WEST AFRICAN EXAMINATIONS COUNCIL (WAEC) GCE STYLE
2026 ECONOMICS MOCK EXAMINATION
Objective and Essay (Theory) Questions and Answers
Independently Produced Practice Paper for Revision Purposes
This is a 100% original mock examination prepared strictly with reference to the current WAEC Economics syllabus for practice purposes. It is not a WAEC past question paper, it does not reproduce any official WAEC document, and it does not claim to predict or represent the actual WAEC examination in any way.
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General Instructions
1. This paper consists of two sections: Section A (Objective) and Section B (Essay).
2. Section A contains 60 objective questions. Answer ALL questions. Time: 40 minutes.
3. Section B contains 6 essay questions. Answer any FOUR (4) questions. Time: 1 hour 40 minutes.
4. Total marks obtainable: 100 (60 marks for Section A and 40 marks for Section B).
5. Write clearly and number your answers correctly.
SECTION A: OBJECTIVE QUESTIONS (60 MARKS)
Answer ALL questions. Each question carries 1 mark. Choose the correct option A, B, C or D.
1. Economics can best be defined as the study of
A. how governments print money
B. how individuals and society choose to allocate scarce resources to satisfy unlimited wants
C. how to become wealthy quickly
D. how companies advertise their products
2. The basic economic problem faced by all societies is
A. inflation
B. scarcity
C. unemployment
D. taxation
3. The cost of the next best alternative forgone when a choice is made is called
A. opportunity cost
B. sunk cost
C. fixed cost
D. marginal cost
4. Which of the following is a factor of production?
A. Land
B. Labour
C. Capital
D. All of the above
5. The reward for the factor of production ‘land’ is called
A. wage
B. rent
C. interest
D. profit
6. The reward for the factor of production ‘labour’ is called
A. rent
B. wage
C. interest
D. profit
7. The reward for the factor of production ‘capital’ is called
A. rent
B. wage
C. interest
D. profit
8. The reward for the factor of production ‘entrepreneurship’ is called
A. rent
B. wage
C. interest
D. profit
9. A curve that shows the maximum combinations of two goods that an economy can produce with its available resources is called the
A. demand curve
B. supply curve
C. production possibility curve
D. indifference curve
10. An economic system in which economic decisions are made mainly by private individuals and market forces is called a
A. command economy
B. free market economy
C. mixed economy
D. traditional economy
11. An economic system in which economic decisions are made mainly by the government is called a
A. free market economy
B. command economy
C. mixed economy
D. traditional economy
12. An economic system that combines features of both the free market and command economies is called a
A. traditional economy
B. command economy
C. mixed economy
D. closed economy
13. The quantity of a good that consumers are willing and able to buy at a given price over a period of time is called
A. supply
B. demand
C. stock
D. output
14. The quantity of a good that producers are willing and able to offer for sale at a given price over a period of time is called
A. demand
B. supply
C. consumption
D. utility
15. The law of demand states that, other things being equal, as the price of a good rises, the quantity demanded
A. also rises
B. falls
C. remains constant
D. becomes infinite
16. The law of supply states that, other things being equal, as the price of a good rises, the quantity supplied
A. falls
B. remains constant
C. rises
D. becomes zero
17. The point at which the demand curve and the supply curve of a good intersect is called the
A. break-even point
B. equilibrium point
C. saturation point
D. indifference point
18. A rightward shift of the demand curve for a good may be caused by
A. a fall in consumer income (for a normal good)
B. an increase in consumer income (for a normal good)
C. an increase in the price of the good itself
D. a decrease in population
19. The measure of the responsiveness of quantity demanded to a change in price is called
A. price elasticity of demand
B. income elasticity of demand
C. cross elasticity of demand
D. elasticity of supply
20. If a small change in price leads to a very large change in quantity demanded, demand is said to be
A. perfectly inelastic
B. elastic
C. inelastic
D. unitary
21. If quantity demanded does not change at all when price changes, demand is said to be
A. perfectly elastic
B. elastic
C. perfectly inelastic
D. unitary
22. A market structure with a very large number of buyers and sellers, homogeneous products, and free entry and exit is called
