WAEC SSCE - Economics - 2019

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The cost of production that is positively related to output is variable cost. Variable costs are costs that vary with the level of production, such as the cost of raw materials or labor. As production increases, the cost of these inputs also increases, leading to a positive relationship between output and variable costs. For example, if a company produces 10 units of a product and incurs a variable cost of $10 per unit, its total variable cost would be $100. If the company increases production to 20 units, the variable cost would be $200, reflecting the positive relationship between output and variable cost. In contrast, total fixed cost remains constant regardless of the level of production, while average fixed cost decreases as output increases, and social cost refers to the cost to society as a whole, including externalities such as pollution or congestion.

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A point X inside the production possibility curve indicates that some resources are idle. This means that the country is not producing the maximum amount of goods and services it can with the given resources. It could be due to inefficiencies in the production process or lack of demand for certain goods and services. However, it does not necessarily mean that the country is poor or that resources are not available.

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An increase in the prices of factor inputs, such as labor, materials, or energy, can lead to an increase in the cost of producing goods and services. When firms face higher costs, they may raise the prices of their products to maintain their profit margins. If the price increases are widespread across the economy, this can lead to a general increase in the level of prices, known as inflation. However, the specific type of inflation that arises from an increase in factor input prices is called cost-push inflation. Cost-push inflation occurs when an increase in the cost of production leads to higher prices for goods and services, which can reduce consumers' purchasing power. It can be particularly problematic if it persists over a long period, leading to lower economic growth and higher unemployment. Therefore, an increase in factor input prices can result in cost-push inflation, which can negatively affect the economy by reducing purchasing power and economic growth.

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The total value of goods and services produced within the borders of a country is called "gross domestic product" or GDP for short. GDP measures the monetary value of all final goods and services produced within a country's borders during a specific period of time, typically a year. GDP includes all goods and services produced by businesses and individuals, including investments and government spending. It does not include goods and services produced by a country's citizens or businesses outside of its borders, which is measured by "gross national product" or GNP. However, to get the net values, we subtract the depreciation of capital from GDP to get "net domestic product" or NDP and we also subtract the income earned by foreigners in the country from GNP to get "net national product" or NNP.

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The factor that will not underestimate national income is the increase in the value of services not paid for. National income is the total income earned by a country's citizens, including all goods and services produced within the country's borders over a certain period. However, there are various factors that can cause national income to be underestimated. A rapid decrease in prices can underestimate national income because it can make it appear as though less output is being produced, even if the physical volume of goods and services produced remains the same. Increased subsistence production, which refers to the production of goods for personal consumption rather than for sale in the market, can also underestimate national income because it is not captured in official statistics. The practice of specialization of labor, where individuals focus on producing specific goods or services in which they have a comparative advantage, can also underestimate national income if the value of their specialized production is not accurately measured. However, an increase in the value of services not paid for, such as volunteer work or services provided within households, can actually help to more accurately reflect national income. By measuring and accounting for the value of these services, which are often not captured in official statistics, national income can be more accurately estimated.

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The short-run in production is the time period where at least one factor of production is fixed, while others are variable. In the short-run, a business cannot change all of its factors of production, such as capital equipment or the size of its physical plant, due to time or cost constraints. Therefore, it must operate with at least one factor of production fixed, while others are variable, such as labor, raw materials, or energy. For example, a bakery may have a fixed number of ovens in the short-run, but it can hire additional workers or purchase more flour to increase its output. Similarly, a farmer may have a fixed amount of land in the short-run, but can vary the amount of labor and fertilizer used to produce crops. Therefore, the short-run is characterized by at least one fixed factor of production and one or more variable factors of production that a business can adjust to increase output or reduce costs.

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Two commodities X and Y are in joint supply when they are produced together by the same process, and an increase in the production of one commodity leads to an increase in the production of the other. This means that the production of X and Y are interdependent, and they cannot be produced separately. For example, crude oil and natural gas are in joint supply because they are produced together from the same oil wells, and an increase in the production of crude oil leads to an increase in the production of natural gas as well.

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If the coefficient of price elasticity of demand of a product is zero, it means that the demand for the product is perfectly inelastic. This implies that a change in price will not lead to any change in the quantity demanded of the product. In other words, regardless of the price of the product, the quantity demanded will remain the same. Therefore, the demand curve will be a vertical line parallel to the quantity axis. This is because changes in price will not cause any change in the quantity demanded, and hence the demand curve will not slope. So, the answer is "parallel to the quantity axis."

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The motive for holding money to meet unforeseen events is termed precautionary demand. This refers to the desire of individuals or businesses to hold cash or other liquid assets to be able to cover unexpected expenses or emergencies that may arise in the future. For example, individuals may hold some cash in case they have a medical emergency or their car breaks down. Similarly, businesses may hold cash reserves to be able to pay for unexpected repairs or to cover temporary shortfalls in revenue. The amount of money held for precautionary demand will depend on various factors, including the level of uncertainty or risk associated with future events, the availability of credit or other sources of liquidity, and the cost of holding money versus other investments. Overall, precautionary demand for money reflects the need to have a financial buffer to be able to deal with unexpected events and to manage risk.

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The use of interest rates to control the money supply is a monetary policy. Monetary policy is the process by which a government, central bank, or monetary authority manages the supply of money and the availability of credit in an economy with the goal of promoting economic growth and stability. One of the tools used in monetary policy is setting interest rates. By adjusting the interest rate, the central bank can influence the amount of money that is available in the economy. If the interest rate is high, it becomes more expensive for people and businesses to borrow money, so they tend to borrow less. This can help reduce inflation and stabilize the economy. On the other hand, if the interest rate is low, borrowing becomes cheaper, encouraging more borrowing and spending, which can stimulate economic growth. So, in a very simple way, monetary policy refers to the management of money supply and interest rates by the central bank to achieve economic goals.

