1. The fundamental economic problem in every society is

A. The large number of the unemployed

B. Inadequate supply of money.

C. Corruption and mismanagement

D. Limited supply of productive resources


  1. A point X inside a production possibility curve indicate that

(a)  Resources are fully utilized.

(b) The country is poor

(c) Some resources are idle

(d) Resources are not available.


  1. The major employer of labor in developing countries is the
  1. tertiary sector
  2. secondary sector
  3. primary sector
  4. industrial sector


  1. The desire for profit is a major feature of
  1. traditional economy
  2. mixed economy
  3. market economy
  4. command economy


  1. The wages of a group of workers in dollars are stated below:

40, 30, 70, 20, 60,10,10,80, 30and 10.

What is the mean wage?

A. 35

B. 36

C. 37

D. 38


  1. If  the coefficient of price elasticity of demand  of product is a zero, then it’s demand curve will be

A. parallel to the quantity axis

B. parallel to the price axis

C.  Negatively slopped.

D.  Positively slopped


  1. If the demand function is ${{Q}_{d}}=-0.5p+20$, calculate the quantity demanded when price is 27.50

A. – 27.50

B. –12.50

C. 12.50

D. 27.50

  1. If less of a good is bought as one’s income increases, such a good is

(a) A normal good

(b) A luxury

(c) a necessity

(d) an inferior good


  1. The demand for coffee and tea is

(a)  Joint

(b) Competitive

(c) composite

(d) derived


  1. What effect will an increase in the supply of fish have on the meat market?

(a) A fall in equilibrium price and quantity.

(b) An increase in equilibrium price and quantity

(c) An increase in equilibrium price and a fall in quantity

(d) Both equilibrium price and quantity remain unchanged


  1. Which of the following factors is not a condition for a change in supply of a commodity?

(a) Improved technology

(b) Cost of production

(c) The price of the commodity

(d) Government tax policies


  1. Supply of agricultural products is likely to be elastics in the

(a) Intermediate period

(b) long-run

(c) Market period

(d) Short run


  1. Two commodities X and Y are in joint supply when

(a) X is a by-product of Y

(b) X and Y are produced by the same firm

(c) Increase in quantity of X leads to decrease in Y

     (d)X and Y cannot be purchased in the same process.


  1. Table I

Units of quantity consumed

Total utility

marginal utility




















Table I above illustrate the law of

(a)        diminishing marginal productivity

(b)       diminishing returns

(c)       diminishing marginal utility

(d)       variable proportion


  1.  When the price of a good is above the equilibrium, there will be
  1. A shortage
  2. A surplus
  3. Unemployment
  4. Inflation


  1. What happens when a minimum price is imposed in a market?

(a)Shortage occurs

(b)Surplus occur

(c)The market maintain it equilibrium

(d)Many firm will close down


  1. When an increase in input leads to a more than proportionate increase in output ,there is

(a)  decreasing to scale

(b) increase in marginal product

(c)  increasing returns to scale

(d) constant returns to scale



  1. The short run in production is the period when

(a)  techniques of production can easily be changed

(b)  all factor of production are variable

(c)  at least a factor is fixed while others are variable

(d) variable factor cannot be changed


Table II shows the short-run of a firm

Use it to answer question 19


Table II






Fixed cost



































19. Calculate the value of Q

(a)        $350

(b)        360

(d)       $370


20. A cost of production that is positively related to output is the

(a)  total fixed cost

(b) average fixed cost

(c) variable cost

(d) social cost


21. In perfect competition, the average revenue curve of a firm is

(a) below the marginal revenue curve

(b) downward slopping

(c) the marginal revenue curve

(d) convex to the origin


22.Which of the following means of funding a business is very reliable and cheap?

