WAEC Economics 2020 past questions

Checked by the Skolra question team · Last updated 15 October 2026

Ten questions from the 2020 WAEC Economics paper, with answers and explanations. We hold 46 questions from this paper, and the Skolra app has all of them.

WAEC Economics 2020 questions and answers

1. 1.

   The location of iron and steel industry at a place is due to

   1. A
      access to generous government tax incentives and subsidies
   2. B
      closeness to the largest urban consumer markets
   3. C
      proximity to raw materials such as iron ore and coal deposits
      Correct
   4. D
      availability of a large pool of cheap unskilled labour nearby
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   Answer: C

   The iron and steel industry is classified as a weight-losing (bulk-reducing) industry because it takes large quantities of heavy raw materials — principally iron ore and coking coal — and combines them to produce a comparatively lighter final product. It is therefore most economical to locate the industry close to these raw material sources in order to minimise heavy transport costs. Classic examples include Sheffield (UK near coal), Pittsburgh (USA near Appalachian coal and Great Lakes iron ore), and Jamshedpur (India near iron ore and coal fields).

2. 2.

   Money would cease to be a good store of value when

   1. A
      the central bank raises interest rates on savings significantly
   2. B
      the government moderately expands the money supply
   3. C
      foreign exchange rates between trading nations remain stable
   4. D
      there is persistent and severe inflation in the economy
      Correct
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   Answer: D

   One of the key functions of money is to act as a store of value — allowing purchasing power to be saved and used in the future. Inflation erodes the purchasing power of money over time; a unit of currency buys fewer goods tomorrow than it does today. During periods of persistent and severe inflation, money loses its value rapidly, making it a poor store of value and leading people to hold real assets (land, gold, foreign currency) instead of domestic currency.

3. 3.

   Which of the following is central to the definition of Economics?

   1. A
      The role of government in regulating markets
   2. B
      The maximization of profits by business firms
   3. C
      The unlimited wants of individuals relative to scarce resources
      Correct
   4. D
      The study of international trade and exchange rates
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   Answer: C

   Economics is fundamentally the study of how individuals, households, firms, and governments make choices under conditions of scarcity. Human wants are unlimited, but the resources (land, labor, capital) available to satisfy those wants are finite. This tension between unlimited wants and scarce means forces choices and trade-offs, which is the central problem all economic analysis seeks to address.

4. 4.

   Tools of monetary policy do not include

   1. A
      the discount rate
   2. B
      government taxation
      Correct
   3. C
      open market operations
   4. D
      reserve requirements
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   Answer: B

   Monetary policy is managed by the central bank and operates through instruments that control the money supply and credit conditions. Its recognised tools include open market operations (buying/selling government securities), the reserve requirement (the fraction of deposits banks must hold as reserves), the discount (or bank) rate (the rate at which the central bank lends to commercial banks), and moral suasion. Taxation is an instrument of fiscal policy, which is the domain of the government's budget, not the central bank.

5. 5.

   In the long run, as individuals receive higher wages, it causes

   1. A
      The supply of labor to bend backwards
      Correct
   2. B
      A rightward shift of the labor demand curve
   3. C
      A fall in the equilibrium wage rate
   4. D
      An increase in the quantity of labor supplied at every wage rate
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   Answer: A

   At low wage levels, higher pay encourages workers to supply more hours (the substitution effect dominates). However, beyond a certain wage, the income effect takes over: workers are already earning enough and prefer to buy more leisure, so they reduce hours worked even as wages rise further. This creates the characteristic backward-bending labor supply curve associated with long-run wage increases.

6. 6.

   Which function of the wholesaler enables him to stabilize prices?

   1. A
      Transporting goods from manufacturers to retailers
   2. B
      Advertising products on behalf of manufacturers
   3. C
      Storing goods and releasing them strategically when needed
      Correct
   4. D
      Providing credit facilities to retailers
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   Answer: C

   The warehousing (storage) function lets the wholesaler buy large quantities during periods of surplus and hold them in store. When supply tightens and prices would otherwise spike, the wholesaler releases stock onto the market. Conversely, withholding stock during gluts prevents excessive price collapses. This buying-and-releasing cycle dampens price volatility and stabilizes the market.

7. 7.

   Governments in West Africa can curtail inflation by

   1. A
      printing more money to increase the money supply
   2. B
      increasing subsidies on consumer goods across the board
   3. C
      lowering interest rates to encourage greater borrowing
   4. D
      reducing government expenditure and increasing taxes
      Correct
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   Answer: D

   Inflation is caused by excess money chasing too few goods. Governments can fight it through contractionary fiscal policy — cutting public spending reduces aggregate demand directly, while raising taxes reduces consumers' disposable income, dampening private spending. Both measures withdraw purchasing power from the economy. In contrast, printing more money or lowering interest rates would worsen inflation by pumping more money into circulation.

8. 8.

   If the average fixed cost (AFC) of producing 5 bags of rice is $20.00, the average fixed cost of producing 10 bags will be

   1. A
      $15.00
   2. B
      $40.00
   3. C
      $5.00
   4. D
      $10.00
      Correct
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   Answer: D

   Total fixed cost (TFC) does not change with output. Here, TFC = AFC × quantity = $20.00 × 5 = $100. When output rises to 10 bags, TFC remains $100, so AFC = $100 ÷ 10 = $10.00. This illustrates the key property of fixed costs: spreading the same total over more units cuts the average fixed cost in half each time output doubles.

9. 9.

   A seller increased the quantity he offered for sale from 200 units to 250 units when the price of his product increased by 12.5%. What is the price elasticity of the supply of his product?

   1. A
      1.0
   2. B
      1.5
   3. C
      0.5
   4. D
      2.0
      Correct
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   Answer: D

   Price elasticity of supply = percentage change in quantity supplied ÷ percentage change in price.
   Percentage change in quantity supplied = (250 − 200) ÷ 200 × 100 = 25%.
   Percentage change in price = 12.5%.
   PES = 25% ÷ 12.5% = 2.0.
   Because the value exceeds 1, supply is elastic: producers respond more than proportionately to the price increase.

10. 10.

    When the production possibility curve shifts outwards, the economy experiences

    1. A
       Structural unemployment
    2. B
       A reduction in consumer purchasing power
    3. C
       Economic growth
       Correct
    4. D
       Demand-pull inflation
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    Answer: C

    The production possibility curve (PPC) shows the maximum combinations of two goods an economy can produce given its resources and technology. An outward shift of the PPC means the economy can now produce more of both goods simultaneously — its productive capacity has expanded. This is the definition of economic growth, driven by increases in the quantity or quality of factors of production, or by technological progress.

The questions come from past JAMB, WAEC and NECO papers. We use software to help write the answer options and explanations, and every answer is checked twice before it goes on the site. How we check

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Practise all 46 questions we hold from the 2020 paper, on a timed CBT screen

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