A. monopoly
B. oligopoly
C. perfect competition
D. monopolistic competition
A. perfect competition
B. monopoly
C. oligopoly
D. duopoly
24. A market structure with a few large sellers dominating the market is called
A. perfect competition
B. monopoly
C. oligopoly
D. monopolistic competition
25. The total market value of all final goods and services produced within a country’s borders in a given year is called
A. Gross National Product (GNP)
B. Gross Domestic Product (GDP)
C. Net National Income
D. Per Capita Income
26. National income divided by the total population of a country gives the
A. Gross Domestic Product
B. per capita income
C. balance of payments
D. terms of trade
27. Which of the following is an example of a direct tax?
A. Value Added Tax
B. Import duty
C. Personal income tax
D. Excise duty
28. Which of the following is an example of an indirect tax?
A. Personal income tax
B. Company income tax
C. Value Added Tax (VAT)
D. Capital gains tax
29. A persistent rise in the general price level of goods and services in an economy over time is called
A. deflation
B. inflation
C. depreciation
D. devaluation
30. A situation in which people who are willing and able to work cannot find jobs is called
A. inflation
B. unemployment
C. recession
D. stagflation
31. The type of unemployment that occurs due to a mismatch between workers’ skills and available jobs is called
A. frictional unemployment
B. structural unemployment
C. seasonal unemployment
D. cyclical unemployment
32. The type of unemployment that occurs when workers are temporarily between jobs is called
A. frictional unemployment
B. structural unemployment
C. seasonal unemployment
D. cyclical unemployment
33. The main function of money as a medium of exchange is to
A. store value over time
B. eliminate the need for a double coincidence of wants in trade
C. measure the value of goods only
D. serve as a standard for deferred payment only
34. Which of the following is a function of money?
A. Medium of exchange
B. Store of value
C. Unit of account
D. All of the above
35. The apex bank responsible for regulating and controlling the banking system and money supply in Nigeria is the
A. Central Bank of Nigeria
B. Nigerian Stock Exchange
C. Federal Ministry of Finance
D. Nigeria Deposit Insurance Corporation
36. A financial institution that accepts deposits and provides loans to individuals and businesses is called a
A. stock exchange
B. commercial bank
C. insurance company
D. cooperative society
37. The minimum price fixed by the government, above the equilibrium price, to protect producers is called a
A. price ceiling
B. price floor
C. subsidy
D. price control
38. The maximum price fixed by the government, below the equilibrium price, to protect consumers is called a
A. price floor
B. price ceiling
C. subsidy
D. tariff
39. A grant of money given by the government to producers to reduce the cost of production and encourage output is called a
A. tax
B. subsidy
C. tariff
D. quota
40. A tax imposed on imported goods to raise revenue and protect domestic industries is called a
B. tariff
C. quota
D. excise duty
41. A physical or numerical limit placed on the quantity of a good that can be imported is called a
A. tariff
B. subsidy
C. quota
D. embargo
42. The record of all economic transactions between a country and the rest of the world over a given period is called the
A. balance of trade
B. balance of payments
C. exchange rate
D. terms of trade
43. The difference between the value of a country’s exports and the value of its imports of goods is called the
A. balance of payments
B. balance of trade
C. terms of trade
D. current account
44. A situation in which the value of a country’s exports exceeds the value of its imports is called a
A. trade deficit
B. trade surplus
C. balanced trade
D. trade embargo
A. interest rate
B. exchange rate
C. inflation rate
D. discount rate
46. The production of a wide variety of goods and services within an economy, rather than relying on one or two products, is called
