WAEC SSCE - Economics - 1999

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In determining cost, economics considers both implicit and explicit costs. Explicit costs refer to the actual monetary payments made for goods, services or resources purchased in the market. Implicit costs, on the other hand, are the opportunity costs of using resources owned by the firm or individual, such as the foregone earnings from using owner’s capital or the value of owner’s time spent working for the business. Thus, economics takes into account both explicit and implicit costs when determining the true cost of producing a good or service.

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Infant industries are industries that are in their early stage of production and need protection from foreign competition. They are usually new and still developing, with high start-up costs and limited resources. The protection can be in the form of tariffs, subsidies, or other trade barriers, aimed at allowing the infant industries to develop and become competitive before they face full international competition. The idea is that once these industries are established and competitive, they will be able to stand on their own and contribute to the economic growth of the country. The concept of infant industries is often used in developing countries that are trying to promote domestic industries and reduce their reliance on imports.

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A proportional tax refers to a tax system where the tax rate remains the same regardless of the income level of the taxpayer. In other words, everyone pays the same percentage of their income as tax. For example, if the tax rate is 10%, then someone who earns $10,000 will pay $1,000 in taxes while someone who earns $100,000 will pay $10,000 in taxes. Therefore, the tax rate is proportional to the income level.

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Income elasticity of demand is a measurement of the responsiveness of quantity demanded to a change in income. Income elasticity of demand measures the percentage change in the quantity demanded of a product in response to a percentage change in income. It shows how sensitive the demand for a product is to changes in income. If the income elasticity of demand for a product is positive, it means that as income increases, the quantity demanded of the product also increases. If it is negative, it means that as income increases, the quantity demanded of the product decreases. The higher the income elasticity of demand, the more sensitive the demand for the product is to changes in income.

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The precautionary motive for holding money refers to the reason why individuals or businesses hold money as a reserve for unforeseen contingencies. This means that people hold money as a precautionary measure to have a financial buffer or safety net in case of unexpected expenses, emergencies, or economic uncertainties. It is essentially a way of protecting oneself from financial risk by having access to liquid assets that can be easily converted into cash when needed.

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The production possibility curve (PPC) shows the maximum possible combinations of two goods that an economy can produce with its existing resources and technology. When all factor inputs are doubled, it means that there is an increase in the amount of resources available for production. This will result in an outward shift of the PPC from its original position. Therefore, the possible outcome is that the PPC will shift from left to right, indicating an increase in the production capacity of the economy. The new PPC will show that the economy can produce more of both goods than it could before. It's worth noting that this scenario assumes that there is no change in technology or other factors that could affect production.

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Mechanization is the most important factor that can boost agriculture in West African countries. Mechanization involves using machines and equipment in farming activities, such as planting, harvesting, and processing of crops. By using mechanization, farmers can save time and energy, increase productivity, and reduce labor costs. Mechanization can also help farmers to cultivate larger areas of land, which can lead to increased yields and profits. Therefore, by paying more attention to mechanization, West African countries can significantly improve their agricultural productivity and increase food security.

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The combination of qualities that ensures a good tax system is economy, convenience, certainty, and equity. Economy means that the tax system should not be overly burdensome or expensive to administer, both for the government and for taxpayers. Convenience means that the tax system should be easy for taxpayers to comply with and for the government to administer. Certainty means that taxpayers should be able to know how much tax they owe and when it is due. Finally, equity means that the tax system should be fair and just, with the burden of taxation shared fairly among taxpayers based on their ability to pay. Therefore, a good tax system should balance these four qualities to ensure that it is effective, efficient, and fair.

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The correct answer is Net National Income (NNI). It is a measure of a country's income that takes into account the depreciation of capital. GNP is the total value of all goods and services produced by a country's residents, regardless of their location, in a given period of time, usually a year. Depreciation is the decrease in the value of capital goods over time, so NNI is calculated by subtracting depreciation from GNP. NNI represents the actual income earned by a country's residents and is a better indicator of a country's economic well-being than GNP or GDP.

