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1. Scale of preference shows

A. opportunity cost of goods consumed
B. incomes of consumers in order of size
C. utilities enjoyed by consumers
D. consumer’s wants in order of priority

2. There is unemployment of resources when production is

A. within the production possibility curve
B. outside the production possibility curve
C. along the production possibility curve
D. adequate to meet market demand

3. A major characteristic of natural resources is that they

A. are unlimited in supply
B. have high cost of production
C. are free gifts of nature
D. do not command any price

4. A major disadvantage of a capitalist economy is that it

A. leads to low production of goods and services
B. requires large number of officials to operate
C. considers individual consumers’ satisfaction
D. worsens income inequality among the citizens

5. The mining sector of an economy contributes 60% to the Gross Domestic Product (GDP). If the GDP is $\$540$, what is the contribution of the mining sector?

A. $\$ 90.00$
B. $\$ 180.00$
C. $\$ 324.00$
D. $\$ 350.00$

6. The increase in the demand for a commodity may lead to a decrease in the demand for another if both are A. in complementary demand
B. of the same quality
C. in composite demand
D. in competitive demand

7. The demand curve for goods of ostentation is usually

A. negatively sloped
B. positively sloped
C. vertical
D. horizontal

8. Which of the following factors is not a cause of change in demand? Changes in

A. taste and fashion
B. income distribution
C. price of the commodity
D. the size of the population

9. If the quantity demanded of a commodity increases from 20 units to 30 units when there is an increase in price from $4.00 to $5.00, the elasticity of demand is

A. 2.00
B. 0.50
C. 0.65
D. 2.50

10. The supply curve of a locally-produced good may shift to the right if

A. there is an increase in taxes on inputs
B. government increases subsidies
C. rural-urban migration is encouraged
D. the price of the commodity increases

11. In perfectly elastic supply, the supply curve

A. is vertical
B. is horizontal
C. slopes downward
D. slopes upward

12. An increase in the price of commodity X led to a fall in the supply of commodity Y. Commodities X and Y are

A. competitive goods
B. composite goods
C. jointly supplied
D. derived goods

13. The production of rice and yam on the same farmland is an example of

A. joint supply
B. composite supply
C. competitive supply
D. market supply

14. A consumer of a single commodity is in equilibrium when

A. his marginal utility is equal to zero
B. he can equate his demand with price
C. he equates marginal utility and price
D. he can equate his marginal and total utilities

15. If the government imposes a minimum price on a commodity

A. market surplus occurs
B. the market will be cleared in the short-run
C. excess demand occurs
D. government regulation is no longer needed

16. A minimum price legislation is also called

A. price ceiling
B. price mechanism
C. price control
D. price floor

17. Which of the following factors is not a cause of diminishing returns?

A. Increase in variable inputs
B. constant technology
C. Land fragmentation
D. Technological innovations

18. In manufacturing, division of labour may be hindered by

A. excessive demand for the product
B. low level of technology
C. excess supply of labour
D. increase in the export of goods

19.The production cost that varies inversely with output is the

A. total fixed cost
B. marginal cost
C. average fixed cost
D. average cost

20. A firm that closes down will still incur

A. variable cost
B. fixed cost
C. total cost
D. marginal cost

21. The sufficient condition for a firm to be in equilibrium is that the

A. marginal revenue curve is above the average revenue curve
B. marginal cost curve cuts the marginal revenue curve from below
C. firm must show that it is profitable
D. marginal cost must be equal to average revenue

22. Cooperative societies are formed mainly to

A. break the monopolies of private companies
B. encourage thrift and credit among members
C. assist producers to maximize their profits
D. promote and maintain the welfare of members

23. A disadvantage of a joint-stock company is

A. unlimited liability
B. limited liability
C. lack of continuity when a shareholder dies
D. limited control in management by shareholders

24. The middlemen is responsible for

A. providing research facilities
B. purchasing raw materials
C. designing the product
D. breaking the bulk

25. A major function of the retailer is to

A. grant credit to the wholesaler
B. break bulk and sell products in small units
C. reduce cost of distribution
D. generate demand for products through advertisement

