Sample WAEC-style Practice Questions (Original Content)
WAEC Style
Question 1
Economics is a social science because it
A. Uses scientific methods to study human behavior
B. Deals with the production of goods only
C. Is taught in all schools
D. Helps people to become rich
Answer: A. Uses scientific methods to study human behavior
Explanation: Economics employs systematic observation and analysis to understand how individuals and societies make choices.
Question 2
The main reason for the study of Economics is the
A. Existence of unlimited resources
B. Fact that human wants are limited
C. Scarcity of resources relative to human wants
D. Need to eliminate poverty completely
Answer: C. Scarcity of resources relative to human wants
Explanation: Scarcity is the basic economic problem that necessitates the study of how to allocate limited resources.
Question 3
A good that is provided by nature and has no price is called a
A. Capital good
B. Free good
C. Consumer good
D. Public good
Answer: B. Free good
Explanation: Free goods like air or sunlight are abundant in nature and do not require any economic cost to obtain.
Question 4
In a capitalist economy, the allocation of resources is determined by
A. The central planning committee
B. The forces of demand and supply
C. Religious leaders
D. Tribal chiefs
Answer: B. The forces of demand and supply
Explanation: In a free market or capitalist system, the price mechanism coordinates the decisions of producers and consumers.
Question 5
Opportunity cost is also known as
A. Money cost
B. Social cost
C. Real cost
D. Variable cost
Answer: C. Real cost
Explanation: It is called real cost because it represents the actual sacrifice made in terms of the alternative good forgone.
Question 6
A point inside the Production Possibility Curve indicates that
A. Resources are fully utilized
B. Resources are being wasted or underutilized
C. The economy is growing
D. Production is at its maximum
Answer: B. Resources are being wasted or underutilized
Explanation: Any point inside the curve means the economy is not producing at its full capacity with available resources.
Question 7
Effective demand is demand backed by
A. Strong desire
B. The ability to pay
C. Government approval
D. High population
Answer: B. The ability to pay
Explanation: Desire alone does not constitute demand in Economics; it must be supported by the purchasing power to acquire the good.
Question 8
If the price of tea rises, the demand for coffee is likely to
A. Decrease
B. Increase
C. Remain unchanged
D. Fall to zero
Answer: B. Increase
Explanation: Tea and coffee are substitutes; as the price of one rises, consumers switch to the relatively cheaper alternative.
Question 9
Which of the following is an exception to the law of demand?
A. Luxury goods
B. Normal goods
C. Capital goods
D. Perishable goods
Answer: A. Luxury goods
Explanation: For luxury goods or Veblen goods, demand may actually increase as price rises due to their status symbol value.
Question 10
A supply curve that is parallel to the vertical axis has an elasticity of
A. Zero
B. One
C. Infinity
D. Greater than one
Answer: A. Zero
Explanation: A vertical supply curve is perfectly inelastic, meaning the quantity supplied remains the same regardless of price.
Question 11
The price at which quantity demanded exceeds quantity supplied is
A. Above the equilibrium price
B. Below the equilibrium price
C. The equilibrium price
D. The maximum price
Answer: B. Below the equilibrium price
Explanation: When the price is too low, more people want to buy than producers want to sell, leading to a shortage.
Question 12
If income elasticity of demand is negative, the good is an
A. Essential good
B. Inferior good
C. Normal good
D. Luxury good
Answer: B. Inferior good
Explanation: For inferior goods, demand falls as consumer income rises.
Question 13
A government subsidy to producers will cause the supply curve to
A. Shift to the left
B. Shift to the right
C. Remain stationary
D. Become vertical
Answer: B. Shift to the right
Explanation: Subsidies reduce the cost of production, encouraging producers to supply more at the same price.
Question 14
Consumer surplus is the difference between
A. Total utility and marginal utility
B. Price a consumer is willing to pay and the actual market price
C. Quantity demanded and quantity supplied
D. Income and expenditure
Answer: B. Price a consumer is willing to pay and the actual market price
Explanation: It represents the extra benefit consumers get when they buy a good for less than their maximum willing price.
Question 15
Which of the following is true about indifference curves?
A. They can intersect each other
B. They slope upwards
C. They are convex to the origin
D. They show only one good
Answer: C. They are convex to the origin
Explanation: This shape reflects the diminishing marginal rate of substitution between two goods.
Question 16
Total product starts to decline when marginal product is
A. Positive
B. Zero
C. Negative
D. Constant
Answer: C. Negative
Explanation: When adding an extra unit of input actually reduces the total output, marginal product becomes negative.