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The table above illustrates the law of diminishing marginal utility. According to this law, as we consume more and more units of a product, the additional satisfaction or utility that we get from consuming each additional unit will start to decrease. In other words, the marginal utility of each additional unit consumed will diminish. Looking at the table, we can see that as the quantity consumed increases, the total utility increases as well, but at a decreasing rate. Additionally, we can see that the marginal utility starts to decline after the second unit is consumed. For example, the first unit consumed gives a marginal utility of 10, the second unit gives a marginal utility of 5, and the third unit gives a marginal utility of only 2. This shows that the additional satisfaction gained from each unit consumed is decreasing. Therefore, the answer is "diminishing marginal utility."

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Human development can be improved if general education and training are encouraged. Education is a key factor in human development, as it provides individuals with the knowledge and skills they need to succeed in life. A well-educated population is more likely to be productive and creative, and to enjoy better health, higher levels of income, and a higher standard of living. Investing in education can also lead to broader social and economic benefits. For example, it can help reduce poverty and inequality, and promote sustainable economic growth. It can also help to build more inclusive and democratic societies, by giving people the knowledge and skills they need to participate fully in the political and economic life of their communities. So, in a very simple way, promoting general education and training can help to improve human development by providing individuals with the skills they need to succeed, and by promoting broader social and economic benefits.

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The supply of agricultural products is likely to be elastic in the long-run. This means that the quantity supplied of agricultural products can change significantly in response to changes in price over a longer period of time. In the long-run, farmers are able to make changes to their operations such as planting different crops, acquiring new technologies, or changing the size of their farms. These changes can result in a significant increase or decrease in the quantity of agricultural products supplied. On the other hand, the supply of agricultural products is likely to be inelastic in the short-run, as farmers may not be able to quickly adjust their operations to changes in price. This is because it takes time to make changes to agricultural operations, such as planting new crops or acquiring new technologies.

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The value of money is inversely related to the price level. This means that as the price level increases, the value of money decreases, and as the price level decreases, the value of money increases. For example, if the price of a gallon of milk is $3, and the value of money is such that one dollar can buy one gallon of milk, then the value of money is $1. However, if the price of a gallon of milk increases to $4, and the value of money remains the same, then the value of money has decreased, as it now takes $4 to purchase one gallon of milk instead of $3. This relationship between the value of money and the price level is known as the quantity theory of money, which states that the value of money is determined by the supply and demand for money in the economy. When the money supply increases, the value of money decreases, and when the money supply decreases, the value of money increases. This is because as the money supply increases, there is more money available to purchase goods and services, which increases demand and drives up prices. Therefore, the statement that the value of money is inversely related to the price level is true.

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The major achievement of the Economic Community of West African States (ECOWAS) is that it has widened the market for goods produced in West Africa. ECOWAS has established a free trade area among its member countries, which has removed barriers to trade such as tariffs and import/export restrictions. This has allowed for increased movement of goods and services across borders, which has facilitated economic growth and development in the region. Additionally, ECOWAS has implemented various policies and programs aimed at promoting intra-regional trade and investment, which has further expanded the market for goods produced in West Africa.

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A normal good is a type of good for which demand increases as a person's income increases. This means that as a person earns more money, they are more likely to buy more of this type of good. For example, as a person's income increases, they may purchase more expensive and higher-quality food, clothing, or housing. On the other hand, if demand for a good decreases as a person's income increases, the good is considered to be a luxury good. Luxury goods are items that are considered non-essential, but are still desired because they are associated with status, exclusivity, or high quality. Examples of luxury goods include expensive jewelry, high-end cars, and designer clothing. A necessity is a type of good that a person needs in order to survive, regardless of their income. Examples of necessities include food, water, shelter, and healthcare. Necessities are often considered to be inelastic goods, meaning that the demand for them does not change much as a person's income changes. An inferior good is a type of good for which demand decreases as a person's income increases. This means that as a person earns more money, they are less likely to buy this type of good. Examples of inferior goods include low-quality food and second-hand clothing.

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In most developing countries, a large percentage of the labor force is engaged in agriculture. Agriculture is a critical sector in many developing countries, as it provides food and livelihoods for a large portion of the population. This sector can include farming, livestock raising, and fishing, among other activities. While the other sectors such as trading, mining, and manufacturing are also important in many developing countries, agriculture remains one of the largest employers and a significant contributor to the economy. However, the exact distribution of the labor force across different sectors can vary depending on the specific country and its development status.

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When the price of a good is above the equilibrium, there will be a surplus. This is because at the higher price, suppliers are willing to supply more of the good than consumers are willing to buy. As a result, there will be excess supply, or a surplus, of the good. To get rid of this surplus, suppliers may have to lower their prices until they reach the equilibrium price where the quantity supplied equals the quantity demanded.

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Plough back profits is a very reliable and cheap means of funding a business. Plough back profits, also known as retained earnings, refers to the practice of reinvesting a portion of a company's profits back into the business instead of distributing them as dividends to shareholders. This approach allows a business to use its profits to finance its growth and expansion without incurring additional debt or giving up ownership. Ploughing back profits is reliable because it does not involve any external financing or borrowing, which means the business does not have to worry about meeting repayment obligations or defaulting on loans. Additionally, since the profits are already earned, there is no cost associated with obtaining them. Furthermore, it is a cheap means of funding because there are no interest payments or other fees associated with retaining earnings. Additionally, since the profits belong to the company, there are no equity dilution concerns or ceding control to external investors. Overall, ploughing back profits is a very reliable and cost-effective means of funding a business, allowing it to finance its growth and expansion without incurring additional debt or giving up ownership.