(a) bank loans

(b) loans from friends

(c) plough back profit

(d) debentures


23.Government in most cases influence location of firm to

(a) discourage private investors

(b) ensure equitable distribution

(c) reduce cost of production

(d) make the firm enjoy economies of scale

24. Middlemen are made up of

(a)manufacturers, wholesalers and consumers

(b) manufacturers, wholesalers and retailers

(c) wholesaler, retailers and hawkers

(d) Wholesalers, retailers and consumer


25. The Malthusian theory of population was proved wrong because

(a) the practice of subsistence farming was encourage

(b) developing countries adopted birth control method

(c) new lands and new method of production were discovered

(d)Malthus’ view was seen as an exaggeration


26. Human development can be improved if

  1. bank give more loan to businessmen
  2. large family size are encourage
  3. general education and training is encouraged
  4. it is handled by private sector only


27. The use of interest rate to control money supply is a

(a) control policy

(b) monetary policy

(c)  development policy

(d) fiscal policy


28. Agricultural productivity may be increased if

A. educational institution are established in rural areas

B. commercial banks are established in rural areas

C. more infrastructural facilities are provided in rural areas

D. labour intensive method of agriculture is encouraged.


29.  A country is described as industrialized if

A. the contribution of industries to national income is high

B. traditional and modern sectors coexist

C. the country adopts import promotion strategy

D. primary industries dominate the economy


30, Which of the following is a major advantage of establishing a tomato processing factory in a country?

A, Local consumption will decrease

B.. More unskilled labour will be employed

C. Foreign exchanged will be conserved

D. It will attract tourists

31. The total value of goods and services produced within the border of a country is

A. net national product

B.Net domestic product

C. gross domestic product

D gross national product


32, Which of the following items is not considered as a transfer payment?

A. Pension pay

B. Government subsidy

C. Students’ grant

D. Doctor salary


33. Which of the following factors will not underestimate the national income

A. Rapid decrease in prices

B. Increased subsistence production

C. Practice of specialization of labour

D. Increase in value of service not paid for


34. Which of the following is true of the value of money? It

A. It positively related to the price level

B. depends on the value of people attach to it

C. is determined by the government

D. is inversely related to the price level


35. The motive of holding money to meet unforeseen events is termed

A. precautionary demand

B. transactions demand

C. liquidity demand

D. speculative demand


36. An increase in the prices of factor input many result in

A. demand – pull inflation

B. stagflation

C. open inflation

D. cost – push inflation


37. Insurance companies are similar to commercial banks in that they

A. Compensate their customers for losses

B. acts as lender of last resort

C. help in maintaining monetary stability in a nation

D. help in mobilizing saving for investment


38. What happens when the central bank increases bank rate

A. Amount of borrowing increases

B. Amount of borrowing decreases

C. Supply of money increases

D.  Commercial banks are not affected


39. Citizens are protected from government’s arbitrariness in taxation by the canon of

A. elasticity

B. flexibility

C. economy

D. certainty


40. In a period of unemployment and falling prices, government should adopt a

A. zero based budget

B. budget deficit

C.  balanced budget

D. Surplus budget


41. In most developing countries, a large percentage of labour force is engaged in

A. trading

B. mining

C. agriculture

D. manufacturing


42. In most underdeveloped countries, development plans do not achieve their objectives due to

A. poor coordination between local and national governments

B. exportation of more primary products

C. lack of educational institutions in those countries

D. urban-rural migration of citizen


43. Balance of trade involves exchange of

A. goods only

B. services only

C. goods and services

D. goods and capital


44.. An improvement in a country’s term of trade means that the

A. nation can export more services

B. nation’s receipts on exports is equal to payment of imports

C. value of her imports is lower than her exports

D. visible exports is less than visible imports


45.  Devaluation of currency may not correct a balance of payment deficit if the demand for export is through

A. perfectly inelastic

B. perfectly elastic

C. fairly elastic

D. unitary elastic


46. One measure of financing a country’s balance of payment deficit is through

A. export diversification

B. import substitution

C. short term borrowing through IMF

D. Internal borrowing from commercial banks


47. The major achievement of the Economic Community of West African States (ECOWAS) is that it has

A. made capital more mobile

B. made possible the use of common currency.

C. increased members allegiance to former colonial masters

D. widened the market for goods produced


48.  Which of the following institutions is concerned with expanding developing countries’ commodity market trade?

A. World Trade Organization (WTO)

B. United Nations Conference on Trade and Development (UNCTAD)

C. Economic Commission for Africa (ECA)

D. African Development Bank (AfDB)


49. Exploitation of forest resources becomes a major problems when

A. communities fight over ownership

B. they are not renewed

C. they are neglected

D. the supply is fixed in the long run


50. Natural resources that are renewable are found in the

A. mining sector

B. traditional sector

C. Agricultural sector

D.  secondary sector