Question 17
An advantage of division of labor is that it
A. Makes work monotonous
B. Increases the skill of the worker
C. Increases the cost of production
D. Discourages the use of machinery
Answer: B. Increases the skill of the worker
Explanation: By repeating a single task, a worker becomes faster and more proficient at it.
Question 18
Internal economies of scale occur when a firm
A. Expands its own size of production
B. Moves to a new industrial estate
C. Benefits from government research
D. Pays higher taxes
Answer: A. Expands its own size of production
Explanation: These are cost saving benefits that arise within a single firm as its output increases.
Question 19
Which factor is most likely to influence the location of a cement factory?
A. Nearness to the market
B. Proximity to raw materials
C. Availability of skilled labor
D. Climatic conditions
Answer: B. Proximity to raw materials
Explanation: Cement production uses heavy raw materials like limestone, making it cheaper to locate near the source.
Question 20
A major disadvantage of a sole proprietorship is
A. Quick decision making
B. Unlimited liability
C. Shared profit
D. Formal registration
Answer: B. Unlimited liability
Explanation: The owner is personally responsible for all the debts of the business if it fails.
Question 21
Which characteristic of money helps in expressing the value of goods in figures?
A. Portability
B. Durability
C. Measure of value
D. Cognizability
Answer: C. Measure of value
Explanation: Money acts as a unit of account, allowing us to compare the worth of different items easily.
Question 22
Open Market Operation (OMO) is a tool used by the Central Bank to
A. Open more bank branches
B. Control the volume of money in circulation
C. Fix the price of goods
D. Grant loans to the public
Answer: B. Control the volume of money in circulation
Explanation: It involves the buying and selling of government securities to influence the level of cash in the economy.
Question 23
Treasury bills are examples of instruments traded in the
A. Capital market
B. Money market
C. Labor market
D. Commodity market
Answer: B. Money market
Explanation: The money market deals with short term debt instruments that mature in less than a year.
Question 24
The supply of money is determined by the
A. Commercial banks
B. Central Bank and the government
C. International Monetary Fund
D. Stock exchange
Answer: B. Central Bank and the government
Explanation: These authorities regulate the printing and flow of currency in the country.
Question 25
A period of rising prices caused by higher wages is called
A. Demand pull inflation
B. Cost push inflation
C. Creeping inflation
D. Deflation
Answer: B. Cost push inflation
Explanation: This occurs when producers increase prices to cover rising costs of production like labor wages.
Question 26
GDP at market price includes indirect taxes but excludes
A. Subsidies
B. Exports
C. Consumption
D. Investment
Answer: A. Subsidies
Explanation: Market prices are higher due to taxes and lower due to subsidies; therefore, subsidies are subtracted when moving from factor cost to market price.
Question 27
Net National Product is Gross National Product minus
A. Indirect taxes
B. Depreciation
C. Subsidies
D. Imports
Answer: B. Depreciation
Explanation: Depreciation represents the wear and tear of capital assets used during production.
Question 28
Personal income minus personal income tax gives
A. National income
B. Disposable income
C. Gross income
D. Real income
Answer: B. Disposable income
Explanation: This is the actual amount an individual has available to spend or save after taxes.
Question 29
Underpopulation exists when a country has
A. Too many people for its resources
B. Too few people to fully exploit its resources
C. A very high birth rate
D. A high death rate
Answer: B. Too few people to fully exploit its resources
Explanation: In this state, an increase in population would lead to an increase in income per head.
Question 30
One major problem of conducting a population census in West Africa is
A. High literacy rate
B. Inaccessibility of rural areas
C. Overabundance of funds
D. Accurate birth records
Answer: B. Inaccessibility of rural areas
Explanation: Poor transport networks make it difficult for enumerators to reach every household in remote regions.
Question 31
The movement of a worker from one job to another within the same skill level is
A. Vertical mobility
B. Horizontal mobility
C. Geographical mobility
D. Occupational instability
Answer: B. Horizontal mobility
Explanation: It involves changing jobs without a change in status or skill requirements.
Question 32
A wholesaler performs the function of breaking bulk by selling in small quantities to
A. Manufacturers
B. Retailers
C. The government
D. Foreigners
Answer: B. Retailers
Explanation: Wholesalers buy in huge lots and divide them into smaller portions for retailers.
Question 33
A large retail shop that sells a wide variety of goods under one roof is a
A. Tied shop
B. Department store
C. Hawing business
D. Mobile shop
Answer: B. Department store
Explanation: Department stores are organized into different sections, each selling a specific type of product.
Question 34
The policy of restricting imports to protect local industries is called
A. Free trade
B. Protectionism
C. Globalization
D. Liberalization
Answer: B. Protectionism
Explanation: Protectionism uses tools like tariffs and quotas to help domestic firms compete against foreign ones.
