2018 - WAEC Economics Past Questions and Answers - page 1

Goods and services that satisfy human wants are produced with the help of resources such as land, labour, capital and enterprise. These resources are scarce while wants are unlimited. Due to scarcity of these resources, an economy cannot produce all that goods and services as required by its citizens.

In short, production possibility curve is a curve which shows all possible combinations of two goods that can be produced by making full use of given resources and technology in an economy.

A production possibility curve measures the maximum output of two goods using a fixed amount of input. The input is any combination of the four factors ofproduction. ... Each point on the curve shows how much of each good will be produced when resources shift from making more of one good and less of the other.

entrepreneur is  a person who sets up a business or businesses, taking on financial risks in the hope of profit. “one who organizes, manages, and assumes the risks of a business or enterprise and manages the various production factors

 Competition leads to efficiency because businesses that have fewer costs are more competitive and make more money. Innovation is encouraged because it provides a competitive edge and increases the chance for wealth.

Downward sloping demand curve means a rational consumer will demand more of a commodity when its price falls. Some of the reasons for.the phenomenon would be: Income Effect : When price of a commodity falls, consumer's real income rises that is he can now purchase more of the commodity with the same income.
 

Causes of Downward Sloping of Demand Curve

• Law of diminishing the marginal utility
• Substitution effect
• Income effect
• New buyers
• Old buyers

• 1. Law of diminishing the marginal utility

  The law of diminishing marginal utility states that with each increasing quantity of the commodity, its marginal utility declines.

  For example, when a person is very hungry the first chapatti that he eats will give him the most satisfaction. As he will consume more chapattis, his level of satisfaction will diminish.

  Thus, when the quantity of goods is more, the marginal utility of the commodity is less. Thus, the consumer is not willing to pay more price for the commodity and its demand will decline.

  Also, when the price of the commodity is low, its demand increases.

  Hence, the demand curve slopes downwards from left to right.

Substitute goods or substitutes are at least two products that could be used for the same purpose by the same consumers. If the price of one of the products rises or falls, then demand for thesubstitute goods or substitute good (if there is just one other) is likely to increase or decline.Substitute goods or substitutes are at least two products that could be used for the same purpose by the same consumers. If the price of one of the products rises or falls, then demand for thesubstitute goods or substitute good (if there is just one other) is likely to increase or decline.

Normal goods are a type of goods whose demand shows a direct relationship with a consumer's income. A normal good is one whose demand increases when people's incomes or the economy rise.

A normal demand curve (which when graphed goes down and to the right) shows that when prices go up, the amount of a good that is demanded goes down. Examples are when the price of gas goes up, people buy less of it and do less driving. ... An exceptional demand curve is one wherein the opposite occurs. it is a  demand curve rising upwards showing that people buy more when the prices go up. the following are the reasons for an exceptional demand curve;

Inferior goods/ Giffen goods

Goods having prestige value

Price expectation

Fear of shortage

Change in income

Change in fashion

Basic necessities of life

Joint supply is an economic term referring to a product or process that can yield two or more outputs. Common examples occur within the livestock industry: cows can be utilized for milk, beef and hide; sheep can be utilized for meat, milk products, wool and sheepskin

 Fixed supply: The total land area of earth (in the sense of the surface area available to men) is fixed. First, supply of land is fixed or inelastic from society's point of view.