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Middlemen refer to the intermediaries or agents that facilitate the movement of goods and services from the producer to the end-user. Middlemen can be made up of various entities, including manufacturers, wholesalers, retailers, and consumers, depending on the specific context. In general, middlemen are involved in the distribution of goods and services from the point of production to the point of consumption. They help to bridge the gap between producers and consumers by performing functions such as transportation, storage, financing, and risk-taking. In the context of the given options, middlemen are typically composed of wholesalers, retailers, and consumers. Wholesalers buy goods in bulk from manufacturers and sell them in smaller quantities to retailers, who in turn sell them to consumers. Consumers, on the other hand, buy goods for their personal use. In summary, middlemen are intermediaries that facilitate the movement of goods and services from producers to end-users, and they can be made up of various entities depending on the specific context. In the given options, middlemen are typically composed of wholesalers, retailers, and consumers.

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The balance of trade involves the exchange of goods and services between countries. Goods are physical products that can be traded, such as cars, clothes, and food. Services, on the other hand, are intangible products that cannot be touched, such as transportation, banking, and tourism. When countries engage in trade, they can export goods and services they produce and import goods and services that they need. The balance of trade is the difference between the total value of a country's exports and the total value of its imports. If a country exports more than it imports, it has a trade surplus, which means it is earning more from trade than it is spending on imports. If a country imports more than it exports, it has a trade deficit, which means it is spending more on imports than it is earning from exports.

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Amount of borrowing decreases. When the central bank increases the bank rate, it becomes more expensive for commercial banks to borrow money from the central bank. As a result, commercial banks are likely to pass on this increase in cost to their customers by charging higher interest rates on loans. This makes borrowing more expensive for individuals and businesses, which can lead to a decrease in the amount of borrowing. The idea behind this is to control inflation and encourage saving.

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The desire for profits is a major feature of a market economy. In a market economy, individuals and businesses operate to make a profit by producing goods and services that people are willing to pay for. The pursuit of profit drives economic activity and helps to allocate resources efficiently.

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Perfectly inelastic. If the demand for a country's exports is perfectly inelastic, it means that the quantity demanded of those exports does not change, no matter what the price is. In other words, the price of the exports does not affect the amount that people are willing to buy. In this case, devaluing the currency (making exports cheaper for foreign buyers) will not lead to an increase in demand for exports and thus will not correct a balance of payments deficit. The demand for the country's exports would have to be fairly elastic or perfectly elastic for devaluation to have an impact on the balance of payments.

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In perfect competition, the average revenue curve of a firm is identical to the marginal revenue curve. This is because in a perfectly competitive market, a firm is a price taker, which means that it cannot influence the market price and must sell its output at the prevailing market price. Since the market price is constant, the average revenue curve is also constant at that price. Meanwhile, the marginal revenue curve represents the additional revenue earned by the firm for each additional unit of output sold. In perfect competition, this additional revenue is equal to the market price, which is constant. Therefore, the marginal revenue curve is also constant and identical to the average revenue curve. Hence, the correct answer is: the marginal revenue curve.

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The situation where an increase in inputs leads to a more than proportionate increase in output is called increasing returns to scale. In other words, if we increase the amount of inputs used in production by a certain percentage, then the output will increase by more than that percentage. For example, if a factory doubles its workforce and, as a result, its production output more than doubles, then this is an example of increasing returns to scale. The opposite of increasing returns to scale is decreasing returns to scale, which occurs when a proportional increase in inputs leads to a less than proportional increase in output. If the increase in inputs results in a proportional increase in output, then this is constant returns to scale.

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Doctor's salary is not considered as a transfer payment. Transfer payments refer to payments made by the government to individuals or organizations for which no goods or services are exchanged. Transfer payments are meant to redistribute income and promote social welfare. Pension pay, government subsidies, and students' grants are all examples of transfer payments because they are payments made by the government to individuals or organizations for which no goods or services are exchanged. Pension pay is a payment made to retired individuals, government subsidies are payments made to support certain industries or individuals, and students' grants are payments made to support education. However, a doctor's salary is not considered a transfer payment because it is a payment made in exchange for the services provided by the doctor. The doctor is providing a service, and in exchange, they are receiving a salary from their employer. Therefore, it is not a transfer payment.

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In many cases, the government can influence the location of firms. The government may do this for various reasons such as to promote economic development or to achieve social objectives. One reason why the government may influence the location of firms is to ensure an equitable distribution of economic opportunities across the country. This means that the government may encourage firms to locate in areas that are underdeveloped or have a high rate of unemployment, to create jobs and stimulate economic growth in those areas. Another reason why the government may influence the location of firms is to reduce the cost of production. For example, the government may offer tax incentives or subsidies to firms that locate in certain areas that have a lower cost of living or lower wage rates. This would make the production process cheaper and more efficient for the firms. Lastly, the government may influence the location of firms to help them enjoy economies of scale. This means that firms can benefit from lower production costs and higher profits by producing at a larger scale. By encouraging firms to locate in certain areas, the government can help create a concentration of similar businesses, which can lead to greater specialization and collaboration, and ultimately reduce the costs of production.

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In developing countries, the major employer of labor is the primary sector. This sector involves activities such as agriculture, fishing, mining, and forestry, which are mainly focused on producing raw materials. Many people in developing countries work in agriculture, either as small-scale farmers or as laborers on larger farms. This is because agriculture is often the most accessible and widespread economic activity in these countries. While the secondary sector (which involves manufacturing and construction) and tertiary sector (which involves services such as banking, education, and healthcare) also provide employment opportunities, they are not as prevalent as the primary sector. The industrial sector, which may refer to a subset of the secondary sector, involves activities related to heavy industry, manufacturing, and engineering, and is also not as widespread in developing countries.

