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WAEC: ECONOMICS Economics 2022 WAEC (WASSCE) Past Questions 2022 Economics WAEC (WASSCE) Theory Past Questions (Paper 2)
Lesson 2, Topic 1
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2022 Economics WAEC (WASSCE) Theory Past Questions (Paper 2)

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Content:

  • 2022 Economics WAEC (WASSCE) Theory Past Questions (Paper 2)
  • SECTION A (1 -2) – Consists of two data-response questions and candidates will be required to answer one of them.
  • SECTION B (3 – 8) – Consists of six questions and candidates will be required to answer any three of them.
  • Duration – 2 hours

SECTION A (1 & 2)

Answer any one (1)

Question 1:

A hypothetical national income data for a country in a particular year is presented below:

ITEMS$-MILLION
Wages and Salaries250
Income paid abroad75
Income from self-employment120
Stock appreciation5
Interest 10
Income received from abroad50
Rent25
Depreciation allowance 3
Royalties2
Profits and dividends35

From the data above, answer the following questions.

Calculate the:

a. Gross Domestic Product (GDP)
b. Gross National Product (GNP)
c. Net National Product (NNP)

View Answer

Question 2:

The diagram below shows the effects of the introduction of a subsidy on the production of maize.

Study the diagram and answer the questions that follow.

Screenshot 2024 12 15 at 14.43.12

a. (i) Identify the curves labelled X, Y and Z.

(ii) State the direction of change in price and quantity with the introduction of subsidy.

b. Calculate the total revenue of the producers:

(i) Before the introduction of subsidy.

(ii) After the introduction of subsidy.

c. Calculate the percentage increase or decrease in the total revenue of the producers with the introduction of subsidy.

d. If the quantity demanded of maize increases from 20 to 40 bags as a result of a fall in price from $15 to $10, calculate the price elasticity of demand.

e. State the type of elasticity of demand in 2(d)

View Answer

SECTION B (3 – 8)

Answer any three (3)

Question 3:

a. Define the term limited liability.

b. Describe four differences between a public joint-stock company and a private joint-stock company.

c. Outline three sources of finance available to sole proprietorship.

View Answer

Question 4:

(a) Distinguish between labour force and efficiency of labour.

(b) Describe five factors which determine the size of the labour force in a country.

View Answer

Question 5:

(a) What is a demand schedule?

(b) Explain each of the following terms:

(i) Effective demand;
(ii) Composite demand;
(iii) Derived demand;

(c) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its;

(i) Substitute
(ii) Complement

View Answer

Question 6:

a. Explain the following types of taxes:

(i) Specific tax:

(ii) value-added tax:

b. With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is:

(i) Perfectly inelastic;
(ii) Perfectly elastic;

View Answer

Question 7:

(a) Distinguish between a:

(i) Mortgage bank and a merchant bank:

(ii) Commercial bank and a development bank.

(b) Explain any four functions of commercial banks.

View Answer

Question 8:

(a) What is Economic integration?

(b) Outline any three shortcomings of the Economic Community of West African States (ECOWAS).

(c) Highlight any three achievements of the Economic Community of West African States (ECOWAS).

View Answer

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Question 1

ITEMS $-MILLION
Wages and Salaries 250
Income paid abroad 75
Income from self -employment 120
Stock appreciation 5
Interest 10
Income received from abroad 50
Rent 25
Depreciation allowance 3
Royalties 2
Profits and dividends 35

 

From the data above, answer the following questions.

Calculate the:

a. Gross Domestic Product (GDP)
b. Gross National Product (GNP)
c. Net National Product (NNP)

Solution to Question 1:

a. Gross Domestic Product = Wages and salaries + income from self-employment + interest + Rent + Profits and dividends + Royalties – Stock appreciation.

= $[(250 + 120 + 10 + 25 + 35 + 2) – 5] million

= $(442 – 5) million

= $437 million

 

b. Gross National Product (GNP) = Gross Domestic Product + Income from abroad – Income paid abroad

= $(437 + 50 – 75) million

= $412 million

 

c. Net National Product = Gross National Product – Depreciation allowance

= $(412 – 3) million

= $409 million

Question 2

The diagram below shows the effects of the introduction of a subsidy on the production of maize.

Study the diagram and answer the questions that follow.

 

a. (i) Identify the curves labelled X, Y and Z.

Solution

X = Demand curve

Y = Old/Original/initial supply curve/supply curve before subsidy/S0

Z = New supply curve/supply curve after subsidy/final supply curve/S1

 

(ii) State the direction of change in price and quantity with the introduction of subsidy.

Solution

Price decreases from $15 to $10.

Quantity increases from 20 bags to 40 bags.

 

b. Calculate the total revenue of the producers:

(i) Before the introduction of subsidy.

Solution

Total revenue before the subsidy:

TR = P × Q

= $15 × 20

= $300.00

 

(ii) After the introduction of subsidy.

Solution

Total revenue after subsidy:

TR  = P × Q

= $10 × 40

= $400.00

 

c. Calculate the percentage increase or decrease in the total revenue of the producers with the introduction of subsidy.