A. specialization
B. diversification
C. industrialization
D. privatization
47. The transfer of ownership of government-owned enterprises to private individuals or companies is called
A. nationalization
B. privatization
C. diversification
D. deregulation
48. The process by which government-owned enterprises are brought under state control and ownership is called
A. privatization
B. nationalization
C. commercialization
D. liberalization
49. Which of the following is a feature of a developing economy?
A. High per capita income
B. Low dependence on agriculture
C. High population growth rate
D. Advanced industrial base
50. The systematic and continuous increase in the productive capacity of an economy over time is called
A. economic growth
B. economic development
C. economic stability
D. economic recession
51. Economic development is best described as
A. an increase in national output only
B. a broad improvement in the standard of living, including income, health, and education
C. a rise in population size
D. an increase in the number of banks
52. Which of the following is a major contributor to Nigeria’s Gross Domestic Product?
A. Agriculture
B. Crude oil and gas
C. Services
D. All of the above
53. A form of business organisation owned and controlled by one person, who bears all the risks and enjoys all the profits, is called a
A. partnership
B. sole proprietorship
C. public corporation
D. joint stock company
54. A form of business organisation owned by two or more people who share responsibility, profits and losses is called a
A. sole proprietorship
B. partnership
C. public corporation
D. cooperative society
55. A business organisation owned by shareholders, with limited liability, and shares that can be bought and sold, is called a
A. sole proprietorship
B. partnership
C. joint stock (limited liability) company
D. cooperative society
56. The type of liability in which a shareholder’s loss is limited to the amount invested in the business is called
A. unlimited liability
B. limited liability
C. joint liability
D. personal liability
57. A voluntary association of people who join together to promote their economic interests through mutual help is called a
A. public corporation
B. cooperative society
C. joint stock company
D. multinational corporation
58. The branch of economics that studies individual units such as households and firms is called
A. macroeconomics
B. microeconomics
C. development economics
D. international economics
59. The branch of economics that studies the economy as a whole, including national income and general price levels, is called
A. microeconomics
B. macroeconomics
C. welfare economics
D. labour economics
60. The total number of people of working age who are either employed or actively seeking work is called the
A. population
B. labour force
C. dependent population
D. urban population
SECTION A MARKING GUIDE: OBJECTIVE ANSWER KEY
Each correct answer carries 1 mark. Total = 60 marks.
| Q | Ans | Q | Ans | Q | Ans | Q | Ans |
| 1 | B | 16 | C | 31 | B | 46 | B |
| 2 | B | 17 | B | 32 | A | 47 | B |
| 3 | A | 18 | B | 33 | B | 48 | B |
| 4 | D | 19 | A | 34 | D | 49 | C |
| 5 | B | 20 | B | 35 | A | 50 | A |
| 6 | B | 21 | C | 36 | B | 51 | B |
| 7 | C | 22 | C | 37 | B | 52 | D |
| 8 | D | 23 | B | 38 | B | 53 | B |
| 9 | C | 24 | C | 39 | B | 54 | B |
| 10 | B | 25 | B | 40 | B | 55 | C |
| 11 | B | 26 | B | 41 | C | 56 | B |
| 12 | C | 27 | C | 42 | B | 57 | B |
| 13 | B | 28 | C | 43 | B | 58 | B |
| 14 | B | 29 | B | 44 | B | 59 | B |
| 15 | B | 30 | B | 45 | B | 60 | B |
SECTION B: ESSAY QUESTIONS (40 MARKS)
Answer any FOUR (4) questions only. Each question carries 10 marks.
1. (a) Define economics. (2 marks)
(b) Explain the basic economic problem of scarcity and state four ways in which it forces societies to make choices. (8 marks)
2. (a) List and explain the four factors of production and their rewards. (8 marks)
(b) State two characteristics of land as a factor of production. (2 marks)
3. (a) State the law of demand and the law of supply. (4 marks)
(b) With the aid of a well-labelled diagram description, explain how the equilibrium price of a good is determined in a free market. (6 marks)
4. (a) Distinguish between inflation and unemployment. (4 marks)
(b) State three causes and three effects of inflation on an economy. (6 marks)
5. (a) List and explain the functions of money. (6 marks)
(b) State four functions of the Central Bank of Nigeria. (4 marks)
6. (a) Distinguish between a sole proprietorship and a joint stock (limited liability) company as forms of business organisation. (4 marks)
(b) State three advantages and three disadvantages of a sole proprietorship. (6 marks)
SECTION B MARKING GUIDE (ESSAY)
Each question carries 10 marks. Award marks as guided below, giving credit for any other correct and relevant point not listed.
Question 1
(a) Economics is the social science that studies how individuals, firms and society choose to allocate scarce resources among competing uses, in order to satisfy their unlimited wants. (2 marks for a reasonable, complete definition)
(b) Scarcity refers to the situation in which human wants are unlimited, while the resources available to satisfy those wants are limited, forcing choices to be made. (2 marks)
Any four ways scarcity forces choices at 1.5 marks each:
1. What to produce: Society must decide which goods and services to produce with its limited resources.
2. How to produce: Society must decide the method or combination of resources to use in production.
3. For whom to produce: Society must decide how the goods and services produced will be distributed among its members.
4. How much to consume and how much to save: Individuals must allocate their limited income between present consumption and saving for the future.
5. Opportunity cost: Every choice made because of scarcity involves giving up an alternative, which represents the opportunity cost of that choice.