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Productivity per worker is best measured by dividing the total output of a company or an economy by the number of workers. This gives an average measure of the amount of output produced by each worker. By dividing total output by the number of workers, it provides an indication of how efficient workers are in producing goods or services. Therefore, the correct answer is "total output divided by the number of workers."

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In the long run, all factor inputs are variable. This means that a firm can adjust its usage of all inputs including labor, capital, and materials to produce a desired level of output. Unlike in the short run, where at least one input is fixed, in the long run, a firm has the flexibility to choose the optimal combination of inputs to minimize costs and maximize profits. This makes the long run a crucial period for firms to make strategic decisions such as expanding production, entering new markets, or investing in new technology to stay competitive.

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In the money market, money can only be borrowed for short-term purposes. The money market deals with short-term lending and borrowing, typically for periods of less than a year. The loans in the money market are used to finance current operations, such as paying bills and meeting short-term cash flow needs. Therefore, the borrowing and lending in the money market are usually for short-term needs, making it suitable for businesses or individuals who require temporary financial support.

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Per capita income in any West African country is measured by dividing the Gross National Product (GNP) by the total population. Per capita income is a measure of the average income per person in a particular country. It is calculated by dividing the total Gross National Product (GNP) of a country by its total population. GNP refers to the total value of goods and services produced by a country's residents, including those living abroad. By dividing GNP by the total population, we get an average measure of the income of each person in the country. This allows for a comparison of the standard of living across different countries. The higher the per capita income, the better the standard of living in a country.

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In an ordinary partnership, the risks are shared among the partners. This means that all partners are jointly and severally liable for the debts and obligations of the partnership. Each partner is responsible for contributing their share of the partnership's capital, and also for any losses that may be incurred by the partnership. The risks of the partnership are not borne solely by the workers or the creditors, but rather by all partners, including the active partners who manage the partnership. This joint liability is one of the main characteristics of a partnership and is designed to encourage careful management of the partnership's affairs by all partners.

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The quantity demanded of a commodity is influenced by several factors, including tastes, weather, price of the commodity, and price of other commodities. However, this question suggests that the quantity demanded is only influenced by one factor, and asks to identify that factor. Out of the options provided, the correct answer is "price of the commodity," as it is one of the primary determinants of the quantity demanded. As the price of a commodity decreases, the quantity demanded generally increases, and vice versa. Other factors, such as tastes, weather, and prices of other commodities, can also affect the quantity demanded, but the price of the commodity is the most direct and significant influence.

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The occupational distribution of population refers to the way in which the working population is distributed across different occupations. This distribution is mainly influenced by economic factors. For example, the availability of job opportunities, wages, and benefits offered by various industries play a significant role in determining the occupational distribution of a population. In regions where there is a shortage of job opportunities, people may be forced to take up jobs in industries that are not in line with their interests or abilities. Similarly, areas with higher wages and better working conditions tend to attract workers, leading to an increase in the workforce in those industries. While other factors such as social, religious, and geographical factors may play a role, economic factors are the most significant influence on the occupational distribution of a population.

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Price discrimination can only occur when there is imperfect competition. This is because price discrimination involves a seller charging different prices for the same product or service to different customers based on their willingness to pay. In a perfect competition market, there are many buyers and sellers, and each seller sells an identical product, making it impossible to charge different prices to different customers. However, in an imperfect competition market, there are a limited number of sellers and buyers, and the seller has some market power, which allows them to charge different prices to different customers.

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The quality of money which makes it possible to be carried easily is its portability. This means that money can be easily transported from one location to another without much difficulty. It is a desirable quality because it enables people to carry out transactions without the need for physical goods to be exchanged. It also means that money can be used as a means of exchange in various locations, making it a convenient medium of exchange for buyers and sellers.

