Sample WAEC-style Practice Questions (Original Content)
WAEC Style
Question 1
Which of the following is the most comprehensive definition of Economics?
A. The study of money and banking
B. The study of how scarce resources are used to satisfy unlimited wants
C. The study of the stock market
D. The study of how to become a successful businessman
Answer: B. The study of how scarce resources are used to satisfy unlimited wants
Explanation: Economics is primarily concerned with the allocation of limited resources among competing needs.
Question 2
A student has $10 and needs a book and a shirt each costing $10. If he chooses the book, the shirt is the
A. Scale of preference
B. Money cost
C. Opportunity cost
D. Real income
Answer: C. Opportunity cost
Explanation: Opportunity cost represents the alternative choice that is sacrificed to satisfy a particular want.
Question 3
In which economic system are resources owned by both the state and private individuals?
A. Capitalist economy
B. Socialist economy
C. Mixed economy
D. Traditional economy
Answer: C. Mixed economy
Explanation: A mixed economy combines elements of both private enterprise and government intervention.
Question 4
Which of these is a characteristic of a socialist economy?
A. Profit maximization
B. Private ownership of property
C. Central planning
D. Consumer sovereignty
Answer: C. Central planning
Explanation: In a socialist system, the government makes the major decisions regarding what to produce and how to distribute it.
Question 5
Human wants are described as unlimited because
A. Resources are plenty
B. New wants emerge as old ones are satisfied
C. People are greedy
D. Money is easily available
Answer: B. New wants emerge as old ones are satisfied
Explanation: Human needs are insatiable because as soon as one level of need is met, another arises.
Question 6
The Production Possibility Curve (PPC) is usually concave to the origin because of
A. Increasing opportunity cost
B. Constant opportunity cost
C. Decreasing opportunity cost
D. Fixed technology
Answer: A. Increasing opportunity cost
Explanation: As more of one good is produced, more of the other good must be sacrificed at an increasing rate.
Question 7
The term "Ceteris Paribus" in Economics means
A. All things are equal
B. Other things being equal
C. All variables are changing
D. Price is constant
Answer: B. Other things being equal
Explanation: It is a Latin phrase used to isolate the relationship between two variables by assuming all other factors remain unchanged.
Question 8
A normal demand curve slopes
A. Upwards from left to right
B. Downwards from left to right
C. Horizontally
D. Vertically
Answer: B. Downwards from left to right
Explanation: This represents the inverse relationship between the price of a good and the quantity demanded.
Question 9
Which of the following will cause a rightward shift of the supply curve?
A. An increase in the cost of production
B. An improvement in technology
C. A decrease in the number of producers
D. An increase in the price of the good
Answer: B. An improvement in technology
Explanation: Better technology makes production more efficient, allowing firms to supply more at the same price.
Question 10
When the percentage change in quantity demanded is exactly equal to the percentage change in price, demand is
A. Perfectly elastic
B. Unitary elastic
C. Inelastic
D. Perfectly inelastic
Answer: B. Unitary elastic
Explanation: Unitary elasticity occurs when the elasticity coefficient is equal to one.
Question 11
Price elasticity of supply measures the responsiveness of quantity supplied to changes in
A. Income
B. Price
C. Taste
D. Weather
Answer: B. Price
Explanation: It calculates how much the quantity produced changes when the market price changes.
Question 12
The cross elasticity of demand for two goods that are complements is
A. Positive
B. Negative
C. Zero
D. Infinite
Answer: B. Negative
Explanation: For complements like cars and petrol, an increase in the price of one leads to a decrease in the demand for the other.
Question 13
The equilibrium price is the price at which
A. Sellers make the most profit
B. Quantity demanded equals quantity supplied
C. Demand is greater than supply
D. Supply is greater than demand
Answer: B. Quantity demanded equals quantity supplied
Explanation: At this price, the market is cleared and there is no pressure for the price to change.
Question 14
A change in the price of a commodity will result in
A. A shift in the demand curve
B. A movement along the demand curve
C. An increase in income
D. A change in taste
Answer: B. A movement along the demand curve
Explanation: Price changes cause a change in quantity demanded, which is represented by moving from one point to another on the same curve.
Question 15
Diminishing marginal utility implies that as consumption increases
A. Total utility decreases
B. Marginal utility decreases
C. Total utility remains constant
D. Marginal utility increases
Answer: B. Marginal utility decreases
Explanation: Each additional unit consumed provides less extra satisfaction than the one before.
Question 16
Which of the following is a fixed factor of production in the short run?
A. Raw materials
B. Land
C. Casual labor
D. Electricity
Answer: B. Land
Explanation: In the short run, at least one factor like land or heavy machinery cannot be easily changed.