Solution

Percentage change in total revenue

= \( \frac{400 \: -\: 300}{300} \: \times \: \frac{100}{1} \)

or

= \( \frac{100}{300} \: \times \: \frac{100}{1}\\ \scriptsize = 33.33 \% \)

 

d. If the quantity demanded of maize increases from 20 to 40 bags as a result of a fall in price from $15 to $10, calculate the price elasticity of demand.

Solution

= \( \frac{40 \: -\: 20}{20} \: \times \: \frac{100}{1} \)

= \( \frac{20}{20} \: \times \: \frac{100}{1} \\ \scriptsize = 100 \% \)

% change in price = \( \frac{10 \: -\: 15}{15} \: \times \: \frac{100}{1} \)

= \( \frac{-5}{15} \: \times \: \frac{100}{1}\\ \scriptsize = (-) \: 33.3 \% \\  \scriptsize =  33.3 \%\)

Price elasticity of demand = \( \frac{100\%}{33.3%} \\ \scriptsize = 3.0\)

OR

Price elasticity of demand = \( \frac{\Delta Q_d}{\Delta P} \: \times \: \frac{P}{Q_d} \)

= \( \frac{40 \: -\: 20}{10 \: – \: 15} \: \times \: \frac{15}{20} \)

= \( \frac{20}{-5} \: \times \: \frac{15}{20} \)

= (-) 3.0

 

e. State the type of elasticity of demand in 2(d)

Answer:

Demand is elastic

Demand is said to be elastic when a change in price results in a more than proportionate change in quantity demanded.

Question 3

a. Define the term limited liability.

Answer

A limited liability exists where the financial obligations of a firm’s owners, in case it fails are limited to the amount of capital invested in the enterprise.

 

b. Describe four differences between a public joint-stock company and a private joint-stock company.

Answer

(i) Ownership: A private joint-stock company is made up of between 2 and 50 members WHILE a public Joint-Stock Company is made up of between 7 and infinity.

(ii) Finance: The private company raises shares privately WHILE the Public company raises Capital through the stock market.

(iii) Publishing of accounts: Private companies are not mandated to publish their annual accounts, BUT Public Companies are compelled by law to publish their accounts.

(iv) List of directors: Private companies are not under obligation to submit the list of directors to the Registrar of companies, BUT Public ones are requested by law to do so.

(v) Transfer of shares/ownership: Members of private companies cannot transfer shares, BUT Shareholders of public companies can easily do so through the stock market.

(vi) Public companies can raise capital by issuing debentures, WHILE Private Companies cannot.

(vii) In public companies ownership is separated from management, WHILE In private companies, ownership may not be separated from management.

(viii) The name of a public company must end with “Plc” and that of a Private Company “Ltd”.

 

c. Outline three sources of finance available to sole proprietorship.

Answer

Sources of finance available to sole proprietorship are:

  • Personal savings
  • Hire purchasers
  • Inheritance
  • Plough back profits
  • Trade credit
  • Sale of assets
  • Grants/loans from government
  • Loans from financial institutions
  • Borrowing from family and friends
  • Leasing of assets
  • Assistance from family and friends

Question 4

(a) Distinguish between labour force and efficiency of labour.

Answer

Labour Force: It refers to the proportion of a country’s population in the working age group who are employed or are seeking employment.

Efficiency of Labour refers to the ability of labour to achieve the highest output possible without compromising quality in a given period of time.

 

(b) Describe five factors which determine the size of the labour force in a country.

Answer

(i) The total population of the country. If the total population is large, the labour force will be large and vice versa.

(ii) The age distribution of the country’s population. If the population is youthful, the labour force will be large and vice versa.

(iii) The official retirement age of workers. If this is low, labour force will be reduced and vice versa.

(iv) The number of women who take up paid jobs. If this is large, labour force will be also large and vice versa.

(v) The school leaving age of students. If this is low, labour force will be large and vice versa.

(vi) The number of people pursuing further studies after the school leaving age. If this is large then labour force will be small.

(vii) The number of people who retire voluntarily before the official retirement age. If more people retire before the official retirement age, labour force will be small and vice versa.

(ix) The number of disabled persons of working age. If this is quite large, the labour force will be small and vice versa.

(x) The number of persons in voluntary unemployment. If this is large, the labour force will be small and vice versa.

(xi) The net migration. If the number of immigrants is higher than the number of emigrants the labour force will be large and vice versa.

Question 5

(a) What is a demand schedule?

Answer

A demand schedule is a table showing the quantities of a commodity demanded at various prices.

 

(b) Explain each of the following terms:

(i) Effective demand;

Answer

Effective demand refers to the desire for a commodity backed by the ability to pay at a particular price and time.

 

(ii) Composite demand;

Answer

Composite demand is when a commodity can be used for more than one purpose i.e. demand for goods that have many uses.

 

(iii) Derived demand;

Answer

Derived demand refers to demand for a commodity, not for its own sake, but for the production of another commodity.