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If a tax is imposed on a good whose demand is inelastic, it means that consumers will continue to purchase the good despite the increase in price due to the tax. This is because the good is a necessity or there are no close substitutes available. As a result, the government revenue will increase because the tax is collected on every unit of the good sold. In contrast, if a tax is imposed on a good whose demand is elastic, consumers will reduce their consumption of the good due to the increase in price, resulting in a decrease in government revenue.

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The money payment made to owners of land and labour are rent and wages. Rent is the payment made to the owner of land for the use of the land. Wages, on the other hand, is the payment made to labour for the use of their services in the production process. These two factors of production are compensated with these payments as they contribute to the production process of goods and services.

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The situation where a government spends more than its budget for a fiscal year is known as a deficit budget. This means that the government's expenditures exceed its revenue for the year, resulting in a budget deficit. This can occur due to a variety of factors such as increased spending on social programs, unexpected economic downturns, or decreased revenue from taxes. A deficit budget can have negative consequences such as inflation, increased public debt, and a reduced ability to respond to future economic challenges.

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The main reason why governments impose taxes is to provide social amenities for their citizens. These amenities include things like roads, schools, hospitals, security, and other public services that are necessary for the welfare of citizens. Taxes are also used to finance government operations, pay salaries of government employees, and support the military. Although taxes can sometimes be seen as a burden, they are essential for the proper functioning of a society, and the benefits they provide usually far outweigh the costs.

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Mortgage banks give loans to investors on a long term basis to build houses. This is because mortgage loans are specifically designed for financing the purchase or construction of real estate properties, such as houses or commercial buildings. The funds provided by mortgage banks are usually paid back by the borrower over a period of several years, typically through monthly payments that include both the principal and interest on the loan. By providing financing for housing, mortgage banks enable people to own homes without having to pay the full cost upfront, which can be a significant burden for most people.

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When price elasticity of supply is equal to 0.4, supply is said to be inelastic. This means that the quantity supplied of a good or service is not very responsive to changes in price. In other words, when there is a change in price, the change in quantity supplied is relatively small. This situation can occur when it is difficult or costly for producers to adjust their production levels in response to price changes, for example, due to limited resources or fixed production capacity. When supply is inelastic, changes in demand can have a significant impact on the market price.

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Devaluation is the reduction in the value of a country's currency compared to the currencies of other nations. This means that one unit of the devalued currency can now purchase fewer units of foreign currency. Devaluation can occur due to various reasons such as a decrease in foreign demand for the country's goods, a decrease in the country's interest rates relative to other countries, or an increase in the supply of the country's currency. The purpose of devaluation is to make the country's exports more competitive in foreign markets by making them relatively cheaper, and to discourage imports by making them relatively more expensive.

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The answer is "payment of salaries and wages". Capital expenditure refers to the spending of funds for acquiring, maintaining or upgrading fixed assets, such as buildings, equipment, or land, that are expected to benefit the company for more than one fiscal year. Salaries and wages are expenses incurred in the normal course of business operations and are classified as operating expenses, not capital expenditures.

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An indirect tax is a tax that is imposed on goods and services rather than on individuals or businesses. Therefore, of the options given, the indirect tax would be sales tax. Sales tax is a tax on the sale of goods and services and is often added to the price of the item. The tax is collected by the seller and then passed on to the government. The buyer indirectly pays the tax when they purchase the item. Unlike direct taxes, such as income tax or company tax, which are paid by individuals or businesses respectively, indirect taxes are paid by consumers through the purchase of goods and services.

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The benefits that result from concentrating similar firms in an area is referred to as external economies of scales. These benefits are enjoyed by firms due to their geographical location and not by the individual firms themselves. Such benefits may include the availability of a pool of skilled workers, common suppliers, access to new technologies, and other factors that reduce costs and increase productivity for firms in that area. Therefore, external economies of scale refer to the advantages that firms gain from the clustering of similar businesses in a particular region, which can enhance the overall competitiveness of the industry in that area.

