SCHOOLS

FIRST TERM UNIFIED EXAMINATION

2018/2019 ACADEMIC SESSION
SUBJECT: ECONOMICS CLASS: YEAR 11 TIME: 2 HOURS
PAPER 1: MULTIPLE CHOICE QUESTIONS

1. An inferior good is one

A. that is not durable
B. that is easily perishable
C. whose price is lower than the prices of other goods
D. whose demand falls when the consumer’s income increases.
2. Resources are said to be scarce because
A. the demand for them is very high
B. they are under-supplied
C. the demand for them exceeds their supply
D. they are sparse.
3. The shape of a demand curve indicates a movement from West to East.
Such a demand curve is referred to as ………………….
A. Perfectly inelastic
B. Unitary elastic
C. Perfectly elastic
D. Relatively elastic
4. A change in consumers’ income will cause
A. a change in demand
B. a change in quantity demanded
C. savings to remain the same
D. reckless spending.
5. The proportionate change in the demand for commodity X divided by the
proportionate change in the price of commodity Y is
A. cross elasticity of demand
B. price elasticity of demand
C. point elasticity of demand
D. income elasticity of demand.
6. Goods for which their demand decreases as price decreases are
A. inferior goods
B. normal goods
C. complementary goods
D. giffen goods.
7. The law of supply is shown on a graph by
A. a downward sloping curve from left to right
B. an upward sloping curve from left to right
C. a line parallel to the price axis
D. a line parallel to the quantity axis.

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8. A change in supply implies a
A. shift in supply curve to the right and not to the left
B. shift in the supply curve to the left and not to the right
C. shift in the supply curve to the right or to the left
D. movement along the supply curve.
9. Supply in Economics means making
A. goods and services available to consumers
B. goods available to the market at a given price and at a given period
C. goods available to the market all that is produced
D. goods available to the market, half of what is produced.
10. All the under-listed factors directly affect supply of a commodity except
A. Price of the commodity
B. improved production method
C. level of consumer’s income
D. access to capital.
11. The type of supply in which two or more commodities are produced and supplied
from one source is known as
A. Composite supply
B. Derived supply
C. Competitive supply
D. Joint supply.
12. At what price will a trader be ready to sell three oranges using the function:
2P = 4q2 + 4, where p is price and q is quantity supplied?
A. N32
B. N20
C. N26
D. N40.
13. A movement along the supply curve either upwards or downwards as a result of
changes in prices implies
A. a change in supply
B. a change in quantity supplied
C. an increase in supply
D. a shift in supply.
14. All things being equal, an increase in supply will lead to
A. a fall in price and an increase in quantity bought and sold
B. an increase in price and increase in quantity bought and sold
C. a fall in price and a fall in quantity bought and sold
D. an increase in quantity supplied and demanded only.
15. If the co-efficient of cross elasticity of demand for goods Y and Z is positive,
the two goods are
A. complements
B. substitutes
C. luxuries
D. inferior
16. The co-efficient of price elasticity indicates
A. how far business can reduce cost
B. the degree of competition
C. the extent to which demand curve shifts
D. Consumers’ responsiveness to price changes.

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17. Income elasticity of demand is the measurement of the responsiveness of
A. price to changes in income
B. quantity demanded to changes in income
C. changes in expenditure to changes in income
D. changes in expenditure to changes in price of the commodity.
18. The income elasticity for normal good is
A. positive
B. negative
C. zero
D. fixed.
19. When elasticity is zero, the demand curve is
A. concave
B. downward sloping
C. perfectly elastic
D. perfectly inelastic.
20. When the price of a given product is reduced from N50 to N30, the quantity
demanded increases from 50 to 70 units. From this, we can conclude that
A. demand is elastic
B. demand is inelastic
C. demand is perfectly inelastic
D. demand has inclined.
21. The responsiveness of demand to a change in income is the measurement of
A. foreign exchange rate
B. cross elasticity of demand
C. income elasticity of demand
D. price index elasticity.
22. An increase in the price of a commodity from $10 to $15 leads to increase in
quantity supplied from 10 units to 15 units. The price elasticity of supply is
A. 0
B. 0.5
C. 1
D. 5.
23. Price elasticity of supply can be influenced by the following factors except
A. time period
B. cost of production
C. nature of the product
D. size of consumers’ income.
24. If a 6% decrease in price results in more than 6% decrease in quantity supplied,
supply can be regarded as
A. elastic
B. unitary elastic
C. perfectly elastic
D. perfectly inelastic.
25. A supply curve which is vertical has elasticity co-efficient of
A. 0
B. 0.5
C. 1
D. 2.

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26. At a co-efficient of price elasticity of supply of 0.5, supply is
A. elastic
B. inelastic
C. perfectly elastic
D. perfectly inelastic.
27. The price of a commodity is determined by the
A. supplier
B. consumer
C. interaction of demand and supply
D. quantity of goods supplied.
28. The price system refers to the system by which
A. the government controls prices in the economy
B. the producers fix the price of their products
C. price allocates resources between consumers and producers
D. prices tend to rise to a general level.
29. The equilibrium price of oranges is 50k. If for some reasons, the price rises to 60k,
there will be
A. excess demand
B. excess supply
C. shortage in the market
D. many buyers in the market.
30. One disadvantage of price system is that it makes possible greater
A. incentive to risk bearing
B. change in the economic environment
C. freedom of choice
D. inequality of income and wealth.
31. A government subsidizes the production of pineapples. This is likely to
A. increase the price of pineapples
B. raise the costs of supplying pineapples
C. raise revenue for the government
D. cause the supply of pineapples to increase at a reduced price.
32. The market for a good was in equilibrium. A change occurred which resulted in a new
equilibrium with a higher price for the good and a lower quantity traded. What change
would have caused this?
A. the demand curve moved to the left
B. the demand curve moved to the right
C. the supply curve moved to the left
D. the supply curve moved to the right.
33. Which of the following is not an advantage of price control?
A. control of inflation
B. distortion of price mechanism
C. prevention of exploitation
D. helping low income earners.
34. Price control can be defined as the fixing of maximum or minimum price by government on
A. luxury goods
B. imported capital goods
C. inferior goods
D. certain selected goods.

