Economics, 2018, WASSCE/WAEC MAY/JUNE, Exam, Paper 1 | Objectives

Paper Info

Year :

2018

Title :

Economics

Exam :

WASSCE/WAEC MAY/JUNE

Paper 1 | Objectives

11 - 20 of 49 Questions

#	Question	Ans
11.	The backward bending supply curve of labour indicates? A. an abnormal supply situation B. the law of supply C. that labour supply and wage are directly related D. that the elasticity of supply is uniform Show Content Detailed Solution The reason is that there are two effects related to determining supply. The substitution effect states that a higher wage makes work more attractive than leisure. ... The income effect states that a higher wage means workers can achieve a target income by working fewer hours. Backward bending supply curve is the normal case for most workers. Most economists agree that a worker's supply curve for labor slopes upward at lower wages and bends backward at higher wages.	C
12.	A supply curve parallel to the X- axis indicates? A. fairly elastic supply B. infinitely elastic supply C. fairly inelastic supply D. perfectly inelastic Show Content Detailed Solution infinitely elastic supply, by definition, means that any decrease in the product price would immediately cause thesupply to shift to zero	B
13.	If the marginal utility of a commodity is equal to its price then A. the consumer is in equilibrium B. more of the commodity can be consumed C. total utility is also equal to its price D. the market is not in equilibrium Show Content Detailed Solution The price a consumer is willing to pay for a good depends on his marginal utility, the marginal utility declines with each additional unit of consumption, according to the law of diminishing marginal utility. Therefore, the price is equal to the marginal utility	C
14.	A price floor is usually fixed A. at the equilibrium and causes shortage B. above the equilibrium and causes shortage C. below the equilibrium and causes shortage D. above the equilibrium and causes surplus Show Content Detailed Solution A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. A price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low. The most common price floor is the minimum wage--the minimum price that can be payed for labor. For a price floor to be effective, it must be set above the equilibrium price.	D
15.	A market is in equilibrium when? A. there is no government intervention B. the demand is the same as the supply C. buyers and sellers are free to sell more goods D. there is no free entry and exit Show Content Detailed Solution Market equilibrium is a market state where the supply in the market is equal to the demand in the market. Theequilibrium price is the price of a good or service when the supply of it is equal to the demand for it in themarket.	B
16.	A firm average cost decreases in the longrun because? A. increasing returns to scale B. diminishing average returns C. decreasing marginal returns D. decreasing average fixed cost Show Content Detailed Solution In the long run, all the factors of production are variable and the cost is accumulated as a result of changes in the various levels of production. Average cost decreases in the longrun due to increasing economies of scale. This refers to the situation where, as the quantity of output goes up, the cost per unit reduces.	A
17.	The larger a firm, the lower its cost of productionThis statement explains the? A. law of diminishing marginal returns B. concept of economies of scale C. law of comparative cost advantage D. theory of division of labour Show Content Detailed Solution Economies of Scale refer to the cost advantage enjoyed by a firm when it increases its level of output. An increase in the level of output indicates the growth and expansion of a firm. This happens when costs are spread over a larger number of goods.	B
18.	In the the longrun, a firm must shut down if its average revenue is? A. greater than average cost B. less than average variable cost C. equal to the minimum average cost D. equal to the average cost Show Content Detailed Solution A firm will choose to implement a shutdown of production when the revenue received from the sale of the goods or services produced cannot even cover the variable costs of production. In that situation, the firm will experience a higher loss when it produces, compared to not producing at all. Technically, shutdown occurs if average revenue is below average variable cost at the profit-maximizing positive level of output.	B
19.	Public limited liability companies are democratic in nature because? A. government appointees are members of the board B. they are run by elected public officers C. electoral principles are adopted in the day-to-day management D. shareholders elect the board of directors Show Content Detailed Solution The directors could not dictate the decisions in the company as the rights in decision making process also vest in the hands of shareholders. Thus democracy is maintained well.	D
20.	In the event of bankruptcy owners of joint-stock companies lose? A. their private properties B. both company and private properties C. only the capital invested D. only their dividends Show Content Detailed Solution joint stock company is a company whose stock is owned jointly by the shareholders. In the event that a joint stock company declares bankruptcy, the company's shareholders may be entitled to a portion of the liquidated assets, depending on which shares they hold and how much liquid assets are left over. baUponnkruptc, a fiyrm will be required to sell all of its assets and pay off all debts.	C

