Practice waec model questions vol1 economics 2021 Past Questions

Question 1 View Details

The government launches a development programme that raises total real GDP by 10 % at the end of year 3. The economy initially has a real per‑capita GDP of ₦500,000. Real GDP grows at 4 % per annum and the population grows at 2 % per annum. Assuming the programme's boost is a one‑time increase to total GDP (population unchanged at that moment) and that the growth rates continue unchanged thereafter, what is the real per‑capita GDP at the end of year 5? Express your answer in Naira, rounded to the nearest hundred.

Correct A. ₦606,100

B. ₦603,900

C. ₦605,800

D. ₦607,200

Correct Answer: A

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Question 2 View Details

A corporate tax system charges 20 % on firms whose annual profit does not exceed ₦5 million and 30 % on firms with profit above that threshold. In a given year the aggregate profit of all firms is ₦10 billion, of which ₦2.5 billion comes from the lower‑rate firms. Before tax is levied, a tax holiday reduces the profit of the higher‑rate firms by 12 %. What is the total tax revenue collected after the holiday? Give your answer in Naira, to the nearest million.

A. ₦2,420,000,000

Correct B. ₦2,480,000,000

C. ₦2,560,000,000

D. ₦2,300,000,000

Correct Answer: B

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Question 3 View Details

The market for a good is described by the demand function $Q_d = 500 - 5P$ and the supply function $Q_s = 3P - 20$, where $Q$ is quantity (in units) and $P$ is price (in Naira). The government imposes a specific tax of ₦10 per unit on sellers.\n\n(a) Determine the original equilibrium price and quantity.\n(b) Compute the price elasticity of demand at the original equilibrium.\n(c) After the tax, what price do consumers pay, what price do producers receive, and what percentage of the tax burden falls on consumers? Express the burden percentage to one decimal place.

A. Consumers pay ₦66.00, producers receive ₦56.00, consumers bear 10 % of the tax

B. Consumers pay ₦70.00, producers receive ₦60.00, consumers bear 50 % of the tax

Correct C. Consumers pay ₦68.75, producers receive ₦58.75, consumers bear 37.5 % of the tax

D. Consumers pay ₦65.00, producers receive ₦55.00, consumers bear 0 % of the tax

Correct Answer: C

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Question 4 View Details

A firm sells a product for ₦250 per unit. Its fixed cost is ₦2,000,000 per year and its variable cost per unit is currently ₦150. Due to inflation, the variable cost is expected to rise by 15 % after six months, while the selling price remains unchanged.\n\n(a) Calculate the break‑even output (in units) before the cost increase.\n(b) Calculate the break‑even output after the variable cost rises.\n(c) By what percentage does the break‑even output increase as a result of the cost rise? Round the percentage to the nearest whole number.

A. Break‑even before rise: 20,000 units; after rise: 27,500 units; increase: 38 %

B. Break‑even before rise: 18,000 units; after rise: 25,000 units; increase: 39 %

C. Break‑even before rise: 20,000 units; after rise: 24,000 units; increase: 20 %

Correct D. Break‑even before rise: 20,000 units; after rise: 25,807 units; increase: 29 %

Correct Answer: D

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Question 5 View Details

At the start of 2025 a country has a labour force of 10 million people growing at 2 % per year. The unemployment rate at that time is 8 %. During 2025, 150,000 new jobs are created and 120,000 workers leave the labour force (through retirement, emigration, etc.). Assume that the workers who leave are representative of the labour force composition at the start of the year (i.e., the same proportion are unemployed as the overall unemployment rate). What is the unemployment rate at the end of 2025? Give your answer as a percentage rounded to one decimal place.

Correct A. 6.4 %

B. 5.8 %

C. 7.2 %

D. 6.0 %

Correct Answer: A

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Question 6 View Details

Define "opportunity cost" in economics and give a specific example involving a farmer who must choose between planting maize or beans.

A. Opportunity cost refers to the time spent on production; e.g., if the farmer plants maize, the opportunity cost is the hours he could have spent harvesting beans.