Question 35
Invisible items in the balance of payments include
A. Motor vehicles
B. Banking and insurance services
C. Crude oil
D. Electronic gadgets
Answer: B. Banking and insurance services
Explanation: Invisible trade refers to the exchange of services that cannot be seen or touched physically.
Question 36
A country's terms of trade improve if the
A. Price of imports rises faster than export prices
B. Price of exports rises faster than import prices
C. Volume of imports increases
D. Volume of exports decreases
Answer: B. Price of exports rises faster than import prices
Explanation: This means the country can buy more imports with the same amount of exports.
Question 37
An exchange rate system where the value of a currency is fixed by the government is
A. Floating exchange rate
B. Fixed exchange rate
C. Managed float
D. Market exchange rate
Answer: B. Fixed exchange rate
Explanation: In this system, the official value is pegged to another major currency or gold.
Question 38
Recurrent expenditure of a government includes
A. Building of bridges
B. Payment of civil servants salaries
C. Construction of dams
D. Buying of industrial machinery
Answer: B. Payment of civil servants salaries
Explanation: Recurrent expenditure covers day to day running costs that happen every year.
Question 39
Which of the following is a non tax source of government revenue?
A. Excise duties
B. Fines and royalties
C. Capital gains tax
D. Import duties
Answer: B. Fines and royalties
Explanation: These are incomes earned by the government from legal penalties or natural resource extractions rather than taxes.
Question 40
A proportional tax is one where
A. The tax rate increases as income increases
B. The tax rate is the same for all income levels
C. High income earners pay no tax
D. The tax rate decreases as income increases
Answer: B. The tax rate is the same for all income levels
Explanation: Every taxpayer pays the same percentage of their income regardless of how much they earn.
Question 41
One objective of national development planning is to
A. Increase the level of unemployment
B. Achieve a high rate of economic growth
C. Discourage foreign investment
D. Encourage the importation of luxury goods
Answer: B. Achieve a high rate of economic growth
Explanation: Planning helps the government coordinate resources to improve the overall economy.
Question 42
A major problem of industrialization in West Africa is
A. Shortage of raw materials
B. Inadequate capital and technical skills
C. Too much electricity supply
D. Small population size
Answer: B. Inadequate capital and technical skills
Explanation: Lack of funds and expert knowledge hinders the growth of large scale manufacturing.
Question 43
The downstream sector of the petroleum industry includes
A. Oil exploration
B. Refining and distribution of fuel
C. Drilling of oil wells
D. Seismic surveys
Answer: B. Refining and distribution of fuel
Explanation: Downstream activities involve turning crude oil into products and getting them to consumers.
Question 44
The West African Development Bank aims to provide financial support to
A. All countries in the world
B. Member states in the West African sub region
C. Only the government of America
D. Individual farmers only
Answer: B. Member states in the West African sub region
Explanation: Its primary focus is the economic development of its specific geographic members.
Question 45
A customs union is a form of economic integration where member countries
A. Have different external tariffs
B. Have a common external tariff against non members
C. Ban all trade between themselves
D. Use different currencies
Answer: B. Have a common external tariff against non members
Explanation: This step goes beyond a free trade area by unifying trade policies toward the rest of the world.
Question 46
Which of the following is a renewable natural resource?
A. Crude oil
B. Coal
C. Timber from forests
D. Iron ore
Answer: C. Timber from forests
Explanation: Trees can be replanted and grown again, while minerals like oil and coal are exhausted once used.
Question 47
Subsistence agriculture is characterized by
A. Production for the market
B. Use of modern machinery
C. Small farm holdings for family consumption
D. High capital investment
Answer: C. Small farm holdings for family consumption
Explanation: The farmer produces just enough to feed themselves and their family with little or no surplus for sale.
Question 48
One of the functions of marketing boards in West Africa was to
A. Discourage farmers from planting
B. Stabilize the prices of agricultural products
C. Import all food items
D. Increase the price of land
Answer: B. Stabilize the prices of agricultural products
Explanation: They aimed to protect farmers from the wild fluctuations of world market prices.
Question 49
The demand for capital depends on the
A. Rate of interest
B. Size of the population
C. Weather condition
D. Number of holidays
Answer: A. Rate of interest
Explanation: The interest rate is the cost of borrowing capital; a higher rate usually leads to lower demand for investment.
Question 50
In a free market, if the price of a good is too high, it is brought down by
A. Government decree
B. Competition among sellers
C. Decreased supply
D. Increased demand
Answer: B. Competition among sellers
Explanation: When there is a surplus because the price is too high, sellers lower their prices to attract buyers and move their stock.