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A regressive tax is a tax system where the tax rate decreases as the taxable amount increases. In other words, the poorer you are, the higher percentage of your income you pay as tax. This type of tax is considered regressive because it places a heavier burden on low-income earners compared to high-income earners. The term "regressive" refers to the fact that the tax rate decreases or regresses as income increases. Therefore, the correct answer is a regressive tax.

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The graph of the function X = a + bY is linear. The equation is in the form of a straight line where X is the dependent variable and Y is the independent variable. The slope of the line is equal to the value of b, and the intercept of the line is equal to the value of a. As the value of Y increases or decreases, the value of X also changes proportionally according to the value of b. Therefore, the graph of the function is a straight line with a constant slope. Hence, the correct answer is "linear".

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The population which yields the highest level of income per head is known as the optimum population. This refers to a situation where the population of a country is in balance with its resources and technology, such that each person can attain the highest possible standard of living. An optimum population strikes a balance between the advantages of a large population (such as economies of scale) and the disadvantages (such as resource depletion and environmental degradation).

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A commodity market can best be described as a market in which goods are sold. In a commodity market, various raw materials and primary products are traded. These can include agricultural products like wheat and corn, precious metals like gold and silver, and energy products like oil and gas. Commodity markets provide a platform for buyers and sellers to trade in these goods, with prices determined by supply and demand. Commodity markets are important because they enable producers to sell their products at a fair market price, and provide buyers with a reliable source of the goods they need. They also help to ensure that resources are allocated efficiently, as goods are directed towards those who value them the most. Overall, commodity markets play a key role in the global economy, providing a platform for the trade of goods that are essential for daily life and economic growth.

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The establishment of industries in rural areas will help to reduce rural-urban migration. When industries are established in rural areas, it creates employment opportunities for the people living in rural areas. This will reduce the rate of migration of people from rural areas to urban areas in search of employment opportunities. With more industries in rural areas, the people will have better access to job opportunities, which will reduce their incentive to migrate to urban areas. This will also help to increase the standard of living in rural areas as people will have better access to income and employment opportunities.

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Capital as a factor of production refers to the stock of physical assets that are used in the production process. This includes machinery, equipment, buildings, and tools, among other things. These physical assets are used to produce goods and services, and they are typically owned by businesses or individuals. The use of capital in the production process can lead to increased efficiency, higher output, and ultimately, increased profits.

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Profits can be calculated by subtracting total cost from total revenue. Total revenue refers to the income generated from the sale of goods or services, while total cost includes all expenses incurred in producing those goods or services, such as materials, labor, and overhead costs. Subtracting total cost from total revenue gives the amount of money left over after all costs have been paid, which is the profit. This is the most common and straightforward method of calculating profits for a business.

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Every society aims to pursue economic objectives that improve the well-being of its citizens. These objectives include increasing production, achieving price stability, promoting equitable distribution of income, and ensuring sustainable economic growth and income. However, an inequitable distribution of income is not an economic objective that societies strive to pursue, as it would lead to social unrest and economic instability.

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A scale of preference is a priority rating of aggregate individuals wants. It refers to a list of wants or needs arranged in order of importance or priority. People usually have unlimited wants, but resources to satisfy these wants are limited, so they have to make choices. A scale of preference helps people to make choices by giving them a clear understanding of what is important to them, and what can be sacrificed or postponed. The most important wants are given priority over the less important ones, and this helps to allocate resources efficiently.

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Balance of trade refers to the relationship between visible exports and visible imports of a country over a given period. Visible exports are physical goods that are produced in one country and sold to another country, while visible imports are physical goods that are produced in another country and bought by the domestic country. The balance of trade can be positive, indicating that a country is exporting more than it is importing, or negative, indicating that a country is importing more than it is exporting. It is an important measure of a country's economic health and can impact its currency value and overall economic stability.