Correct B. Opportunity cost is the value of the next best alternative foregone; e.g., if the farmer plants maize, the opportunity cost is the profit he could have earned from beans.

C. Opportunity cost is the total monetary expense incurred; e.g., if the farmer plants maize, the opportunity cost is the cost of the seeds and fertilizer for maize.

D. Opportunity cost is the profit lost from the chosen activity; e.g., if the farmer plants maize, the opportunity cost is the profit he could have earned from maize itself.

Correct Answer: B

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Question 7 View Details

The following data are for a country in a given year: Consumption = ₦1,500 billion, Investment = ₦300 billion, Government spending = ₦500 billion, Exports = ₦200 billion, Imports = ₦250 billion, Net factor income from abroad = -₦30 billion, Depreciation = ₦120 billion. Calculate the Net National Product (NNP) at market prices for that year.

Correct A. 2100

B. 1900

C. 2150

D. 2000

Correct Answer: A

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Question 8 View Details

A country's export price index rose from 120 to 138 over a year, while its import price index rose from 110 to 121 in the same period. Calculate the percentage change in the terms of trade and state whether the terms of trade improved or deteriorated.

A. Approximately 3.2% improvement

B. Approximately 5.8% deterioration

Correct C. Approximately 4.6% improvement

D. Approximately 4.6% deterioration

Correct Answer: C

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Question 9 View Details

In 2022 the nominal GDP of a country was ₦5,000 billion and the GDP deflator for that year was 125 (base year 2010 = 100). Real GDP for 2022 is expressed in base‑year prices. If the real GDP in 2021 was ₦4,800 billion, compute the real GDP for 2022 and the real‑GDP growth rate from 2021 to 2022.

A. Real GDP 2022 = 3800 billion; growth rate = -20.8%

B. Real GDP 2022 = 4000 billion; growth rate = 5.0%

C. Real GDP 2022 = 4200 billion; growth rate = -12.5%

Correct D. Real GDP 2022 = 4000 billion; growth rate = -16.7%

Correct Answer: D

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Question 10 View Details

The Human Development Index (HDI) is the arithmetic mean of three dimension indices: Health (life‑expectancy index), Education (average of mean‑years‑of‑schooling index and expected‑years‑of‑schooling index) and Standard of Living (GNI per capita index). Each index is calculated as $(actual - min)/(max - min)$. For Country A the data are: - Life expectancy: 68 years (min 20, max 85) - Mean years of schooling: 7 years (min 0, max 15) - Expected years of schooling: 12 years (min 0, max 18) - GNI per capita: $4,500 (use natural‑log transformation; min ln 100 = 4.6052, max ln 75,000 = 11.2253) (a) Compute the current HDI for Country A (round to three decimal places). Now suppose the country improves its life expectancy to 72 years and its GNI per capita to $6,000, while the education indicators remain unchanged. (b) Compute the new HDI and the percentage increase in HDI (rounded to one decimal place).

A. Initial HDI = 0.590; new HDI = 0.630; increase ≈ 6.8%

B. Initial HDI = 0.610; new HDI = 0.645; increase ≈ 5.7%

C. Initial HDI = 0.627; new HDI = 0.680; increase ≈ 8.5%

Correct D. Initial HDI = 0.627; new HDI = 0.662; increase ≈ 5.6%

Correct Answer: D

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Question 11 View Details

The labour force of a country is 2,000,000 persons and the unemployment rate is 12%. Structural unemployment is twice the frictional unemployment. The government introduces a training programme that reduces structural unemployment by 1.5 percentage points and frictional unemployment by 0.5 percentage points, while the labour force expands by 2% due to higher participation. What is the new unemployment rate (in %)?

A. 12%

Correct B. 10%

C. 11%

D. 9.5%

Correct Answer: B

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Question 12 View Details

A region's population grew from 1.2 million to 1.5 million over a four‑year period. During these four years the crude birth rate was a constant 28 per 1,000 population and the crude death rate was a constant 12 per 1,000 population. Assuming net migration was the same each year, calculate the net migration rate (per 1,000 population per year) that must have occurred.

