Practice waec model questions vol1 economics 2019 Past Questions

Question 1 View Details

In 2020 the Consumer Price Index (CPI) was 112 and in 2021 it rose to 118. A worker earned a nominal wage of ₦48,000 in 2020. What percentage increase in the nominal wage is required in 2021 so that the worker's real wage remains the same as in 2020?

A. 5.00%

B. 4.85%

Correct C. 5.36%

D. 6.14%

Correct Answer: C

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Question 2 View Details

A farmer cultivates maize on 5 hectares. Expected yield is 2.8 tonnes per hectare and the market price is ₦120 per kg. Variable cost per hectare is ₦150,000 and fixed cost is ₦200,000. The government offers a subsidy that pays 20% of the variable cost per hectare if the farmer adopts an improved seed. The improved seed raises yield by 15% but also raises variable cost by 10% (before the subsidy). What is the minimum market price per kg at which the farmer will earn at least the same profit as before adopting the seed?

A. ₦90.00 per kg

Correct B. ₦98.76 per kg

C. ₦102.50 per kg

D. ₦95.20 per kg

Correct Answer: B

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Question 3 View Details

The following data (in billions of Naira) are recorded for a year: Consumption = 2,500, Investment = 800, Government spending = 1,200, Exports = 600, Imports = 900, Indirect taxes net of subsidies = 300, Depreciation = 250, Net factor income from abroad = -50. Using the income approach, where GDP = Compensation of employees + Gross operating surplus + Gross mixed income + Indirect taxes - subsidies, and given Compensation of employees = 1,800, Gross operating surplus = 500, Gross mixed income = 400, compute the Gross Domestic Product (GDP) and then the Gross National Income (GNI). Express GNI in billions of Naira.

A. 2,850

Correct B. 2,950

C. 3,050

D. 2,900

Correct Answer: B

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Question 4 View Details

The central bank sets the required reserve ratio at 10 % and the public holds currency equal to 30 % of their deposits (currency‑deposit ratio = 0.30). The banking system currently has excess reserves of ₦200 million. The central bank conducts an open‑market purchase of government securities worth ₦500 million. Assuming banks lend out all excess reserves and the public does not change its currency‑deposit ratio, calculate the total increase in the money supply (M2) after the purchase.

A. ₦2,150 million

B. ₦2,025 million

Correct C. ₦2,275 million

D. ₦2,500 million

Correct Answer: C

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Question 5 View Details

The demand for a product is given by the linear equation Q = 120 - 0.5P, where Q is quantity demanded (in thousands of units) and P is price (in Naira per unit). Currently the price is ₦80. The government imposes a specific tax of ₦20 per unit, raising the price to ₦100. Compute the price elasticity of demand at the original price and state whether total revenue will increase or decrease after the tax.

A. -0.2; total revenue will increase

B. -0.5; total revenue will decrease

C. -1.0; total revenue will increase

Correct D. -0.5; total revenue will increase

Correct Answer: D

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Question 6 View Details

Country X imports wheat at a world price of $200 per ton. The government imposes a specific tariff of $30 per ton on the first 500 tons (quota) and a 10% ad valorem tariff on any imports above the quota. Domestic demand for wheat is 800 tons and domestic supply is 200 tons. The export price of wheat (for the country's own export sector) remains $250 per ton. Calculate (a) the equilibrium import price after the tariff policy, (b) the total quantity imported, and (c) the percentage change in the terms of trade (export price ÷ import price) compared with the situation before the tariff. State whether the terms of trade improve or deteriorate.

A. 9.5% improvement

B. 10.3% deterioration

C. 8.7% deterioration

Correct D. 9.1% deterioration

Correct Answer: D

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Question 7 View Details

A firm in a monopolistically competitive market faces the demand curve P = 120 - 2Q and has a marginal cost curve MC = 20 + Q. Fixed costs are ₦200. Determine the profit‑maximising output, the corresponding price, and the economic profit (or loss).

A. Output 22 units, price ₦75, profit ₦880

Correct B. Output 20 units, price ₦80, profit ₦800

C. Output 20 units, price ₦90, profit ₦600

D. Output 18 units, price ₦85, profit ₦720

Correct Answer: B

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Question 8 View Details

The market for a certain good is described by the equations Qd = 500 - 5P and Qs = 3P - 30, where Q is quantity and P is price (₦). Find the equilibrium price and quantity.