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The price of the commodity is not a condition for a change in the supply of a commodity. The price of a commodity is a reflection of the supply and demand for that commodity, and a change in price will cause a shift in either the supply or the demand curve. However, a change in price is not a factor that directly causes a change in the supply of a commodity. Improved technology, cost of production, and government tax policies are all factors that can influence the supply of a commodity. Improved technology can make it easier and more efficient to produce a commodity, leading to an increase in supply. The cost of production includes the cost of labor, raw materials, and other inputs that are used to produce a commodity. If the cost of production increases, the supply of the commodity may decrease. Government tax policies can also impact the supply of a commodity by changing the incentives for producers to supply the commodity. For example, a tax on a commodity may increase the cost of production, leading to a decrease in supply.

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(a) Balance of trade: The balance of trade refers to the difference between a country's exports and imports of goods (visible trade). In this case, the total exports of goods are 200 + 300 = 500 million dollars, while the total imports of goods are 250 + 400 = 650 million dollars. Hence, the balance of trade is a deficit of 650 - 500 = -150 million dollars.

(b) Invisible trade balance: The invisible trade balance refers to the difference between a country's exports and imports of services (invisible trade). In this case, the total exports of services are 25 + 30 = 55 million dollars, while the total imports of services are 50 + 75 + 85 = 210 million dollars. Hence, the invisible trade balance is a deficit of 210 - 55 = -155 million dollars.

(c) Balance on current account: The balance on current account refers to the overall balance of a country's visible and invisible trade, as well as transfers. In this case, the total exports are 500 + 55 = 555 million dollars, while the total imports are 650 + 210 + 150 = 1010 million dollars. Hence, the balance on current account is a deficit of 1010 - 555 = -455 million dollars.

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a. The value of total cost at output level 0 is $10.00, at output level 1 is $18.00 ($10.00 + $8.00), at output level 2 is $20.00 ($10.00 + $10.00), at output level 3 is $25.00, and at output level 4 is $32.00.

b. By using the information given in the table, we can calculate the values of u, v, w, x, y, and z.

u = $17.00 ($25.00 - $8.00)

v = $24.00 ($32.00 - $8.00)

w = $18.00 ($20.00 - $2.00)

x = $20.00

y = $75.00 ($100.00 - $25.00)

z = $68.00 ($100.00 - $32.00)

c. The profit levels at output level 1 and 4 are $2.00 ($20.00 - $18.00) and $36.00 ($68.00 - $32.00) respectively.

d. The firm is operating in a perfectly competitive market structure. The reason for this is that the price of maize is fixed at $20.00, indicating that the firm has no control over the price and is a price taker, which is a characteristic of a perfectly competitive market. Additionally, the firm is producing a homogeneous product, maize, which is another characteristic of a perfectly competitive market.

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(a) (i) The distribution of goods refers to the process of getting finished products from manufacturers to consumers through intermediaries, such as wholesalers, retailers, and agents.

(ii) The normal chain of distribution of goods starts from manufacturers who produce goods, then sells them to wholesalers who purchase goods in bulk and sell them to retailers. Finally, retailers sell goods directly to consumers.

 Producer | ----> | Wholesaler| ----> | Retailer | ----> | Consumer | 

(b) A consumers' cooperative society is a type of cooperative organization formed by consumers to protect their common interests in purchasing goods and services. Members of a consumers' cooperative society pool their resources to buy products directly from manufacturers, wholesalers or importers at a lower price than retail outlets, and then distribute these products to members at a reasonable cost. The primary goal of a consumers' cooperative society is to provide quality products and services to members at an affordable price.

(c) Four roles performed by a consumers' cooperative society are:

1. Purchasing products and services: The consumers' cooperative society purchases products and services on behalf of its members, ensuring that they get quality products at a lower cost.
2. Selling products and services: The society sells products and services to its members at a reasonable price, ensuring that members get value for their money.
3. Education and training: The society provides education and training to its members on consumer protection, product quality, and safe use of products.
4. Advocacy and lobbying: The society advocates for the rights of consumers and lobbies government and other stakeholders to protect the interests of consumers.

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(a)

i. Equilibrium output is 50kg and equilibrium price is $20.00.

(ii)

Firm's profit = TR-TC
TR = 50kg x $20.00 = $1000.00
TC = 50kg x $12.00 = $600.00
      = $1000.00-$600.00
Profit = $400.00

OR

Profit = (AR- AC) x Q
= ($20.00-$12.00) x 50
= $8.00x 50
= $400.00

(iii)

Abnormal/economic/supernormal profit: This is because the profit is earned at a point where the price (AR) is greater than AC.

(b)

The average revenue function is horizontal because, in perfect competition, AR which is also the price is constant/fixed.

(c)

(i) When MC is less than ATC, ATC is falling

(ii) When MC is equal to ATC, ATC is at its minimum.

(iii) When MC is greater than ATC, ATC s rising

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(a) Unemployment of labour refers to a situation where a person who is willing and able to work is unable to find a job. In other words, it is a state of being unemployed.

(b)

1. (i) Frictional unemployment occurs when workers are between jobs and are searching for new employment opportunities. For example, a person who resigns from their job and is searching for a new job is experiencing frictional unemployment.
2. (ii) Structural unemployment occurs when there is a mismatch between the skills of workers and the requirements of available jobs. For example, if a worker is highly skilled in a particular industry that has declined, they may find it difficult to find a job in that industry, and may experience structural unemployment.
3. (iii) Seasonal unemployment occurs when workers are employed in jobs that are only available during certain seasons of the year. For example, agricultural workers may experience seasonal unemployment during the off-season when there is no work available.