Correct A. 42

B. 45

C. 38

D. 30

Correct Answer: A

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Question 13 View Details

In a simple Keynesian model with no crowding‑out, the marginal propensity to consume (MPC) is 0.6. The government raises taxes by an amount equal to 10 % of GDP and at the same time increases public spending by an amount equal to 5 % of GDP. What is the net percentage change in equilibrium output as a proportion of GDP?

A. -5.0%

Correct B. -2.5%

C. 0.0%

D. 2.5%

Correct Answer: B

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Question 14 View Details

The price of a good rises from ₦200 to ₦250 and the quantity demanded falls from 500 units to 400 units. Using the midpoint (arc) method, determine the price elasticity of demand and state whether demand is elastic, inelastic or unitary.

Correct A. -1

B. 0

C. -1.2

D. -0.8

Correct Answer: A

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Question 15 View Details

In the market for rice the demand function is Qd = 800 - 4P and the supply function is Qs = 200 + 2P, where P is the price paid by buyers (in ₦) and Q is quantity (in units). The government imposes a specific tax of ₦20 per unit on sellers. What is the new equilibrium price paid by buyers (rounded to two decimal places)?

A. 126.67

B. 100.00

Correct C. 106.67

D. 86.67

Correct Answer: C

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Question 16 View Details

A farmer needs exactly 120 kg of nitrogen for a field. He can purchase two fertilizers: Fertilizer A contains 30% nitrogen and costs ₦500 per kg, while Fertilizer B contains 20% nitrogen and costs ₦400 per kg. The farmer's equipment can handle at most 500 kg of total fertilizer. Determine how many kilograms of each fertilizer the farmer should buy to meet the nitrogen requirement at the minimum possible cost, and state that minimum cost.

A. 300 kg of Fertilizer A, 150 kg of Fertilizer B; minimum cost ₦210,000

B. 500 kg of Fertilizer A, 0 kg of Fertilizer B; minimum cost ₦250,000

Correct C. 400 kg of Fertilizer A, 0 kg of Fertilizer B; minimum cost ₦200,000

D. 350 kg of Fertilizer A, 75 kg of Fertilizer B; minimum cost ₦205,000

Correct Answer: C

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Question 17 View Details

A country's population was 30 million in 2020. For the first five years (2021‑2025) the annual natural increase (births minus deaths) is 2.5 %. From 2026 onward the natural increase falls to 1.5 %. Starting in 2023, net migration adds 0.2 % of the population each year. In which calendar year will the population first exceed 40 million?

A. 2033

Correct B. 2035

C. 2034

D. 2036

Correct Answer: B

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Question 18 View Details

The central bank sets the required reserve ratio at 10 % and the public's currency‑deposit ratio at 0.25. The monetary base is ₦500 million. The government announces a policy that will raise the required reserve ratio to 12 % while the currency‑deposit ratio stays unchanged. What is the percentage change in the money supply caused by this policy?

A. Increase of approximately 5.4 %

Correct B. Decrease of approximately 5.4 %

C. Decrease of approximately 7.1 %

D. Decrease of approximately 3.2 %

Correct Answer: B

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Question 19 View Details

In the wheat market the demand function is $Q_d = 120 - 2P$ and the supply function is $Q_s = 20 + P$, where $Q$ is quantity in tonnes and $P$ is price per kg in naira. The government imposes a specific tax of ₦4 per kg on sellers. What is the new equilibrium price paid by buyers (in naira per kg)?

A. ₦32.20 per kg (approx)

Correct B. ₦34.67 per kg (approx)

C. ₦38.50 per kg (approx)

D. ₦30.00 per kg (approx)

Correct Answer: B

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Question 20 View Details

A firm produces widgets with the Cobb‑Douglas production function $Q = 4 L^{0.5} K^{0.5}$, where $L$ is labour hours and $K$ is units of capital. The output price is ₦200 per unit, the wage rate is ₦20 per labour hour and the rental rate of capital is ₦80 per unit. To produce exactly 160 widgets, determine the cost‑minimising quantities of labour and capital and compute the minimum total cost.