A. Price ₦60.00, Quantity 150.00 units

Correct B. Price ₦66.25, Quantity 168.75 units

C. Price ₦70.00, Quantity 180.00 units

D. Price ₦65.00, Quantity 165.00 units

Correct Answer: B

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Question 9 View Details

A firm must transport 1,000 tons of product from point A to point B, a distance of 500 km. Two transport modes are available:\n- Rail: cost per ton = 40 + 0.02 × distance (km). Capacity = 600 tons. If the rail shipment exceeds 400 tons, a 5% discount is applied to the variable part of the rail cost.\n- Road: cost per ton = 30 + 0.05 × distance (km). Capacity = 800 tons.\nDetermine the cost‑minimising allocation of the 1,000 tons between rail and road and compute the total transport cost.

A. 500 tons by rail, 500 tons by road; total cost ₦48,500

B. 550 tons by rail, 450 tons by road; total cost ₦48,800

Correct C. 600 tons by rail, 400 tons by road; total cost ₦50,500

D. 600 tons by rail, 400 tons by road; total cost ₦51,000

Correct Answer: C

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Question 10 View Details

In a country the labour force is 2,000,000. Currently 1,800,000 people are employed. The government launches a training programme that reduces cyclical unemployment by 25 % while structural unemployment remains unchanged. If structural unemployment accounts for 40 % of total unemployment, what is the new unemployment rate after the programme?

A. 9.0%

B. 7.5%

Correct C. 8.5%

D. 10.0%

Correct Answer: C

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Question 11 View Details

A consumer's income rises from ₦200,000 to ₦260,000 and the quantity demanded of a good increases from 40 units to 55 units. Calculate the income elasticity of demand and state whether the good is a necessity, normal, or luxury good.

Correct A. 1.25 (luxury good)

B. 1.60 (luxury good)

C. 1.00 (necessity)

D. 0.85 (normal good)

Correct Answer: A

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Question 12 View Details

In an economy, banks are required to hold 10% of deposits as reserves. The public keeps 20% of total money as cash (currency‑deposit ratio = 0.20).\n(a) Determine the money multiplier.\n(b) If the central bank purchases ₦500 million of government securities in the open market, what is the maximum possible increase in the money supply?

A. ₦3,000 million

B. ₦2,500 million

C. ₦1,500 million

Correct D. ₦2,000 million

Correct Answer: D

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Question 13 View Details

Using the income approach, compute the Gross Domestic Product (GDP) and Gross National Product (GNP) for a country with the following annual data (in billions of naira):\n- Wages: 150\n- Rent: 30\n- Interest: 20\n- Profits: 50\n- Indirect taxes net of subsidies: 40\n- Depreciation (consumption of fixed capital): 25\n- Net factor income from abroad: -5 (net outflow)\nProvide both GDP and GNP values.

A. GDP = ₦340 billion; GNP = ₦335 billion

B. GDP = ₦300 billion; GNP = ₦295 billion

Correct C. GDP = ₦315 billion; GNP = ₦310 billion

D. GDP = ₦315 billion; GNP = ₦315 billion

Correct Answer: C

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Question 14 View Details

A farmer has 10 hectares of land. If wheat yields 3 tonnes per hectare and sells for ₦200 per tonne, while maize yields 2.5 tonnes per hectare and sells for ₦240 per tonne, which crop will generate a higher total revenue?

A. Wheat generates higher total revenue (₦6,000)

B. Maize generates higher total revenue (₦6,000)

Correct C. Both crops give equal total revenue (₦6,000)

D. Total revenue is ₦5,800 for wheat and ₦6,200 for maize

Correct Answer: C

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Question 15 View Details

A firm's production function for a single variable input (labour L) is $Q = 10L - 0.5L^{2}$. The product sells for ₦50 per unit and the wage rate is ₦200 per labour unit. Determine the number of labour units that maximizes profit and compute the maximum profit.

Correct A. ₦900

B. ₦875

C. ₦800

D. ₦500

Correct Answer: A

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Question 16 View Details

The Consumer Price Index (CPI) was 120 in 2017, 126 in 2018 and 133 in 2019. A government bond offered a nominal interest rate of 12 % per annum each year. Using the exact Fisher relation, calculate the average real interest rate over the two-year period 2017‑2019 (i.e., the average of the real rates for 2017‑2018 and 2018‑2019). Give your answer to two decimal places as a percentage.

Correct A. 6.38%

B. 4.89%

C. 5.12%

D. 7.45%

Correct Answer: A

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Question 17 View Details

In 2020 the total labour force of a country was 20 million and the number of employed persons was 16.5 million. Structural unemployment accounts for 4 % of the labour force and frictional unemployment for 2 % of the labour force. What was the cyclical unemployment rate (as a percentage of the labour force) in 2020?

A. 8.0%

B. 9.5%

Correct C. 11.5%

D. 13.0%

Correct Answer: C

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Question 18 View Details

A country's export price index was 110 and its import price index was 95 in 2018 (base year 2000 = 100). In 2019 the export price index rose to 121 and the import price index rose to 100. Compute the percentage change in the terms of trade from 2018 to 2019 and state whether the terms of trade improved or deteriorated. Give the percentage change to one decimal place.