11.	The backward bending supply curve of labour indicates? A. an abnormal supply situation B. the law of supply C. that labour supply and wage are directly related D. that the elasticity of supply is uniform Show Content Detailed Solution The reason is that there are two effects related to determining supply. The substitution effect states that a higher wage makes work more attractive than leisure. ... The income effect states that a higher wage means workers can achieve a target income by working fewer hours. Backward bending supply curve is the normal case for most workers. Most economists agree that a worker's supply curve for labor slopes upward at lower wages and bends backward at higher wages.	C
12.	A supply curve parallel to the X- axis indicates? A. fairly elastic supply B. infinitely elastic supply C. fairly inelastic supply D. perfectly inelastic Show Content Detailed Solution infinitely elastic supply, by definition, means that any decrease in the product price would immediately cause thesupply to shift to zero	B
13.	If the marginal utility of a commodity is equal to its price then A. the consumer is in equilibrium B. more of the commodity can be consumed C. total utility is also equal to its price D. the market is not in equilibrium Show Content Detailed Solution The price a consumer is willing to pay for a good depends on his marginal utility, the marginal utility declines with each additional unit of consumption, according to the law of diminishing marginal utility. Therefore, the price is equal to the marginal utility	C
14.	A price floor is usually fixed A. at the equilibrium and causes shortage B. above the equilibrium and causes shortage C. below the equilibrium and causes shortage D. above the equilibrium and causes surplus Show Content Detailed Solution A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. A price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low. The most common price floor is the minimum wage--the minimum price that can be payed for labor. For a price floor to be effective, it must be set above the equilibrium price.	D
15.	A market is in equilibrium when? A. there is no government intervention B. the demand is the same as the supply C. buyers and sellers are free to sell more goods D. there is no free entry and exit Show Content Detailed Solution Market equilibrium is a market state where the supply in the market is equal to the demand in the market. Theequilibrium price is the price of a good or service when the supply of it is equal to the demand for it in themarket.	B

16.	A firm average cost decreases in the longrun because? A. increasing returns to scale B. diminishing average returns C. decreasing marginal returns D. decreasing average fixed cost Show Content Detailed Solution In the long run, all the factors of production are variable and the cost is accumulated as a result of changes in the various levels of production. Average cost decreases in the longrun due to increasing economies of scale. This refers to the situation where, as the quantity of output goes up, the cost per unit reduces.	A
17.	The larger a firm, the lower its cost of productionThis statement explains the? A. law of diminishing marginal returns B. concept of economies of scale C. law of comparative cost advantage D. theory of division of labour Show Content Detailed Solution Economies of Scale refer to the cost advantage enjoyed by a firm when it increases its level of output. An increase in the level of output indicates the growth and expansion of a firm. This happens when costs are spread over a larger number of goods.	B
18.	In the the longrun, a firm must shut down if its average revenue is? A. greater than average cost B. less than average variable cost C. equal to the minimum average cost D. equal to the average cost Show Content Detailed Solution A firm will choose to implement a shutdown of production when the revenue received from the sale of the goods or services produced cannot even cover the variable costs of production. In that situation, the firm will experience a higher loss when it produces, compared to not producing at all. Technically, shutdown occurs if average revenue is below average variable cost at the profit-maximizing positive level of output.	B
19.	Public limited liability companies are democratic in nature because? A. government appointees are members of the board B. they are run by elected public officers C. electoral principles are adopted in the day-to-day management D. shareholders elect the board of directors Show Content Detailed Solution The directors could not dictate the decisions in the company as the rights in decision making process also vest in the hands of shareholders. Thus democracy is maintained well.	D
20.	In the event of bankruptcy owners of joint-stock companies lose? A. their private properties B. both company and private properties C. only the capital invested D. only their dividends Show Content Detailed Solution joint stock company is a company whose stock is owned jointly by the shareholders. In the event that a joint stock company declares bankruptcy, the company's shareholders may be entitled to a portion of the liquidated assets, depending on which shares they hold and how much liquid assets are left over. baUponnkruptc, a fiyrm will be required to sell all of its assets and pay off all debts.	C