A. Labour = 100 hours, Capital = 10 units; minimum total cost = ₦2,800

Correct B. Labour = 80 hours, Capital = 20 units; minimum total cost = ₦3,200

C. Labour = 70 hours, Capital = 25 units; minimum total cost = ₦3,400

D. Labour = 60 hours, Capital = 30 units; minimum total cost = ₦3,600

Correct Answer: B

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Question 21 View Details

A bus company faces the demand equation Q = 5,000 - 200P, where Q is the number of passengers per month and P is the fare (in Naira). The total cost function is TC = 5,000 + 5Q + 0.005Q². Determine the fare that maximises the company's profit and compute the maximum profit.

A. Optimal fare = ₦25 per passenger; Maximum profit = ₦6,000

B. Optimal fare = ₦15 per passenger; Maximum profit = ₦4,000

C. Optimal fare = ₦30 per passenger; Maximum profit = ₦3,500

Correct D. Optimal fare = ₦20 per passenger; Maximum profit = ₦5,000

Correct Answer: D

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Question 22 View Details

The price of a commodity rises from ₦200 to ₦250 and the quantity demanded falls from 1,200 units to 960 units. Using the midpoint method, calculate the price elasticity of demand and state whether demand is elastic, inelastic or unit‑elastic.

A. Elasticity = -2 (elastic)

B. Elasticity = -1.2 (elastic)

Correct C. Elasticity = -1 (unit‑elastic)

D. Elasticity = -0.8 (inelastic)

Correct Answer: C

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Question 23 View Details

A country's population was 10,000,000 in 2020. It grew at an annual compound rate of 2.5 % for the next five years, then at 1.8 % for the following three years, and finally fell by 0.5 % in the ninth year. Calculate the population at the end of 2029, the average annual growth rate over the whole nine‑year period, and state whether the average growth met a target of 2 % per annum.

Correct A. Population end‑2029 ≈ 11,876,427; Average annual growth ≈ 1.93 %; Target of 2 % not met

B. Population end‑2029 ≈ 12,050,000; Average annual growth ≈ 2.05 %; Target of 2 % met

C. Population end‑2029 ≈ 11,900,000; Average annual growth ≈ 1.90 %; Target of 2 % not met

D. Population end‑2029 ≈ 11,750,000; Average annual growth ≈ 1.85 %; Target of 2 % not met

Correct Answer: A

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Question 24 View Details

A firm's price‑demand relation is P = 120 - 0.5Q, where P is the price (Naira) and Q the quantity sold. The total cost function is TC = 5,000 + 10Q. Determine the output level that maximises profit and calculate the maximum profit.

A. Output = 120 units; Maximum profit = ₦1,200

B. Output = 100 units; Maximum profit = ₦900

C. Output = 115 units; Maximum profit = ₦1,050

Correct D. Output = 110 units; Maximum profit = ₦1,050

Correct Answer: D

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Question 25 View Details

The government imposes a specific tax of ₦50 per unit on a good whose demand is Qd = 800 - 4P and supply is Qs = -200 + 6P, where P is the price before tax. Find the price paid by consumers, the price received by producers, the total tax revenue, and the dead‑weight loss caused by the tax.

A. Consumer price = ₦140; Producer price = ₦90; Tax revenue = ₦15,600; Dead‑weight loss = ₦3,500

B. Consumer price = ₦130; Producer price = ₦85; Tax revenue = ₦13,000; Dead‑weight loss = ₦2,800

C. Consumer price = ₦120; Producer price = ₦70; Tax revenue = ₦12,000; Dead‑weight loss = ₦2,500

Correct D. Consumer price = ₦130; Producer price = ₦80; Tax revenue = ₦14,000; Dead‑weight loss = ₦3,000

Correct Answer: D

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