A. 3.8% improvement

B. 4.5% deterioration

Correct C. 4.5% improvement

D. 5.5% improvement

Correct Answer: C

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Question 19 View Details

A manufacturing firm has total cost (in million Naira) given by TC = 0.5Q² + 20Q + 500, where Q is output in thousand units. The market price per thousand units is 80 million Naira. The government imposes a specific tax of 10 million Naira per thousand units. (a) What is the minimum output (in thousand units, rounded to the nearest whole thousand) the firm must produce to break even after the tax? (b) At that output, does the firm experience economies of scale (i.e., is average cost decreasing)? Answer with the output and either "Yes" or "No".

A. 89, Yes

B. 85, No

C. 92, No

Correct D. 89, No

Correct Answer: D

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Question 20 View Details

The demand for a good is given by P = 200 - 2Q and the supply by P = 20 + Q, where P is price in Naira and Q is quantity. Find the equilibrium price and quantity.

A. Price = 200 Naira, Quantity = 180 units

B. Price = 53 Naira, Quantity = 73 units

C. Price = 50 Naira, Quantity = 30 units

Correct D. Price = 80 Naira, Quantity = 60 units

Correct Answer: D

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Question 21 View Details

The Central Bank wants to increase the money supply by ₦500 million. The required reserve ratio is 10% and the public holds 25% of deposits as cash (currency‑deposit ratio = 0.25). How much must the Central Bank inject through open‑market purchases to achieve the target increase?

A. ₦100 million

B. ₦160 million

C. ₦120 million

Correct D. ₦140 million

Correct Answer: D

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Question 22 View Details

A farmer has 10 hectares of land and 24 labour‑days available. He can grow maize or soybeans.\n- Maize yields 3 tonnes/ha, market price ₦120 per kg, variable cost ₦200,000 per ha.\n- Soybeans yield 2.5 tonnes/ha, market price ₦150 per kg, variable cost ₦250,000 per ha.\nLabour required: maize 2 days/ha, soybeans 3 days/ha. Fixed costs total ₦300,000. Determine the allocation of hectares to each crop that maximises profit and state the maximum profit.

A. Plant 0 ha of maize and 8 ha of soybeans; maximum profit = ₦900,000

B. Plant 8 ha of maize and 2 ha of soybeans; maximum profit = ₦1,150,000

C. Plant 6 ha of maize and 4 ha of soybeans; maximum profit = ₦1,050,000

Correct D. Plant 10 ha of maize and 0 ha of soybeans; maximum profit = ₦1,300,000

Correct Answer: D

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Question 23 View Details

A firm's total cost (in million naira) for producing $Q$ thousand units is given by $TC = 0.02Q^{3} - 0.3Q^{2} + 15Q + 200$. Find the output level (in thousand units) at which average total cost is minimised and state that minimum average total cost.

A. Output = 25 thousand units; minimum ATC = 24 million naira per thousand units

B. Output = 15 thousand units; minimum ATC = 30 million naira per thousand units

Correct C. Output = 20 thousand units; minimum ATC = 27 million naira per thousand units

D. Output = 20 thousand units; minimum ATC = 30 million naira per thousand units

Correct Answer: C

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Question 24 View Details

Country X exported 500,000 tonnes of cocoa at $2.00 per tonne and imported 300,000 tonnes of wheat at $1.50 per tonne. After a year, the world price of cocoa rises by 20% while the wheat price falls by 10%, with quantities unchanged. (a) Compute the original trade balance, (b) the new trade balance, and (c) the percentage change in the terms of trade.

A. (a) $500,000 surplus; (b) $750,000 surplus; (c) 30% improvement in terms of trade

Correct B. (a) $550,000 surplus; (b) $795,000 surplus; (c) 33.33% improvement in terms of trade

C. (a) $550,000 surplus; (b) $800,000 surplus; (c) 35% improvement in terms of trade

D. (a) $600,000 surplus; (b) $795,000 surplus; (c) 33.33% improvement in terms of trade

Correct Answer: B

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Question 25 View Details

A workshop uses a fixed amount of capital $K = 4$ units and variable labour $L$. Its production function (output in units) is $Q = 5L - 0.5L^{2} + 2K$. Determine the labour input that maximises output, the maximum output level, and the marginal product of labour at that point.

A. Labour = 4 units; maximum output = 20 units; marginal product at that point = 1

B. Labour = 6 units; maximum output = 20 units; marginal product at that point = -1

Correct C. Labour = 5 units; maximum output = 20.5 units; marginal product at that point = 0

D. Labour = 3 units; maximum output = 18.5 units; marginal product at that point = 2

Correct Answer: C

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