Question 2
(a) Any four factors at 2 marks each (1 mark for correct explanation, 1 mark for correct reward):
1. Land: Refers to all natural resources used in production, such as soil, water, minerals and forests; its reward is rent.
2. Labour: Refers to the physical and mental effort of human beings used in production; its reward is wages/salary.
3. Capital: Refers to man-made resources, such as machinery, tools and buildings, used to produce other goods and services; its reward is interest.
4. Entrepreneurship: Refers to the ability to organise the other factors of production, take risks and make business decisions; its reward is profit.
(b) Any two characteristics at 1 mark each: Land is fixed in supply (cannot be increased); land has no cost of production (it is a free gift of nature); land is immobile geographically, though it may be occupationally mobile; land varies in fertility and quality from place to place.
Question 3
(a) Law of demand (2 marks): The law of demand states that, other things being equal (ceteris paribus), as the price of a good rises, the quantity demanded of that good falls, and as the price falls, the quantity demanded rises; that is, there is an inverse relationship between price and quantity demanded.
Law of supply (2 marks): The law of supply states that, other things being equal, as the price of a good rises, the quantity supplied of that good also rises, and as the price falls, the quantity supplied falls; that is, there is a direct relationship between price and quantity supplied.
(b) Explanation (6 marks): The demand curve slopes downward from left to right, showing the inverse relationship between price and quantity demanded, while the supply curve slopes upward from left to right, showing the direct relationship between price and quantity supplied. Equilibrium price is determined at the point where the demand curve intersects the supply curve, that is, where the quantity demanded by consumers exactly equals the quantity supplied by producers, so there is neither a surplus nor a shortage in the market. At any price above this equilibrium, quantity supplied would exceed quantity demanded, creating a surplus that would push the price back down; at any price below equilibrium, quantity demanded would exceed quantity supplied, creating a shortage that would push the price back up, until equilibrium is restored.
Question 4
(a) Inflation is a persistent and general rise in the price level of goods and services in an economy over a period of time, which reduces the purchasing power of money. Unemployment is a situation in which people who are willing and able to work, and are actively seeking employment, are unable to find jobs. (4 marks, 2 marks each)
(b) Causes of inflation (any three at 1 mark each): Excessive growth in money supply relative to output (demand-pull inflation); a rise in the cost of production, such as wages or raw materials (cost-push inflation); excessive government spending/deficit financing; high demand for goods and services relative to available supply; devaluation of the local currency, raising the cost of imported goods.
Effects of inflation (any three at 1 mark each): It reduces the purchasing power/real value of money and savings; it can discourage savings and investment due to uncertainty; it erodes the real income of people on fixed incomes; it can lead to a rise in the cost of living and reduced standard of living; it may make a country’s exports less competitive in international markets.
Question 5
(a) Any three functions at 2 marks each: Medium of exchange, money eliminates the need for a double coincidence of wants by serving as a generally accepted means of payment for goods and services; unit of account, money serves as a common standard for measuring and comparing the value of different goods and services; store of value, money can be saved and used to make purchases at a future date, retaining its value over time (subject to inflation); standard for deferred payment, money allows for debts and future payments to be expressed and settled in agreed monetary terms.
(b) Any four functions at 1 mark each: Issuing legal tender currency (notes and coins) for the country; acting as banker to the government and to commercial banks; regulating and supervising the banking and financial system; formulating and implementing monetary policy to control money supply and inflation; managing the country’s foreign exchange reserves; acting as lender of last resort to commercial banks.
Question 6
(a) A sole proprietorship is a business owned and controlled by one person, who provides the capital, makes all business decisions, bears unlimited liability for the debts of the business, and takes all the profits (or losses). A joint stock (limited liability) company is a business organisation owned by shareholders, whose liability is limited to the amount of their shareholding, with shares that can generally be bought, sold or transferred, and which is managed by a board of directors on behalf of the shareholders. (4 marks, 2 marks each)
(b) Advantages of a sole proprietorship (any three at 1 mark each): Easy and inexpensive to set up, with minimal legal formalities; the owner has full control over business decisions; the owner keeps all the profits made by the business; it allows for close, personal relationships with customers.
Disadvantages (any three at 1 mark each): The owner bears unlimited liability, risking personal assets for business debts; limited capital, since it usually relies on the owner’s personal savings and small loans; limited continuity, as the business may cease to exist upon the death, illness or retirement of the owner; heavy workload and responsibility resting on one person, without the benefit of shared expertise.
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