WAEC Economics 2001 Past Questions & Answers

The fundamental problem in economics is that human wants are unlimited, but the resources available to satisfy these wants are limited or scarce. This gap between unlimited wants and scarce resources is what creates economic problems, as it forces individuals and societies to make choices. Therefore, the scarcity of resources relative to wants is the root cause of all economic issues.

Common mistake: Students may mistakenly choose option B, 'man is insatiable', because while unlimited wants are part of the problem, they only become an economic problem because resources are scarce.

Capitalism is an economic system where the means of production, such as land, factories, and capital, are owned and controlled by private individuals and firms. The main goal in a capitalist economy is to make a profit. Since the question describes a system with private ownership of resources, capitalism is the correct answer.

Common mistake: Students might mistakenly choose socialism, confusing it with capitalism, but socialism is characterized by state or public ownership of resources, which is the opposite of what the question asks.

Quasi-rent is the extra earning a factor of production, like a specialized machine, makes because its supply cannot be increased quickly in the short run. This payment is temporary because, in the long run, more of these machines can be produced, which will cause the extra earnings to disappear. Therefore, it is correctly defined as a payment on a factor whose supply is temporarily fixed.

Common mistake: Students often mistakenly choose 'Returns on investment' because it sounds plausible, but this term is too general, whereas quasi-rent specifically refers to returns arising from a temporary shortage in the supply of a factor.

In Economics, there are four factors of production: land, labour, capital, and entrepreneurship. Each factor receives a specific reward for its contribution; land earns rent, labour earns wages, and capital earns interest. The entrepreneur is the person who organizes all these other factors and takes the risk of starting a business, and their reward for this effort and risk is the profit the business makes.

Common mistake: Students often confuse the rewards for the different factors of production, for example, incorrectly choosing 'wages' which is the reward for labour, or 'interest' which is the reward for capital.

An entrepreneur is the person who organizes the other factors of production like land, labour, and capital to start a business. A major part of this role is making all the important decisions for the business, such as what to produce and how to produce it. Therefore, decision-making is a core function of an entrepreneur.

Common mistake: Students might mistakenly choose 'Avoidance of risks' because they associate entrepreneurs with risk, but the correct function is risk-bearing (taking on risks), not avoiding them.

In statistics, which is a key tool for economic analysis, the 'range' is defined as the measure of spread or dispersion. It is calculated by taking the highest value in a set of data and subtracting the lowest value from it. This gives economists a simple way to see how widely the data points are spread out.

Common mistake: Students often confuse the different measures of central tendency and dispersion; they might mistakenly choose 'median', which is the middle value in a sorted dataset, not the difference between the highest and lowest values.

In a capitalist economy, the decisions of what to produce are made by private individuals and firms based on what consumers want to buy. This principle is called 'consumer sovereignty', which means the consumer's demand controls the market. Because producers will only make goods and services they can sell for a profit, the consumer's choice is the most powerful force, making them the 'King'.

Common mistake: Students might mistakenly choose 'Mixed Economy' because it includes capitalist elements, but the concept of the consumer as an absolute 'King' is a defining feature of a pure capitalist system with minimal government interference.

The question asks for the term that describes how people are spread out in a country. 'Dispersal' implies movement and scattering. 'Mobility of people' refers to the ability of individuals to move from one location to another, such as from rural to urban areas, which is the process that leads to their dispersal across the country.

Common mistake: Students may mistakenly choose 'geographical distribution' because it describes the resulting pattern of where people live, but 'mobility' better captures the dynamic process of movement and spreading out implied by the word 'dispersal'.

An ageing population means there are more old people than young people, usually because birth rates are low and people are living longer. When the birth rate is low, the overall population will grow very slowly, or might even start to shrink. Therefore, a key feature of a country with an ageing population is that its total population is increasing at a low rate.

Common mistake: Students might mistakenly choose option D, confusing an ageing population with an 'optimum population,' which is a theoretical concept about the ideal population size for maximizing income per head, not about age structure.

The question asks for the method that does not control or reduce population growth. Legalizing abortion, family planning, and limiting the number of children are all policies aimed at slowing down population increase. However, providing incentives on immigration encourages people from other countries to move in, which would increase the population, not control its growth.

Common mistake: Students might mistakenly choose option C, 'family planning', because it is a well-known method of population control, but they fail to notice the word 'except' in the question.