Question 17
Average Product is defined as
A. Total product divided by the number of units of the variable factor
B. Change in total product divided by change in labor
C. Total product multiplied by price
D. Fixed product plus variable product
Answer: A. Total product divided by the number of units of the variable factor
Explanation: Average product measures the output per worker or per unit of input.
Question 18
A firm's variable costs are those that
A. Never change
B. Change with the level of output
C. Are paid only once
D. Include rent and insurance
Answer: B. Change with the level of output
Explanation: Examples include raw materials and wages for production staff, which increase as more units are made.
Question 19
The long run is a period of time in which
A. All factors of production are fixed
B. All factors of production are variable
C. Only labor is variable
D. Price cannot change
Answer: B. All factors of production are variable
Explanation: In the long run, firms can change all their inputs, including factory size and land.
Question 20
Total Revenue is calculated by multiplying
A. Price and Quantity sold
B. Price and Average Cost
C. Marginal Revenue and Price
D. Fixed Cost and Output
Answer: A. Price and Quantity sold
Explanation: TR equals P times Q. It is the total amount of money a firm receives from sales.
Question 21
A market with a large number of buyers and sellers selling heterogeneous products is
A. Perfect competition
B. Monopolistic competition
C. Monopoly
D. Pure competition
Answer: B. Monopolistic competition
Explanation: In this market, products are similar but differentiated by branding or packaging.
Question 22
Which of the following is a legal monopoly?
A. A firm with the best technology
B. A firm granted a patent right
C. A firm that is very large
D. A firm that sells to the government
Answer: B. A firm granted a patent right
Explanation: Patents provide legal protection to inventors, preventing others from producing the same product for a period of time.
Question 23
Price discrimination occurs when a seller charges
A. The same price to all buyers
B. Different prices to different buyers for the same product
C. Higher prices for better quality
D. Lower prices during a sale
Answer: B. Different prices to different buyers for the same product
Explanation: This is common in services like electricity or air travel, based on the consumer's ability or willingness to pay.
Question 24
The demand for labor is an example of
A. Joint demand
B. Derived demand
C. Composite demand
D. Competitive demand
Answer: B. Derived demand
Explanation: Labor is not demanded for its own sake, but for what it can produce.
Question 25
A firm's profit is maximized when
A. Total Revenue equals Total Cost
B. Marginal Revenue equals Marginal Cost
C. Average Revenue equals Average Cost
D. Price equals Average Cost
Answer: B. Marginal Revenue equals Marginal Cost
Explanation: This is the standard equilibrium condition for any profit maximizing firm in any market structure.
Question 26
What is the reward for the factor of production known as land?
A. Wages
B. Interest
C. Rent
D. Profit
Answer: C. Rent
Explanation: Rent is the payment made to owners of land and other natural resources.
Question 27
Middlemen in the chain of distribution include
A. Manufacturers and Consumers
B. Wholesalers and Retailers
C. Farmers and Miners
D. Bankers and Lawyers
Answer: B. Wholesalers and Retailers
Explanation: They facilitate the movement of goods from the producer to the final consumer.
Question 28
Which of the following is a form of money?
A. A gold bar
B. A credit card
C. A bank note
D. A stock certificate
Answer: C. A bank note
Explanation: Bank notes and coins are legal tender and serve as a medium of exchange.
Question 29
The value of money varies
A. Directly with the price level
B. Inversely with the price level
C. Directly with the interest rate
D. Inversely with the interest rate
Answer: B. Inversely with the price level
Explanation: As prices rise, the purchasing power (value) of a unit of money falls.
Question 30
A commercial bank's primary function is to
A. Issue currency
B. Act as the government's bank
C. Accept deposits and lend money
D. Control the money supply
Answer: C. Accept deposits and lend money
Explanation: This is how commercial banks serve the public and earn profit through interest.
Question 31
The central bank can reduce the money supply by
A. Lowering the interest rate
B. Buying government bonds
C. Raising the cash reserve ratio
D. Reducing taxes
Answer: C. Raising the cash reserve ratio
Explanation: By requiring banks to keep more cash in reserve, the amount available for lending decreases.
Question 32
Inflation caused by excessive spending in the economy is called
A. Cost push inflation
B. Demand pull inflation
C. Hyperinflation
D. Imported inflation
Answer: B. Demand pull inflation
Explanation: This occurs when "too much money is chasing too few goods."
Question 33
Who are the losers during a period of high inflation?
A. Borrowers
B. Business owners
C. Fixed income earners
D. Speculators
Answer: C. Fixed income earners
Explanation: Their income remains the same while the cost of living increases, reducing their standard of living.