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The West African economy can best be described as agricultural. Agriculture is the primary economic activity in West Africa, accounting for a significant portion of the region's GDP and providing employment for a large proportion of the population. The climate and terrain in West Africa are well-suited for the production of crops like cocoa, cotton, peanuts, and palm oil, which are major exports for the region. In addition to agriculture, West Africa is also rich in natural resources such as gold, diamonds, and oil. However, these industries are often dominated by foreign companies and have not led to significant economic development for the region. While some countries in West Africa have experienced significant economic growth in recent years, many still struggle with poverty, high unemployment, and inadequate infrastructure. However, the region has shown potential for growth and development, particularly in areas like renewable energy, which could help to diversify the economy and create new opportunities for employment and investment. Overall, the West African economy is largely agricultural, but has the potential for growth and diversification in other industries as well.

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The price elasticity of coefficient indicates the consumer responsiveness to price changes. In other words, it measures the percentage change in quantity demanded of a product due to a percentage change in its price. A higher elasticity value means that consumers are more sensitive to price changes and will decrease their quantity demanded more in response to a price increase, while a lower elasticity value means that consumers are less sensitive to price changes and will only slightly decrease their quantity demanded in response to a price increase.

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In a perfect market, the price and quantity of a good or service are determined by the forces of demand and supply. This means that the price of the good or service will adjust until the quantity supplied by producers is equal to the quantity demanded by consumers. The higher the price, the less quantity demanded by consumers, and the more quantity supplied by producers. Conversely, the lower the price, the more quantity demanded by consumers, and the less quantity supplied by producers. The equilibrium price and quantity occur where the quantity demanded equals the quantity supplied. This system is often referred to as the "invisible hand" of the market, where prices and quantities are determined by the interactions of buyers and sellers without any external intervention.

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The reward for capital is interest. Interest is the compensation that is paid by a borrower to a lender for the use of their money. Capital refers to the funds or assets that are available for investment, and the return on that capital is in the form of interest. Interest rates are determined by a variety of factors, including the supply and demand for credit, inflation, and monetary policy. In other words, when someone invests their capital, they expect to earn interest on that investment as a reward for putting their money at risk. This interest serves as an incentive for people to invest their money, which in turn fuels economic growth and development.

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In a socialist economy, the factors of production are owned and controlled by the government. The government plays a central role in planning and regulating the economy, and the goal is to distribute resources and wealth equally among all members of society. This is in contrast to a capitalist economy where the factors of production are owned by private individuals or businesses and are operated for profit. In a socialist economy, the government makes decisions about production and distribution, with the aim of meeting the needs of the entire society rather than just maximizing profits for a select few.

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The most common form of business enterprise in West Africa is the sole proprietorship. A sole proprietorship is a type of business in which one person owns and operates the business. This means that the owner has complete control over the business and is responsible for all its operations and finances. In West Africa, sole proprietorships are the most common type of business enterprise because they are easy to start, require less capital and legal formalities, and offer complete autonomy to the owner. Many small-scale businesses, such as retail shops, hair salons, and restaurants, are run as sole proprietorships in West Africa.

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The system whereby goods are exchanged for goods is known as the barter system. In this system, goods and services are exchanged for other goods and services without the use of money. For example, a farmer may exchange his crops with a carpenter for furniture, or a tailor may exchange his services with a baker for bread. This system was used in the past before the introduction of money as a medium of exchange. However, it has some limitations such as difficulty in determining the value of goods and services, lack of divisibility, and the need for a double coincidence of wants.

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The provision of services is classified under tertiary production. Tertiary production, also known as the service sector, involves the production and delivery of services to individuals and businesses. Services can be intangible products, such as healthcare, education, transportation, and financial services, among others. In contrast to primary and secondary production, which involve the production of tangible goods, tertiary production is all about providing a service. The service sector is a crucial part of most modern economies, and it is often the largest contributor to economic growth and employment.

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