1. Which of the following problems arises where there are more than one technically possible methods of production?

A. Where to produce
B. For whom to produce
C. How to produce ✔
D. What to produce

Explanation:
The “how to produce” problem arises when there are multiple production methods.

2. Visible balance is also known as

A. Terms of trade
B. Balance of payments
C. Balance of trade ✔
D. Capital balance

Explanation:
Visible balance = export-import of goods → balance of trade.

3. A shift in the demand curve indicates

A. Exceptional demand
B. Change in demand ✔
C. Change in quantity demanded
D. Elasticity of demand

Explanation:
Shift = change in demand due to non-price factors.

4. If a 6% decrease in price results in more than 6% decrease in quantity supplied, supply is

A. Elastic ✔
B. Unitary elastic
C. Perfectly inelastic
D. Perfectly elastic

Explanation:
%ΔQ > %ΔP → elastic supply.

5. Condition for consumer utility maximization:

A. Equality of the ratio of marginal utilities and the ratio of prices ✔
B. Equality of ratio of average utilities and prices
C. Equality of marginal utility to total utility ratio
D. Total utility and marginal utility zero

Explanation:
Utility maximization rule: $\frac{MU_x}{P_x} = \frac{MU_y}{P_y}$.

6. Mode is

A. Observation with the highest frequency ✔
B. Average of two middle numbers
C. Item that occupies the middle position
D. Difference of two extreme values

Explanation:
Mode = most frequent value.

7. Commodity takes insignificant proportion of income → demand is

A. Unitary elastic
B. Price inelastic ✔
C. Fairly elastic
D. Income inelastic

Explanation:
Low proportion of income → insensitive to price → inelastic.

8. A demand schedule shows quantities of goods that are

A. Bought at given price at a time ✔
B. Supplied at given price
C. Produced at given price
D. Reserved for future

Explanation:
Demand schedule shows quantity demanded at each price.

9. Demand curve downward sloping because consumer will pay

A. Less as marginal utility falls ✔
B. More as marginal utility falls
C. Less as total utility falls
D. More as average utility falls

Explanation:
Law of diminishing marginal utility → lower MU → lower price willing to pay.

10. Decrease in demand for X → decrease in demand for Y. X and Y are

A. Derived
B. Composite
C. Joint ✔
D. Competitive

Explanation:
Joint demand = goods used together → demand for one affects the other.

11. Any price below equilibrium price will lead to

A. Increase in supply
B. Excess demand ✔
C. Equality of demand and supply
D. Decrease in demand

Explanation:
Price < equilibrium → shortage → excess demand.

12. Allocation of goods/services in a free market is performed by

A. The price system ✔
B. Banking system
C. Central planning
D. Government budgets

Explanation:
Prices signal how resources are allocated.

13. Given demand function $Q_d = 20 - \frac{1}{2}P$. What is $Q_d$ when $P = 12$?

$Q_d = 20 - \frac{1}{2} × 12 = 20 - 6 = 14$ units ✔

A. 6 units
B. 10 units
C. 12 units
D. 14 units

Explanation:
Substitute $P = 12$ into the demand function.

14. Consumer total utility = 22 utils, units consumed = 4. Average utility =

$AU = \frac{TU}{Q} = \frac{22}{4} = 5.5$ utils ✔

A. 88 utils
B. 18 utils
C. 5.5 utils
D. 3.5 utils

Explanation:
Average utility = Total utility ÷ Quantity.

15. Law of diminishing marginal utility applies to

A. Firm minimizing cost
B. Consumer maximizing satisfaction ✔
C. Producer maximizing marginal product
D. Consumer minimizing total utility

Explanation:
Consumer theory → marginal utility falls as consumption increases.

16. Law of diminishing returns is short-run phenomenon because

A. All inputs are fixed
B. All inputs variable
C. Some outputs variable
D. Some inputs variable ✔

Explanation:
Short-run = at least one fixed input → diminishing returns occur.

17. Which can increase population?

A. Increase in birth rate ✔
B. Increase in death rate
C. Poor medical facilities
D. Decrease in birth rate

Explanation:
Higher birth rate → higher population growth.

18. In firm's production, marginal cost

A. Falls continuously
B. Falls and later rises ✔
C. Remains unchanged
D. Rises and later falls

Explanation:
MC typically decreases at first, then rises due to diminishing returns.