 

(c) Using appropriate diagrams, explain how a change in the price of a commodity would influence the demand of its;

(i) Substitute

Substitute: In the case where two commodities are substitutes e.g. margarine and butter.

When the price of margarine increases from P1 to P2, its quantity demanded will decrease from Q1 to Q2. When this happens, consumers being rational will switch to butter, increasing the demand for butter shown by a rightward shift of the demand curve from D1D1 to D2D2.

 

(ii) Complement

In the case where the commodities are complements eg Torch and batteries. When the price of the torch increases from P1 to P2, the quantity demanded will fall from Q1 to Q2. When this happens, the demand for batteries will fall, as shown by the leftward shift of the demand curve from D1D1 to D2D2.

Answer

Question 6

a. Explain the following types of taxes:

(i) Specific tax:

Answer

Specific Tax: is an indirect tax levied per unit of an output irrespective of its value.

(ii) value-added tax:

Answer

Value added Tax: is an indirect tax levied on value added to a good or service produced. It levied on the difference between sales revenue and the cost of producing an output.

 

b. With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is:

(i) Perfectly inelastic;

Answer

Demand is perfectly inelastic if, at every price level, quantity demanded remains the same The market price of the commodity will rise by the full amount of the tax and the whole burden of the tax rests on the consumer.

 

0P1 was the price before the imposition of an indirect tax and the initial supply curve S0S0 – When the tax was imposed, the supply curve shifted from S0S0 to S1S1 forcing the price to rise from OP2. The full amount of the tax is P1E1E2P2 above and is borne by the consumer.

(ii) Perfectly elastic;

Answer

Demand is perfectly elastic if, at a given price, consumers are willing to buy all the commodities that are available and none at any price above the market price. Since the producer cannot increase the price of the commodity, price remains the same and the entire burden of the tax rests on the producer.

The imposition of an indirect tax results in a leftward shift of the initial supply curve S0S0 to a new supply curve S1S1. Price remains the same at 0P1 and the whole burden of the tax P1E1E2P2 rests on the producer.

Question 7

(a) Distinguish between a:

(i) Mortgage bank and a merchant bank:

Answer

A mortgage bank is a financial institution that specializes in granting loans to individuals and corporate bodies for building purposes. Such loans are repaid in instalments spread over several years.

WHILE

A merchant bank is a financial institution that provides specialized services like acceptance of bills of exchange, corporate finance, portfolio management, equipment leasing-and acceptance of deposits.

 

(ii) Commercial bank and a development bank.

Answer

Commercial banks are financial institutions that perform the services of accepting deposits and using such money to make loans and other financial services available to customers. The loans are usually for short and medium terms.

WHILE

A Development bank is a financial institution set up to provide long-term loans to groups of individuals and governments for development projects. They provide financial assistance in high risk, low profit and long gestation period investments which are unattractive to commercial banks.

(b) Explain any four functions of commercial banks

Answer

(i) Acceptance of deposit: Customer’s money can be kept in any of the different types of commercial banks’ accounts – savings, current or demand deposit and time or fixed deposit accounts etc.

(ii) Lending of money: Commercial banks make available loans and overdrafts.

(iii) Commercial banks provide facilities for the safekeeping of valuables.

(iv) Commercial banks provide facilities for domestic and foreign remittances.

(v) Commercial banks provide trust services for individuals and organizations. Trust services include the management of trust funds

(vi) Commercial banks act as agents for their customers in the purchase and sale of securities.

(vii) Money creation: Deposit received can be given out as credits to customers which in turn creates further deposits.

(viii) Commercial banks offer advisory services to customers

(ix) Commercial banks discount bills of exchange for their customers.

(x) Commercial banks act as executors of will for their customers.

(xi) Commercial banks help the Central Bank to implement government monetary policy.

(xii) Commercial banks sell foreign exchange to their customers.

Question 8

(a) What is Economic integration?

Answer

Economic integration is a form of international cooperation among nations to achieve greater efficiency in the production of goods and services for the social and economic welfare of their countries.

 

(b) Outline any three shortcomings of the Economic Community of West African States (ECOWAS).

Answer

(i) Divided loyalty of member states.

(ii) Ideological differences.

(iii) Inability to create a common currency

(iv) Differences in levels of development among member states/fear of domination of small countries by big countries.

(v) Political/social instability in the sub-region.

(vii) Inadequate infrastructural facilities in the sub-region

(viii) Lack of political will to implement the policies/agreements of the union.

(ix) Non-payment of dues by some member states

(x) Negative attitude towards member countries because of language differences.

(xi) Differences in trade policies in member countries.

 

(c) Highlight any three achievements of the Economic Community of West African States (ECOWAS).

Answer

(i) Removal of custom duties.

(ii) Reduced administrative restrictions e.g. on investment.

(iii) Establishment of a common fund for cooperation, compensation and development.

(iv) Mediation among member states.

(v) Formation of the Economic Community of West African States Monitoring Group (ECOMOG).

(vi) Growth and expansion of markets.

(vii) Unity in the sub-region.

(viii) Co-operation in culture and sports.

(ix) Free movement of labour.

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