(c)

There are several causes of unemployment in a country. These include:

• Economic recession or downturn: This can lead to a decrease in economic activity, causing businesses to reduce their workforce or shut down, resulting in unemployment.
• Technological advancements: Technological advancements can make certain jobs obsolete, resulting in workers losing their jobs.
• Lack of education and skills: Workers who lack education or skills may find it difficult to find a job in a competitive job market.
• Government policies: Government policies such as taxation, regulations, and trade policies can affect businesses and their ability to hire workers, resulting in unemployment.

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(a)

1. Elastic demand refers to a situation where a change in price leads to a significant change in the quantity demanded of a good or service. In other words, consumers are sensitive to price changes and are willing to buy more or less of the good or service depending on the price. On the other hand, inelastic demand occurs when a change in price does not significantly affect the quantity demanded. Consumers are less sensitive to price changes and will continue to buy the same amount of the good or service, regardless of the price.
2. Income elasticity of demand measures the responsiveness of demand for a good or service to a change in consumer income. It shows how changes in income affect the quantity demanded of a good or service. Cross elasticity of demand, on the other hand, measures the responsiveness of demand for one good or service to a change in the price of another good or service. It shows how changes in the price of one good affect the demand for another good.

(b)

1. If the demand for a product is price elastic, an increase in price will result in a decrease in the quantity demanded. As a result, the total revenue of the producer will decrease, as shown in the diagram below:



2. If the demand for a product is price inelastic, an increase in price will result in a smaller decrease in the quantity demanded. As a result, the total revenue of the producer will increase, as shown in the diagram below:

In both cases, the producer must weigh the potential impact on total revenue before deciding to increase the price of their product.

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(a)

i. Growing population refers to a situation where the number of people in a certain area or country is increasing over time. On the other hand, declining population refers to a situation where the number of people in a certain area or country is decreasing over time.

ii. Overpopulation refers to a situation where there are too many people and not enough resources to support them. This can lead to issues such as food and housing shortages and can put a strain on the environment. Underpopulation, on the other hand, refers to a situation where there are too few people and not enough workforce to support the economy. This can lead to issues such as a declining workforce, which can result in reduced economic activity and growth.

(b) Some of the disadvantages of a rapidly growing population in an economy include:

1. Strained resources: When there are too many people, it can be difficult to provide enough resources such as food, water, and housing, which can lead to shortages and higher prices.
2. Increased competition for jobs: With a growing population, there will be more people competing for the same jobs, which can lead to unemployment and lower wages.
3. Overburdened infrastructure: A rapidly growing population can put a strain on infrastructure such as roads, schools, and hospitals, which can result in traffic congestion, overcrowded schools, and long wait times at hospitals.
4. Environmental degradation: When there are too many people, it can be difficult to maintain a healthy environment, which can result in pollution, deforestation, and other environmental problems.

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a.

i. Elastic demand refers to a situation where a small change in price results in a large change in the quantity demanded. This means that consumers are highly sensitive to price changes, and a small increase in price can cause a significant decrease in the quantity demanded. In contrast, inelastic demand refers to a situation where a change in price does not significantly affect the quantity demanded. This means that consumers are not very sensitive to price changes, and a small increase in price may only cause a small decrease in the quantity demanded.

ii. Income elasticity of demand measures the responsiveness of the quantity demanded of a product to a change in consumer income. If the income elasticity of demand is positive, it means that the product is a normal good, and as consumer income increases, the quantity demanded also increases. If the income elasticity of demand is negative, it means that the product is an inferior good, and as consumer income increases, the quantity demanded decreases. Cross elasticity of demand measures the responsiveness of the quantity demanded of one product to a change in the price of another product. If the cross elasticity of demand is positive, it means that the two products are substitutes, and an increase in the price of one product will lead to an increase in the quantity demanded of the other product. If the cross elasticity of demand is negative, it means that the two products are complements, and an increase in the price of one product will lead to a decrease in the quantity demanded of the other product.

b.

i. If the demand for a product is price elastic, an increase in price will result in a decrease in the quantity demanded by a greater proportion. This means that the total revenue of the producer will decrease, as the increase in price will not be enough to offset the decrease in the quantity demanded. This can be illustrated using a downward-sloping demand curve, where the increase in price causes the quantity demanded to move along the demand curve to a lower quantity.

ii. If the demand for a product is price inelastic, an increase in price will result in a decrease in the quantity demanded by a smaller proportion. This means that the total revenue of the producer will increase, as the increase in price will be enough to offset the decrease in the quantity demanded. This can be illustrated using a steeply sloping demand curve, where the increase in price causes the quantity demanded to move along the demand curve to a slightly lower quantity, resulting in a net increase in total revenue.

Akọwa Nkọwa

(a) Public debt refers to the amount of money that a government owes to its creditors, which may include individuals, organizations, or other governments. It is the cumulative amount of government borrowing that has not yet been paid back.

(b) Countries may borrow for various reasons, including:

1. Financing infrastructure projects: Governments may borrow money to finance large-scale infrastructure projects such as highways, bridges, and airports. These projects require significant upfront costs that cannot be covered by tax revenues or other sources of government income.
2. Funding government operations: Governments may also borrow money to fund their day-to-day operations, including salaries for government employees and the provision of public services such as healthcare and education. This is often necessary when government revenues are not sufficient to cover these expenses.
3. Responding to economic crises: In times of economic crisis, such as a recession or a natural disaster, governments may borrow money to provide economic stimulus or relief. This can include measures such as increased government spending, tax breaks, or loans to struggling businesses.