26. A positive effect of a rapid population increase is

A. an excessive budget deficit
B. a reduction in standard of living
C. a wider market for goods and services
D. a higher dependency ratio

27. Which of the following factors may not affect the efficiency of labour?

A. Education and training
B. Provision of welfare service
C. Race and colour of workforce
D. Quality of other factor inputs

28. The type of unemployment found among workers who leave their jobs in search of other jobs is termed

A. seasonal unemployment
B. structural unemployment
C. frictional unemployment
D. cyclical unemployment

29. The main objective of marketing boards is to

A. accumulate revenue for government
B. educate farmers on pricing of cash crops
C. stabilize the incomes of cash crop farmers
D. provide warehousing facilities

30. The use of mass advertising media enable a firm to enjoy

A. managerial economies
B. financial economies
C. marketing economies
D. welfare economies

31. Which of the following industries will add more value to primary products?

A. Construction industry
B. Processing industry
C. Mining industry
D. Service industry

32. Gross National Product (GNP) less the provision for the wear and tear of assets is the

A. net factor income
B. net indirect taxes
C. net national product
D. net present value

33. An example of transfer payments in national income accounting is

A. money transferred to another country
B. transfer of funds from one bank to another
C. unemployment allowance paid to the citizens
D. the amount paid to a worker on transfer

34. Increasing national income without effective control of population size in a country can lead to

A. higher per capita income
B. increase in poverty
C. increased outflow of aid
D. underutilization of resources

35. An example of commodity money is

A. currency note
B. mobile money
C. cheques
D. silver

36. If inflation is anticipated, people may

A. save more money
B. spend more money
C. give out more loans
D. spend less money

37. If the Central Bank increases its bank rate

A. many banks will shut down their operations
B. customers will borrow more from banks
C. the supply of money may be reduced
D. interest charges by banks will fall

38. Commercial banks are different from development banks in that the latter

A. lend on short-term basis
B. pay interest on current accounts only
C. are mostly joint-stock companies
D. do not deal in foreign currencies

39. The use of the bank rate, cash ratio and open market operations constitute

A. monetary policy
B. export policy
C. fiscal policy
D. import policy

40. Fiscal policy measures imply a change in

A. only taxation to control aggregate demand
B. bank rate to influence lending
C. only government expenditure to regulate an economy
D. government revenue and expenditure to regulate an economy

41. If demand is perfectly inelastic, a tax imposed

A. is borne only by the producer
B. is borne only by the consumer
C. will have greater impact on the seller
D. will have no impact on the buyer

42. Development planning focuses mainly on

A. allocation of resources by the entrepreneurs
B. mapping out strategies by the government
C. developing some areas of the country by the government
D. deciding on which types of homes to build

43. Political instability hinders economic growth because it

A. scares many people from politics
B. prevent politicians from playing effective politics
C. discourage entrepreneurs generally
D. encourages urban-rural migration

44. Foreign investment and long term securities in the balance of payment accounts are recorded as

A. current account transaction
B. capital account transaction
C. balance of trade account transaction
D. invisible balance account transaction

45. An argument for the use of commercial policy rest on the need to

A. make imported goods affordable
B. reduce domestic unemployment
C. encourage the importation of non-essential goods
D. make a country enjoy absolute advantage in production of all goods

46. Which of the following measures can lead to an increase in exports?

A. Increase in export duties
B. Increase in excise duties
C. Depreciation of currency
D. Total ban on imports

47. Given that a country’s index of export price is 180 and that of import is 200, the terms of trade is

A. 0.09
B. 2.00
C. 90.00
D. 380.00

48. A benefit that is present in all forms of economic integration is that

A. factors of production are free to move and be moved
B. common currency is in use
C. common agricultural policy is in place
D. the size of the market is widened

49. The main function of the African Development Bank (AFDB) is to

A. promote free trade and development among members
B. provide loans to finance balance of payment problems
C. provide loans to members to finance viable projects
D. help members overcome their internal problems

50. If petrol is no longer needed to produce energy, then demand for crude oil

A. will increase
B. will remain constant
C. may be limited to chemical industries
D. will make producing countries richer

ANSWERS