WAEC Economics 2010 Past Questions & Answers

In economics, an economic good is any item that is scarce, meaning it is not freely available and has a price. Air, in its natural state, is abundant and we do not pay for it, making it a 'free good'. On the other hand, bottled water, household utensils, and shelter are all limited in supply and command a price, which is why they are classified as economic goods.

Common mistake: Students might mistakenly choose 'bottled water' because they associate water with being free, but they forget that the process of bottling and purifying it makes it scarce and gives it a price.

A tent-making factory is involved in secondary production, where raw materials are turned into finished goods. This is considered an indirect service because the factory's work satisfies human wants (the need for shelter) through a product, rather than through direct personal contact with the consumer. Unlike a doctor or a barber who provides a direct service, the factory provides its service indirectly through the goods it creates.

Common mistake: Students may mistakenly choose 'personal services' because a person will use the tent, but they forget that personal services require direct, face-to-face interaction between the provider and the consumer.

A capitalist economic system, also known as a free market economy, is defined by the private ownership of resources and the means of production. In this system, individuals and private companies make their own economic decisions, like what to produce and sell, driven by the desire to make a profit. The government's role is very limited, which is why it is associated with individual decision-making.

Common mistake: Students often mistakenly choose 'Mixed system' because most countries today have mixed economies, but the question asks for the system defined by *mostly* private ownership, which is the core principle of capitalism.

The mean, also known as the average, is a basic statistical measure used to find the central value of a set of numbers. It is calculated by adding up all the numbers (the sum of items) and then dividing by how many numbers there are (the number of items). This question is the exact definition of the mean.

Common mistake: Students often confuse the mean with the median, which is the middle number in a sorted list, or the mode, which is the number that appears most frequently.

To find the median, you must first arrange the numbers in order from smallest to largest. The given scores are 8, 9, 6, 5, 10, and arranging them gives 5, 6, 8, 9, 10. The median is the middle value in the arranged set. In this list of five numbers, the middle number is the third one, which is 8.

Common mistake: Students often make the mistake of picking the middle number from the original, unordered list, which would incorrectly lead them to choose 6.

A shift of the demand curve to the right indicates an increase in demand at every price level. An increase in the income of the buyer gives them more purchasing power, allowing them to buy more of a normal good even when the price has not changed. This change in a condition of demand, other than price, causes the entire curve to shift right.

Common mistake: Students often mistakenly choose option D because a price decrease does lead to more being bought, but this is a movement *along* the demand curve (an increase in quantity demanded), not a *shift* of the entire curve.

In Economics, a normal good is defined as any good for which demand increases when income increases, and demand falls when income decreases, holding other factors constant. For example, if a student gets more pocket money, they may decide to buy more data or go to the cinema more often. Because they can now afford more, their demand for these goods rises with their income.

Common mistake: Students often confuse normal goods with inferior goods, which are goods for which demand falls as income rises (e.g., a person might buy less instant noodles when they can afford to eat out more).

The supply curve shows the relationship between the price of a good and the quantity producers are willing to sell. According to the law of supply, as the price of a good increases, the quantity supplied also increases because it becomes more profitable for sellers. This direct relationship between price and quantity supplied means the supply curve slopes upwards from left to right, which is known as a positive slope.

Common mistake: Students sometimes confuse the supply curve with the demand curve, which has a negative slope because consumers buy less as prices rise.

In economics, market equilibrium is a state where the forces of demand and supply are balanced. The equilibrium price is the specific price where the quantity of a good that consumers are willing and able to buy (quantity demanded) is exactly equal to the quantity that producers are willing and able to sell (quantity supplied). At this point, the market is stable with no pressure for the price to change.

Common mistake: Students sometimes mistakenly choose option A or B, confusing equilibrium with conditions of shortage (demand > supply) or surplus (supply > demand), which are states of disequilibrium that cause prices to change.

The equilibrium price is the price where the quantity demanded by consumers equals the quantity supplied by producers. If supply decreases while demand stays the same, there will be fewer goods available for the same number of people who want them. This creates a shortage, which causes buyers to compete for the limited goods, pushing the market price up to a new, higher equilibrium.

Common mistake: Students sometimes mistakenly choose options B or C because they confuse the concept of price movement with elasticity, but the question is about the direction of the price change, not the responsiveness of demand or supply.