(c) A huge national debt can have several effects on the economy of a country, including:

1. Increased interest payments: As the national debt grows, the government will need to pay more in interest payments to its creditors. This can divert resources away from other government programs and services, and may lead to higher taxes or reduced spending in other areas.
2. Decreased investment: When a country's debt is high, investors may become less willing to lend money to the government or invest in the country's economy. This can lead to lower levels of investment and slower economic growth.
3. Reduced international competitiveness: If a country's debt is perceived as being too high, it may lead to a decline in its international competitiveness. This can make it more difficult for the country to attract foreign investment or to compete with other countries in the global marketplace.

Akọwa Nkọwa

(a) Economic integration refers to the process of bringing together different economies into a single market, where goods, services, capital, and labor can flow freely between countries. This integration is meant to increase efficiency and promote economic growth, as well as to reduce barriers to trade and investment.

(b) A free trade area refers to a group of countries that have agreed to remove trade barriers between themselves, allowing for the free flow of goods and services between their borders. In contrast, a customs union refers to a group of countries that have not only eliminated trade barriers between themselves but have also agreed to have a common trade policy towards non-member countries. In other words, in a customs union, member countries have a unified approach towards trade with countries outside the union.

(c) Advantages of a free trade area:

1. Increased trade: By removing trade barriers, countries within a free trade area can trade more freely, leading to increased trade and greater economic activity.
2. Improved competitiveness: Companies within a free trade area have access to a larger market, which can increase their competitiveness and help them to grow.

Disadvantages of a free trade area:

1. Competition: Companies may face increased competition from other countries within the free trade area, which could hurt their ability to compete.
2. Loss of control: By removing trade barriers, countries within a free trade area are giving up some control over their economies, as they may no longer be able to protect certain industries or regulate trade in certain ways.

Akọwa Nkọwa

(a)

i. The size of the working population (19 - 60 years) is 35% + 25% = 60% of the total population. Therefore, the size of the working population is 200,000 * 60% = 120,000.

ii. The size of the dependent population (0 - 18 years and 60 years and above) is 30% + 10% = 40% of the total population. Therefore, the size of the dependent population is 200,000 * 40% = 80,000.

(b)

If the population (0 - 18 years) is increased by 2%, the new size of the population will be 30% + 2% = 32% of the total population. The number of people in this age group will be 200,000 * 32% = 64,000. If 0.5% of the people aged 61 years and above died, the new percentage of the population in this age group will be 10% - 0.5% = 9.5%. The number of people in this age group will be 200,000 * 9.5% = 19,000. The natural increase in the population is 64,000 + 19,000 - 200,000 = -117,000.

(c)

The age distribution of the population can be described as a young population with a large proportion of the population below the age of 18 years and a smaller proportion of the population aged 60 years and above. This is because 30% of the population is aged 0 - 18 years and only 10% of the population is aged 60 years and above.

Akọwa Nkọwa

(a) An industry is a group of companies that produce similar goods or services. Industries can be categorized based on the raw materials used, the production process, or the type of goods or services produced.

(b)

1. i. Division of labor refers to the specialization of tasks within a production process. In division of labor, different workers are assigned specific tasks to perform, which leads to increased efficiency and productivity.
2. ii. Economies of scale refer to the cost advantage that a company gains as it increases its production. As a company produces more, the cost of each unit decreases because fixed costs are spread over a larger number of units.

(c) Four internal economies of scale are:

1. 1. Technical economies of scale - These are achieved through the use of specialized machinery, improved production processes, and the optimization of resources.
2. 2. Managerial economies of scale - This refers to the benefits that come from having a larger, more centralized management team that can coordinate operations and make decisions more effectively.
3. 3. Financial economies of scale - Larger companies typically have access to more financing options, including lower-cost loans and the ability to issue bonds, which can lower their cost of capital.
4. 4. Marketing economies of scale - This refers to the benefits that come from having a larger marketing budget, which allows a company to reach more customers and increase its brand recognition.

Akọwa Nkọwa

(a)

1. The distribution of goods refers to the process of making products available to customers. It involves the movement of goods from the manufacturer to the final consumer, through various intermediaries such as wholesalers, distributors, and retailers.
2. The normal chain of distribution of goods usually involves the following steps:
1. Manufacturing: The manufacturer produces the goods.
2. Wholesaling: The manufacturer sells the goods to wholesalers who then store and sell the goods in bulk to retailers.
3. Retail: The retailer sells the goods to the end consumer.

(b) A consumers' cooperative society is a type of cooperative that is owned and controlled by its members, who are also its customers. The main aim of a consumers' cooperative society is to provide its members with goods and services at a reasonable price, by eliminating the profit-making middlemen.

(c) The four roles performed by a consumers' cooperative society are:

1. Procurement: The cooperative procures goods and services on behalf of its members to take advantage of bulk purchasing power.
2. Marketing: The cooperative markets the goods and services to its members, eliminating the need for intermediaries and reducing the cost to the consumer.
3. Distribution: The cooperative operates its own stores or distribution centers to make the goods and services available to its members.
4. Service: The cooperative provides various services to its members, such as financial services, insurance, and education.

Akọwa Nkọwa

(a)

i. Equilibrium output is 50kg and equilibrium price is $20.00.

(ii)

Firm's profit = TR-TC
TR = 50kg x $20.00 = $1000.00
TC = 50kg x $12.00 = $600.00
      = $1000.00-$600.00
Profit = $400.00

OR

Profit = (AR- AC) x Q
= ($20.00-$12.00) x 50
= $8.00x 50
= $400.00

(iii)

Abnormal/economic/supernormal profit: This is because the profit is earned at a point where the price (AR) is greater than AC.

