100% Real Waec Gce 2015 Economics Obj And Theory Answers

By 04:51 Fri, 04 Sep 2015 Comments













=14/2 =7

(v) AC=20/4


(w) AC=48/6


(x) AC=14-6





(i) Profit=revenue-cost







-It is output 1

-It is where TC=AC



-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


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-Location of industry is defined simply as the siting or

establishment of a firm or industry in a particular


-Localisation on the other hand refers to the

concentration of firms or industries producing

similar products in an area.



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


(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 supply.

(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 costs.


-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 inflation

-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


-Money laundering: Mass transfer and injection of

money into circulation can also cause inflation


Price elasticity of demand;-This may be defined as

the degree of responsiveness of demand to little

changes in prices of goods and services


-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



-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

(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.


(i) Population explosion: Underdeveloped countries

do witness high birth rate leading to population


(ii) Low standard of living: The standard of living in

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



(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


(ii) Provision of capital: Banks should be encouraged

to provide capital or fund for individuals and firms to

enable them embark on productive ventures.

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