19. Price < AC but > part of VC, firm covers

A. All fixed & variable cost
B. All fixed & part of variable cost
C. All variable & part fixed cost ✔
D. Part fixed & part variable cost

Explanation:
Price covers VC + part of FC → operate in short run.

20. Debts can only be paid from own assets implies

A. Unlimited liability
B. Transferred liability
C. Limited liability ✔
D. Capital liability

Explanation:
Limited liability → shareholders risk only capital invested.

21. Small-scale businesses common in West Africa because

A. Can easily float shares
B. Management boards easily formed
C. Initial capital easy to raise ✔
D. Dividend payments regular

Explanation:
Small capital requirement → easy entry.

22. Public limited company finances operations through

A. Government taxes
B. Equity shares ✔
C. Dividend payments
D. Import duties

Explanation:
PLCs issue shares → raise capital.

23. Factor of production combining resources is

A. Capital
B. Land
C. Entrepreneur ✔
D. Labour

Explanation:
Entrepreneur organizes land, labour, capital.

24. Monopoly due to patent rights:

A. Natural
B. State
C. Legal ✔
D. Discriminating

Explanation:
Patent → exclusive legal rights → legal monopoly.

25. Function of a retailer:

A. Banking
B. Hoarding
C. Storage
D. Sales ✔

Explanation:
Retailer sells goods to final consumers.

26. Function of retailer (repeat):

A. Banking
B. Hoarding
C. Storage
D. Sales ✔

Explanation:
Same as above.

27. Difference between immigrants and emigrants:

A. Natural growth rate
B. Natural increase
C. Net migration ✔
D. Census

Explanation:
Net migration = immigrants − emigrants.

28. Feature of optimum population except:

A. Full employment
B. Unlimited unexploited resources ✔
C. Maximum per capita production
D. High standard of living

Explanation:
Resources are always limited → statement B false.

29. Financial institution specializing in risk spreading:

A. Investment bank
B. Development bank
C. Insurance company ✔
D. Stock exchange

Explanation:
Insurance spreads risk among many policyholders.

30. Means of reducing population except:

A. Emigration
B. Family planning
C. Early marriage ✔
D. Sex education

Explanation:
Early marriage increases fertility → not a reduction method.

31. Feature of peasant agriculture:

A. Specializes in one crop
B. Small farm holdings ✔
C. Capital-intensive
D. Mostly tree crops

Explanation:
Peasant farms are small, subsistence-based.

32. Problem facing industrial development in West Africa:

A. Inadequate large market
B. Inadequate infrastructure ✔
C. Inadequate labour supply
D. Unavailability of resources

Explanation:
Poor roads, electricity, and transport hinder industry.

33. Fragile, bulky, perishable product → locate industry close to

A. Raw materials
B. Market ✔
C. Labour supply
D. Power supply

Explanation:
Close to market → minimize transport & spoilage.

34. National income formula with $Y=C+I+(X-M)$

A. $Y = C - I + (X + M)$
B. $Y = C + I + (X + M)$
C. $Y = C + I + (X - M)$ ✔
D. $Y = C + I + (M - X)$

Explanation:
Net exports = exports − imports → national income.

35. National income is

A. GDP at market prices
B. GNP at factor cost ✔
C. NNP at factor cost
D. NNP at market prices

Explanation:
GNP at factor cost = total income earned by residents.

36. GNP − depreciation =

A. Total national income
B. GDP
C. Net national product ✔
D. Net domestic product

Explanation:
NNP = GNP − depreciation.

37. Mr Akpoti has meat, Mr Adama has maize → transaction possible due to

A. Bank deposit
B. Joint demand
C. Scale of preference
D. Double coincidence of wants ✔

Explanation:
Barter requires both parties want each other's goods.

38. Not a form of money:

A. Coins
B. Bank notes
C. Bank balance ✔
D. Bank deposit

Explanation:
Bank balance = account balance → not physical money.

39. Price index measures:

A. How value of money changes over time ✔
B. Volume of currency
C. Exchange rate
D. Composition of goods/services

Explanation:
Price index tracks inflation/deflation.

40. Difference between birth rate and death rate is known as:

A. Demographic transition
B. Natural growth rate ✔
C. Migration rate
D. Fertility rate

Explanation:
Natural growth rate = birth rate − death rate.