Question 34
National income is the total value of
A. All goods produced in a year
B. All final goods and services produced in a year
C. All taxes collected by the government
D. All money in the banks
Answer: B. All final goods and services produced in a year
Explanation: It is the sum total of all economic activity within a country over a specific period.
Question 35
The income method of measuring national income involves adding up
A. Consumption and Investment
B. Wages, Rent, Interest, and Profit
C. Exports and Imports
D. Total output of all sectors
Answer: B. Wages, Rent, Interest, and Profit
Explanation: These are the payments made to the factors of production.
Question 36
To avoid double counting in national income, we should only include the value of
A. Intermediate goods
B. Raw materials
C. Final goods
D. Second hand goods
Answer: C. Final goods
Explanation: Including intermediate goods would mean counting the same value multiple times at different stages of production.
Question 37
A population is said to be optimum when it
A. Is very large
B. Yields the highest income per head
C. Is growing very fast
D. Matches the number of houses
Answer: B. Yields the highest income per head
Explanation: Optimum population is the ideal balance between population size and available resources.
Question 38
The aging population is a problem because it leads to
A. A high dependency ratio
B. A large labor force
C. Low government spending on health
D. High birth rates
Answer: A. A high dependency ratio
Explanation: There are fewer workers to support a large number of elderly people who are no longer working.
Question 39
International trade takes place because of
A. Differences in taste
B. Absolute and Comparative advantage
C. Distance between countries
D. Similarity in resources
Answer: B. Absolute and Comparative advantage
Explanation: Countries benefit by specializing in what they can produce most efficiently and trading for other things.
Question 40
A tax on imported goods is called
A. An export duty
B. A tariff
C. A quota
D. A subsidy
Answer: B. A tariff
Explanation: Tariffs are used to raise government revenue and protect local industries from foreign competition.
Question 41
The record of a country's visible and invisible trade is the
A. Balance of Trade
B. Current Account
C. Capital Account
D. National Debt
Answer: B. Current Account
Explanation: The current account includes the balance of trade (goods) and the balance of services (invisibles).
Question 42
One of the functions of the International Monetary Fund (IMF) is to
A. Give long term development loans
B. Provide short term loans for balance of payment problems
C. Print money for all countries
D. Abolish all taxes
Answer: B. Provide short term loans for balance of payment problems
Explanation: The IMF helps maintain global monetary stability and assists countries with financial crises.
Question 43
Public debt is the money owed by
A. Individuals to the bank
B. The government to internal and external creditors
C. Firms to their workers
D. One country to another for trade
Answer: B. The government to internal and external creditors
Explanation: This debt arises when the government spends more than it collects in revenue over several years.
Question 44
Which of the following is a direct tax?
A. Value Added Tax (VAT)
B. Personal Income Tax
C. Customs duties
D. Sales tax
Answer: B. Personal Income Tax
Explanation: Direct taxes are paid directly by the individual or company to the tax authorities.
Question 45
An example of an invisible export is
A. Selling cocoa to Europe
B. Providing tourism services to foreigners
C. Importing machinery
D. Exporting crude oil
Answer: B. Providing tourism services to foreigners
Explanation: Invisible trade involves services rather than physical goods.
Question 46
Economic development differs from economic growth because development involves
A. Only an increase in GDP
B. Quantitative and qualitative changes
C. More people in the country
D. Higher inflation
Answer: B. Quantitative and qualitative changes
Explanation: Development includes growth plus improvements in the standard of living and structural changes in the economy.
Question 47
The main reason for the establishment of the Economic Community of West African States (ECOWAS) is to
A. Fight wars together
B. Promote economic integration and cooperation
C. Encourage migration to Europe
D. Set a single price for all goods
Answer: B. Promote economic integration and cooperation
Explanation: ECOWAS aims to create a large single market in the West African sub region.
Question 48
A producer is in equilibrium when his goal is to
A. Minimize profit
B. Maximize output at minimum cost
C. Employ more workers
D. Increase the price of his goods
Answer: B. Maximize output at minimum cost
Explanation: Efficiency in production means getting the best possible result from the resources used.
Question 49
Which of the following is a problem of agricultural marketing in West Africa?
A. Too many good roads
B. Inadequate storage facilities
C. High price of goods
D. Lack of farmers
Answer: B. Inadequate storage facilities
Explanation: Much of the farm produce is lost due to spoilage before it reaches the market.
Question 50
The scale of preference helps a consumer to solve the problem of
A. Choice
B. Scarcity
C. Demand
D. Supply
Answer: A. Choice
Explanation: By ranking wants, the consumer is able to choose the most important needs first given their limited resources.