
A. Mining
B. Agriculture
C. Transport
D. Manufacturing
Answer: C. Transport
Explanation: Tertiary industries provide services rather than physical goods.
Question 25
When the government takes over a private firm, the process is called
A. Privatization
B. Nationalization
C. Commercialization
D. Globalization
Answer: B. Nationalization
Explanation: Nationalization is the transfer of ownership from private individuals to the state.
Question 26
The trade between two or more countries is
A. Internal trade
B. International trade
C. Local trade
D. Barter trade
Answer: B. International trade
Explanation: This involves the exchange of goods across national boundaries.
Question 27
A country's balance of trade is favorable if
A. Imports are greater than exports
B. Exports are greater than imports
C. Taxes are high
D. Inflation is low
Answer: B. Exports are greater than imports
Explanation: This means the country is earning more from selling goods than it is spending on buying them.
Question 28
Devaluation of a currency makes exports
A. More expensive
B. Cheaper
C. Scarce
D. Illegal
Answer: B. Cheaper
Explanation: Devaluation lowers the price of a country's goods in the international market.
Question 29
The main objective of the African Development Bank is to
A. Give loans to America
B. Promote economic development in Africa
C. Print a single currency for the world
D. Increase taxes in Africa
Answer: B. Promote economic development in Africa
Explanation: The bank provides funds and technical assistance to African countries for infrastructure and growth.
Question 30
Public finance deals with the
A. Financial activities of the government
B. Money in commercial banks
C. Wealth of individuals
D. Profit of private firms
Answer: A. Financial activities of the government
Explanation: It involves government revenue, expenditure, and debt.
Question 31
A tax on income that increases as the income increases is
A. Regressive tax
B. Progressive tax
C. Proportional tax
D. Flat tax
Answer: B. Progressive tax
Explanation: The percentage of income paid as tax rises for higher income earners.
Question 32
Which of the following is a non tax revenue for the government?
A. Import duties
B. Company tax
C. Court fines
D. Excise duties
Answer: C. Court fines
Explanation: Revenue from fines, fees, and licenses is classified as non tax revenue.
Question 33
A budget where estimated expenditure is more than estimated revenue is a
A. Surplus budget
B. Deficit budget
C. Balanced budget
D. Personal budget
Answer: B. Deficit budget
Explanation: Deficit budgets are often used to stimulate an economy during a recession.
Question 34
Economic growth is measured by the increase in
A. Real GDP
B. Population
C. Number of schools
D. Prices of goods
Answer: A. Real GDP
Explanation: Real GDP accounts for price changes and shows the actual growth in output.
Question 35
The main product of the Nigerian economy is
A. Cocoa
B. Gold
C. Crude oil
D. Groundnut
Answer: C. Crude oil
Explanation: Nigeria depends heavily on crude oil for its foreign exchange and government revenue.
Question 36
Which of the following is a problem of agriculture in West Africa?
A. Too much land
B. Land tenure system
C. High price of seeds
D. Absence of labor
Answer: B. Land tenure system
Explanation: Traditional land ownership laws make it difficult for farmers to get large areas for modern farming.
Question 37
The primary reason for international trade is
A. Distance between nations
B. Differences in resource endowment
C. Differences in population
D. Similarity in climate
Answer: B. Differences in resource endowment
Explanation: Countries trade because they cannot produce all goods efficiently due to natural limitations.
Question 38
In a partnership, a dormant partner is one who
A. Only works in the office
B. Contributes capital but does not take part in management
C. Does not contribute capital
D. Manages the business only
Answer: B. Contributes capital but does not take part in management
Explanation: Also known as a sleeping partner, they share in profits and losses but are not active.
Question 39
A document showing the detail of a country's trade and financial transactions with other nations is the
A. Terms of trade
B. Balance of payments
C. Trade agreement
D. Import license
Answer: B. Balance of payments
Explanation: It is a systematic record of all economic transactions between residents of the country and the rest of the world.
Question 40
Economic development involves growth plus
A. Inflation
B. Qualitative changes in the economy
C. Increase in population
D. High interest rates
Answer: B. Qualitative changes in the economy
Explanation: Development includes improvements in health, education, and the general standard of living.
Question 41
The money market is for
A. Short term loans
B. Long term loans
C. Permanent loans
D. Family loans
Answer: A. Short term loans
Explanation: Instruments like treasury bills are traded in the money market for short durations.
Question 42
A tax on goods produced within a country is
A. Import duty
B. Excise duty
C. Export duty
D. Income tax
Answer: B. Excise duty
Explanation: Excise duties are levied on locally manufactured goods like tobacco or spirits.
Question 43
One benefit of privatization is
A. Government control
B. Increased efficiency and competition
C. Lower prices for all goods
D. Higher unemployment
Answer: B. Increased efficiency and competition
Explanation: Private owners are often more motivated to improve services to make profit.
Question 44
An example of joint supply is
A. Pen and Ink
B. Mutton and Wool
C. Bread and Butter
D. Tea and Coffee
Answer: B. Mutton and Wool
Explanation: Joint supply occurs when the production of one good automatically results in the production of another.
Question 45
If the price of a good increases and demand falls significantly, the demand is
A. Inelastic
B. Elastic
C. Unitary
D. Constant
Answer: B. Elastic
Explanation: Elastic demand means consumers are very sensitive to price changes.
Question 46
The branch of Economics that deals with the economy as a whole is
A. Microeconomics
B. Macroeconomics
C. Home economics
D. Political economics
Answer: B. Macroeconomics
Explanation: Macroeconomics studies aggregates like national income, inflation, and unemployment.
Question 47
A situation where a country's population is growing at the same rate as its resources is
A. Overpopulation
B. Underpopulation
C. Optimum population
D. Stagnant population
Answer: C. Optimum population
Explanation: This is the ideal size that produces the highest income per head.
Question 48
The total value of a nation's stock of assets is its
A. Income
B. Wealth
C. Profit
D. Debt
Answer: B. Wealth
Explanation: Wealth is a stock concept representing the total assets owned at a point in time.
Question 49
One of the functions of the retailer to the consumer is
A. Giving technical advice on products
B. Selling in bulk
C. Manufacturing goods
D. Paying the producer
Answer: A. Giving technical advice on products
Explanation: Retailers often guide consumers on how to use or maintain a product.
Question 50
Which of the following is an invisible import?
A. Machinery from China
B. Payment for foreign shipping services
C. Cocoa sold to Europe
D. Books from America
Answer: B. Payment for foreign shipping services
Explanation: Invisible trade involves services which do not have a physical presence.