(b)

The average revenue function is horizontal because, in perfect competition, AR which is also the price is constant/fixed.

(c)

(i) When MC is less than ATC, ATC is falling

(ii) When MC is equal to ATC, ATC is at its minimum.

(iii) When MC is greater than ATC, ATC s rising

Akọwa Nkọwa

(a) Money is a medium of exchange that is widely accepted in transactions for goods and services. It serves as a unit of account, a store of value, and a standard of deferred payment.

(b) Three characteristics of money are:

1. 1. Durability: Money should be able to withstand repeated use and last for a long period of time.
2. 2. Divisibility: Money should be able to be divided into smaller units to allow for transactions of various sizes.
3. 3. Acceptability: Money should be widely accepted as a means of payment in transactions for goods and services.

(c) Inflation is an increase in the general price level of goods and services in an economy over a period of time. Inflation affects the functions of money in the following ways:

1. 1. Unit of Account: Inflation makes it difficult to compare prices and the value of money over time, as the purchasing power of money changes.
2. 2. Store of Value: Inflation erodes the value of money over time, so if an individual saves money, the purchasing power of that money will decrease.
3. 3. Medium of Exchange: Inflation can lead to a decrease in the acceptability of money as a medium of exchange, as people may prefer to hold onto other assets that are less affected by inflation.

Akọwa Nkọwa

a) The labour force refers to the total number of individuals in a given population who are of working age and either employed or actively seeking employment.

b)

1. (i) Occupational mobility of labour refers to the ability of workers to move from one job or occupation to another. For example, a factory worker who retrains and becomes a nurse would be an example of occupational mobility.
2. (ii) Geographical mobility of labour refers to the ability of workers to move from one geographic location to another in search of employment. For example, a person who moves from a rural area to a city to take a job would be an example of geographical mobility.

c) Four factors that can influence the size of the labour force in a country are:

1. Demographic factors, such as changes in population growth, age structure, and migration patterns, can affect the size of the labour force.
2. Economic factors, such as changes in the overall level of economic activity, unemployment rates, and labour market conditions, can influence the size of the labour force.
3. Education and training levels, which can affect the skills and qualifications of the labour force, and therefore, its size.
4. Government policies, such as tax policies, labour laws, and social welfare programs, can also impact the size of the labour force by affecting incentives to work, job opportunities, and the availability of benefits for workers.

Akọwa Nkọwa

(a) The balance of trade is the difference between a country's exports and imports of goods. In this case, the exports of goods are $525 million ($200 million from agricultural products and $325 million from mineral products) and the imports of goods are $335 million ($250 million from consumer goods and $85 million from transportation). Thus, the balance of trade is:

$525 million (exports of goods) - $335 million (imports of goods) = $190 million

Therefore, the balance of trade is $190 million.

(b) The invisible trade balance is the difference between a country's earnings and expenditures from services, such as banking and insurance. In this case, the earnings from insurance are $25 million and the expenditures are $50 million, resulting in a deficit of $25 million. The earnings from banking are $30 million and the expenditures are $75 million, resulting in a deficit of $45 million. Thus, the invisible trade balance is:

$25 million (earnings from insurance) - $50 million (expenditures on insurance) + $30 million (earnings from banking) - $75 million (expenditures on banking) = -$70 million

Therefore, the invisible trade balance is a deficit of $70 million.

(c) The balance on current account is the sum of the balance of trade and the invisible trade balance. In this case, the balance of trade is $190 million and the invisible trade balance is a deficit of $70 million. Thus, the balance on current account is:

$190 million (balance of trade) - $70 million (invisible trade balance) = $120 million

Therefore, the balance on current account is a surplus of $120 million.

Akọwa Nkọwa

(a) The four causes of demand-pull inflation are:

1. Increased consumer spending: When consumers have more money to spend, they purchase more goods and services, which increases demand and drives up prices.
2. Increased government spending: When the government increases its spending, it injects more money into the economy, which increases demand and drives up prices.
3. Increased investment: When businesses invest in new projects and expand their operations, they increase demand for goods and services, which drives up prices.
4. Increased exports: When a country experiences an increase in exports, its demand for goods and services increases, which drives up prices.

(b) The four undesirable effects of inflation are:

1. Decreased purchasing power: When prices rise, people's money buys less, which decreases their standard of living.
2. Increased uncertainty: Inflation creates uncertainty, as people don't know what prices will be in the future, making it difficult for them to plan for the future.
3. Increased cost of borrowing: When inflation is high, interest rates are often increased to combat it, making it more expensive for people and businesses to borrow money.
4. Reduced savings: When the value of money decreases due to inflation, people's savings also decrease in value, reducing their ability to save for the future.

Akọwa Nkọwa

a) Joint venture: A joint venture is a business arrangement where two or more companies come together to undertake a specific business project or task, sharing resources, risks, and profits.

b) Merits of a private company over a partnership:

1. Limited liability: In a private company, the liability of the shareholders is limited to the amount of capital they have invested. This means that if the company incurs losses, the shareholders are not personally responsible for paying the debts of the company. In contrast, in a partnership, the partners have unlimited liability, meaning that they are personally responsible for paying the debts of the partnership.
2. Perpetual succession: A private company has perpetual succession, meaning that it continues to exist even if one or more of its shareholders die or leave the company. This provides stability and continuity to the company's operations, which can be important for long-term planning and growth. In contrast, in a partnership, the partnership dissolves if one or more partners leave or die.
3. Ease of transfer of ownership: The shares of a private company can be easily bought and sold, providing liquidity to the shareholders. This means that it is easier to bring in new investors or sell shares to existing shareholders. In a partnership, the transfer of ownership is more complicated, as it requires the agreement of all partners.

c) Sources of finance for a public enterprise:

1. Equity financing: Public enterprises can raise capital by issuing shares to the public, which gives investors a stake in the ownership of the company. This is a common way for public enterprises to raise large amounts of capital for expansion or new projects.
2. Debt financing: Public enterprises can also raise capital by borrowing money from banks or issuing bonds to investors. This is a common way to finance large projects or to manage short-term cash flow needs.
3. Government funding: Public enterprises may receive funding from the government, either in the form of grants or subsidies. This is common in industries that are considered strategic or in the public interest, such as healthcare, education, or infrastructure.

