WAEC Economics 2005 Past Questions & Answers

Because resources are scarce, we must always make choices, and every choice involves giving something up, which is the opportunity cost. Economic activities are about making the most efficient decisions to get the most satisfaction from our limited resources. Therefore, these activities are undertaken to solve the problem of opportunity cost by ensuring the best alternative is chosen.

Common mistake: Many students will choose 'scarcity' as it is the fundamental economic problem, but opportunity cost is the immediate problem that decision-making (i.e., economic activity) directly addresses.

Production is divided into three main stages. Primary production is the first stage, which involves the extraction of raw materials directly from nature, such as from the land, sea, or earth. Since farming, mining, and fishing all involve taking resources directly from their natural source, they are all classified as primary production.

Common mistake: Students might mistakenly choose secondary production, but this stage involves processing raw materials into finished goods (like turning wood into furniture), not just extracting them.

A scale of preference is the correct answer because it is the economic term for a list of our wants, arranged from the most important to the least important. Because our resources are limited (scarcity), we cannot satisfy all our wants, so we must rank them. This ranking helps us make a rational choice on what to spend our money on first.

Common mistake: Students often mistakenly choose 'choice' because a scale of preference is used to make a choice, but 'choice' is the act of selecting, not the list itself.

Opportunity cost is the value of the next best alternative that you give up when you make a choice. In this case, Olu had to choose between buying a textbook and a T-shirt with his 150.00 Naira. Since he chose to buy the T-shirt, the alternative he gave up was the textbook, making the textbook his opportunity cost.

Common mistake: Students often mistakenly choose option B because they confuse the item that was chosen (the T-shirt) with the alternative that was given up (the textbook).

In Economics, there are four factors of production: land, labour, capital, and entrepreneurship, and each has a specific reward. The entrepreneur is the person who organizes the other factors and bears the business risk. The remuneration or reward for this risk-taking and organizational role is the profit that remains after all other costs, like wages and interest, are paid.

Common mistake: Students often mistakenly choose 'wages' or 'salary' because they associate remuneration with payment for work, but these are specifically the rewards for labour, not for the risk-taking role of the entrepreneur.

In Economics, the factors of production are land, labour, capital, and entrepreneurship. 'Land' refers to all natural resources, and its total supply on Earth is considered fixed or perfectly inelastic because we cannot create more of it. While we can improve land, the total quantity available globally does not change, unlike labour which grows with population or capital which can be manufactured.

Common mistake: Students might mistakenly choose 'skilled labour' or 'capital goods' because their supply can be limited in the short run, but they fail to recognise that only land's total global supply is fundamentally fixed.

The Production Possibility Curve (PPC) shows the maximum quantity of goods an economy can produce with its available resources. When factor inputs like labour and capital are reduced, the economy's total capacity to produce also falls. This reduction in productive capacity is shown by the entire PPC shifting inwards, indicating that less of both goods can now be produced.

Common mistake: Students might mistakenly choose 'outwards' because they confuse a reduction in resources with an increase in resources or an improvement in technology, which are the factors that cause an outward shift.

Occupational mobility of labour refers to the ease with which a worker can change from one type of job to a completely different one, for example, a teacher retraining to become a lawyer. The question describes a worker changing their job *type*, which is the definition of occupational mobility. This movement is based on skills and profession, not location.

Common mistake: Students often mistakenly choose geographical mobility of labour, confusing the movement between job *types* with the movement between physical *locations*.

The size of a country's population is determined by three main factors: how many people are born, how many people die, and how many people move in or out of the country. The birth rate increases the population, while the death rate decreases it. Migration, which is the movement of people, also changes the population size, as people immigrating add to the count and those emigrating subtract from it. Therefore, birth rate, death rate, and migration rate are the correct determinants.

Common mistake: Students may mistakenly choose an option including unemployment (V), confusing a major economic problem with a direct factor that determines the actual number of people in a country.

Age distribution shows the government the number of people in different age groups, like children, working adults, and the elderly. This information is essential for effective planning. For instance, knowing the number of children helps in planning for schools and immunization, while knowing the size of the working population helps in planning for job creation.

Common mistake: Students might mistakenly choose option A because rural-urban drift is also a population concept, but it relates to the geographical movement of people, not their age structure.