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35. In maximum price legislation, the government
A. fixes the price above the equilibrium price
B. fixes the price at the equilibrium price
C. fixes the price below the equilibrium price
D. reduces the supply of goods and services.

A government gives farmers a subsidy of $5 per kilo to supply food on the open market
where X is the original equilibrium position. The effect is illustrated in the diagram

36. What will be the new equilibrium price and quantity supplied as a result of the subsidy?

Equilibrium price ($ per kilo) Quantity supplied (000 kilos)

A 10 16

B 13 20

C 15 16

D 20 8

37. Increase in production subsidy will

A. shift the demand curve to the left
B. shift the supply curve to the right
C. shift both the demand and supply curves to the left
D. shift the supply curve to the left and the demand curve to the right.
38. A major reason why government subsidizes the production of certain commodities is to
A. reduce production
B. increase production
C. increase cost of production
D. reduce the number of producers.
39. Which one of the following costs of production does not change with output?
A. Marginal Cost (MC)
B. Total Cost (TC)
C. Variable Cost (VC)
D. Fixed Cost (FC).

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40. In the firm’s production process, marginal cost
A. falls continuously throughout
B. falls and later rises
C. remains unchanged throughout
D. rises and later falls.

41. In the long run, all factor inputs are

A. variable
B. constant
C. fixed
D. diminishing.
42. Which of the following explains marginal cost?
A. Overhead costs plus variable cost resulting from production
B. The average cost of producing more unit of the product
C. The extra cost of producing more units of the product
D. Overhead cost minus variable cost.
43. If AC = average cost of production, FC = fixed cost of production,
VC = variable cost of production, and TC = total cost of production, then
A. VC = TC/FC
B. VC = FC + AC
C. VC = TC - AC
D. VC = TC - FC

Output Total Cost ( N)

1 20
2 56
3 96
4 144
44. In the table above, the marginal cost when
output 5 160 is 2 units is
A. N16
B. N20
C. N36
D. N40.
45. The profit of a producer is the difference between
A. total cost and marginal cost
B. total revenue and total cost
C. average cost and total cost
D. price and total cost.
46. What must be added to variable cost to give total cost?
A. Average Total Cost
B. Average Variable Cost
C. Fixed Cost
D. Marginal Cost.
47. Which of the following is regarded as fixed cost?
A. Cost of raw materials
B. Cost of fuel

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 C. Cost of light
D. Rent on land.
48. Which of the following does not change in the short run?
A. Variable Cost
B. Marginal Cost
C. Total Cost
D. Fixed Cost.
49. The notion of short-run and long-run periods is responsible for grouping costs into
A. fixed and variable costs
B. implicit and explicit
C. average and total
D. money and opportunity.
50. If a firm’s price is less than average cost but more than average variable cost,
the firm is covering
A. all of its fixed cost and variable cost
B. all of its fixed cost and part of variable cost
C. all of its variable cost and part of fixed cost
D. part of its fixed cost and part of the variable cost.

PAPER 2
THEORY QUESTIONS
SECTION A
Answer only one question from this section
1. Use the table below to answer the following questions.

Price per unit (N) Quantity demanded (kg) Quantity supplied (kg)

5 500 60
6 400 150
7 300 300
8 250 400
9 150 500
10 50 600

a. At what price and quantity does the market attain equilibrium, and why? 5 marks

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 b. At what price does the market exhibit excess demand over supply and
by how much? 5 marks
c. At what price does the market exhibit excess supply over demand and
by how much? 5 marks
d. At what price will the supplier be willing to sell most? What quantity will
he be willing to sell at that price? 5 marks

2. Use the table below to answer the following questions.

Output Total Revenue Marginal Total Cost Marginal

(kg) (N) Revenue (N) (N) Cost (N)
0 0 - 5 -
1 9 9 8 3
2 18 9 16 T
3 24 6 21 5
4 28 Q 25 4
5 30 2 26 1
6 P 1 25 0
7 28 -3 S 1
8 24 R 24 -2

a. Calculate the values of P, Q, R, S, and T. 5 marks

b. At what output is profit maximized? 5 marks
c. Calculate the profit when quantity sold is 5. 5 marks
d. At what output does MC begin to rise? 5 marks

SECTION B
Answer three questions from this section
3. a. Using graphical illustrations, explain the five types of price elasticity of demand.
15 marks
b. Outline five factors that can affect demand for a commodity. 5 marks

4. a. Properly differentiate between the followings concepts:

i. Implicit cost and explicit cost 5 marks
ii. Economist’s and accountant’s view on cost 5 marks

b. With the aid of diagram, differentiate between:

i. Marginal Cost and Average Cost. 5 marks
ii. Fixed Cost and Variable Cost. 5 marks

5. a. What is Price System? 2 marks

b. Highlight four factors that determine price. 4 marks
c. State four functions of price system. 4 marks
d. Is there a difference between price ceiling and minimum price? Explain. 4 marks

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 e. State three effects of maximum price legislation. 6 marks

6. a. Discuss five factors that could determine supply of a commodity. 10 marks

b. Define Price Elasticity of Demand. 2 marks
c. What is Income Elasticity of Demand? 2 marks
d. Outline six factors that affect Elasticity of Demand. 6 marks