5 September 2015

Okcityloaded 2015 WAEC GCE Solution: ECONOMICS


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(5a) Inflation may be defined as a persistent rise in the
general price level of goods and services. Inflation
occurs when the volume of purchases is permanently
running ahead of production and too much money in
circulation chasing too few goods

(5bi) Demand-pull inflation occurs when consumers
have high purchasing power leading to increases in
aggregate demand without a corresponding increase in

(5bii) Cost-push inflation occurs when increases in
cost of production are passed on to consumers in the
form of high prices for the goods and services on sale.
The prices of goods and services are pushed up by rising

(5c) -High cost of production: when there is high cost of
production,manufacturers build in this high cost into
cost per unit and pass it to consumers leading to cost pull
-Increase in salaries and wages: when salaries and
wages are increase without corresponding increase in
supply of goods and services,it can lead to excess money
in circulation chasing few goods
-Excessive bank lending: This can lead to excessive
money in circulation chasing few goods and services
-Money laundering: Mass transfer and injection of money
into circulation can also cause inflation

(8a) Economic growth maybe defined as the process
by which the productive capacity of an economy
increases over a givenperiod,leading to a rise in the
level of the national income.

(8b) (i) Population explosion: Underdeveloped countries do
witness high birth rate leading to population explosion.

(ii) Low standard of living: The standard of living inv these countries is generally low

(iii) High dependency on foreign nations: Most of these
developing nations depend greatly on foreign countries
for their survival.

(iv) Low savings and investment: Labour receives low
income and this reduces or leads to low savings and

(8c) (i) Encouragement of savings: People and firms
should be encouraged to save provided there is an
improvement in their income. Good savings leads to
investments. Expenditure in consumption should be
reduced. (ii) Provision of capital: Banks should be encouraged
to provide capital or fund for individuals and firms to
enable them embark on productive ventures.

(3ai) -A firm is the basic unit within which factors of
production are organised for the purpose of producing
wealth. it is an entity which specialises in the
production and distribution of goods under one
administration. e.g Texaco Nig Ltd, Leventis PLC
-An industry on the other hand is a group of firms
producing similar products and under separate

(3aii) -Location of industry is defined simply as the siting or
establishment of a firm or industry in a particular place.
-Localisation on the other hand refers to the
concentration of firms or industries producing similar
products in an area.

(3b) (i) Proximity of source of raw materials:
-cement producing industries should be located close to
sources of raw materials to reduce transportation.
-perishable goods like fruits, palm oil industries etc
should also be located near their raw materials.

Availability of capital: -there should be enough capital to purchase industrial
input before and after setting up industries
-entrepreneurs should have access to loans

1a ) (s )TC = AC *Q
=6 * 3= 18
(T ) TC =AC * Q
=6 * 5= 30
(U ) AC =TC / Q = 14 / 2 = 7
(v ) AC =20/ 4
(w) AC = 48/ 6
(x ) AC =14 – 6 = 6
(y )20 -18= 2
(z )30 -20= 10
1b ) i) Profit = revenue-cost
$ 10-$ 1 =$ 9
ii )P = R – C
=$ 10- $ 4
=$ 6

1c ) -It is output 1 – It is where TC = AC

6 a ) Price elasticity of demand ; -This may be defined
as the degree of responsiveness of demand to little changes in prices of goods and services

6 b ) -Income elasticity of demand is defined as the degree of
responsiveness of demand to
changes in income of consumers while Cross
elasticity of demand may be defined as the
degree of responsiveness of demand for a
commodity to changes in the price of another
commodity – Income elasticity of demand measures how
changes in income of consumers will affect the
quantity of commodities demanded by such
consumers while cross elasticity of demand is
the proportionate change in the price of goods
demanded over the proportionate change in the price of
another good demanded

-Income elasticity of demand is negative for
inferior goods since an increase in income will
lead to a decreased in demand for them while
cross elasticitry of demand is applicable mainly
to goods that are close substitutes as well as
complimentary goods

6 c ) -Availability of substitutes goods ; -The more
possible substitutes they are for a given good
and service,the greater the elasticity when the
close substitues are available , consumer can easily
switch from one good to another even if
there is only small change in price ,conversely if
there is no substitutes available , demand for a
good is more likely to be inelastic
-Proportion of the purchaser ‘s budget
consumed by the item ;- products that consume a large
portion of the purchaser ‘s budget tend
to have greater elasticity.The relative high cost
of such goods will cause consumers to pay
attention to purchase and seek substitutes. In
contrast, demand will tend to be inelastic when
a good represents only negligible portion of the budget
-Degree of necessity;- The greater the necessity
for a good , the lower the elasticity .consumers
will attempt to buy necessary products
regardless of the price . luxury products ,on the
other hand ,tend to have greater elasticity – Brand
loyalty ;-An attachment to a certain
brand can override sensitvity to price changes ,
resulting to price changes ,resulting in more
inelastic demand.

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