2020 WASSCE ECONOMICS THEORY

1.
SECTION A
Answer one question only from Section A.
Table 1 below shows the number of workers engaged by an agricultural firm over a period of
time. Study it and answer the questions that follow.
Table 1
Number of Total Marginal Average
workers Product product product
0 0 0 0
1 20 20 20
2 50 30 Z
3 70 20 23.3
4 80 Y 20
5 80 0 16
6 X -9.8 11.7
(a) Calculate the values of X, Y, and Z

(b) At what level of employment of labour does the firm experience:

(i) increasing returns
(ii) decreasing returns
(iii) negative returns.

(c) State the law of diminishing returns

(d) (i) On a graph sheet, draw the total product and the marginal product curve.
(ii) State any two relationships between the two curves in (d)(i) above.
2.
SECTION A
Answer one question only from Section A.
Figure1 below represents the production possibility curve of a nation.
Use it to answer the questions that follow.

(a) What is the opportunity cost of:

(i) producing 30 units of cocoa.
(ii) Increasing textile production from 30 to 40 bales?

(b) Interpret the following points as found in the graph:

(i) Point Y
(ii) Point G
(iii) Point X

(c) List three conditions that can enable the nation to produce at point X.

(d) State two basic economic concepts illustrated in the diagram above.

(e) (i) Define production possibility curve

(ii) What does the slope of the production possibility curve indicate?
3.
SECTION B
(a) Define consumer goods.
(b) Explain the following forms of capital with an example each
(i) Fixed capital
(ii) Social capital
(iii) circulating capital
(c) Outline three reasons for the low level of saving in a country

4.
(a) Distinguish between the following pairs of terms:
(i) capital expenditure and recurrent expenditure
(ii) fiscal policy and monetary policy
(b) Explain four reasons why the government of a country imposes taxes

5.
(a) Define tariff
(b) State the following laws:
(i) The law of absolute cost advantage
(ii) The law of comparative cost advantage
(c) Outline any four assumptions behind the law of comparative cost advantage.

6.
(a) What is money?
(b) Explain the following concepts
(i) Value of money
(ii) Demand for money
(c) Identify any four determinants of transactions demand for money
7.
(a) Distinguish between competitive demand and joint demand
(b) using diagrams, explain how the following factors will affect the equilibrium price and
quantity of commodity R in the market:
(i) an increase in the price of the complement of commodity R;
(ii) an increase in price of a substitute of commodity R
(iii) imposition of an indirect tax on commodity R.

8.
(a) Differentiate between subsistence farming and commercial farming
(b) State four features of subsistence farming.
(c) Outline two positive and two negative effects of mining on the economy of West African
countries.