Akọwa Nkọwa

a. Public debt refers to the amount of money owed by a government to its creditors. It includes bonds, bills, and other securities that a government has issued in order to raise money to fund its operations and pay for public goods and services.

b. Three reasons why countries borrow are:

• To finance government spending, such as investments in infrastructure, education, and healthcare.
• To respond to economic downturns or emergencies, such as natural disasters or financial crises.
• To fund ongoing government operations, such as paying for salaries and benefits for government employees.

c. Three effects of a huge national debt on a country's economy are:

• Increased borrowing costs: The more a country borrows, the more it has to pay in interest on its debt, which can lead to increased borrowing costs and a larger share of government spending going towards debt repayment.
• Reduced spending on public goods and services: A large debt burden can limit a government's ability to invest in public goods and services, such as infrastructure, education, and healthcare.
• Weakened currency: A high level of debt can lead to a decrease in confidence in a country's ability to repay its debt, which can cause its currency to weaken and make imports more expensive.

Akọwa Nkọwa

(a) Professor Robbins defined Economics as "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."

(b)

1. (i) Opportunity cost: Opportunity cost refers to the cost of the next best alternative forgone when making a choice. It is the value of the next best option that is given up in order to pursue a particular choice.
2. (ii) Scale of preference: Scale of preference refers to the ranking of wants or desires of an individual or society based on their relative importance. This ranking determines how limited resources are allocated among different wants.
3. (iii) Production possibility curve (PPC): Production possibility curve is a graphical representation of the possible combinations of two goods that a society can produce given its available resources and technology. It shows the trade-offs that must be made when choosing between the production of two goods.

(c) There are three main reasons for studying economics:

1. 1. Understanding how the economy works: Economics helps us understand how the economy functions, how resources are allocated, how businesses operate, and how consumers make decisions.
2. 2. Making informed decisions: Economics provides the tools to make informed decisions about how to allocate scarce resources, how to invest money, and how to make optimal choices.
3. 3. Improving well-being: Economics helps us to understand how to improve the well-being of individuals and society by examining issues such as income inequality, poverty, and unemployment. It also helps us to understand the impact of policies and regulations on the economy and on society as a whole.

Akọwa Nkọwa

a) A joint venture is a business arrangement where two or more parties come together to undertake a specific business project or venture. The parties involved in the joint venture share the costs, profits, and losses of the project.

b) Some merits of a private company over a partnership include:

1. 1. Limited liability: A private company is a separate legal entity from its owners, meaning that the owners have limited liability for the company's debts and obligations. In a partnership, the partners have unlimited liability, which means that they are personally responsible for the partnership's debts and obligations.
2. 2. Perpetual existence: A private company has perpetual existence, which means that it can continue to exist even if the original owners die or sell their shares. In contrast, a partnership dissolves when one of the partners dies, retires, or withdraws from the partnership.
3. 3. Ease of raising capital: A private company can raise capital by issuing shares to investors, which is a more straightforward process than raising capital in a partnership. In a partnership, the partners must contribute their own capital or borrow from banks or other lenders.

c) Three sources of finance for a public enterprise include:

1. 1. Equity financing: This involves selling shares of the company to investors in exchange for capital. Equity financing allows the public enterprise to raise large amounts of capital without incurring debt. Investors who buy shares in the company become part owners and can earn returns on their investment through dividends or by selling their shares at a profit.
2. 2. Debt financing: This involves borrowing money from banks or other lenders and paying back the loan with interest over time. Debt financing is a common source of finance for public enterprises, especially for capital-intensive projects such as infrastructure development.
3. 3. Grants and subsidies: Public enterprises may also receive grants and subsidies from government agencies or other organizations. Grants and subsidies are usually provided for specific purposes, such as research and development, environmental protection, or social welfare programs. Unlike loans, grants and subsidies do not need to be repaid, which makes them an attractive source of finance for public enterprises.

Akọwa Nkọwa

(a) An industry refers to a group of companies or organizations that are involved in the production of similar goods or services. An industry can be further divided into sub-industries based on the specific products or services they offer.

(b)(i) Division of labour refers to the process of breaking down a complex task into smaller, more manageable parts, and assigning each part to a different worker. This allows for greater specialization and efficiency, as each worker becomes skilled in a specific aspect of the task.

(ii) Economies of scale refer to the cost advantages that a company or industry realizes as it increases production. The larger the scale of production, the lower the cost per unit, as fixed costs are spread over a larger number of units.

(c) Four internal economies of scale are:

1. Technical Economies of Scale: This refers to the efficiency gains that result from the use of better technology and equipment.
2. Managerial Economies of Scale: This refers to the efficiency gains that result from improved management practices, such as better planning and coordination.
3. Financial Economies of Scale: This refers to the cost savings that result from having access to more funds, either through increased profits or through borrowing at lower interest rates.
4. Marketing Economies of Scale: This refers to the cost savings that result from the ability to spread marketing and advertising costs over a larger number of units. By reaching a larger audience, a company can achieve greater economies of scale in marketing its products.