| Subject Code | 0525 |
| Subject Title | O Level Economics |
| Session | June 2018 Paper 1 |
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Cameroon GCE O Level Economics Paper 1 Solution - June 2023
1. The Natural Growth Rate (NGR) of a population is:
Explanation: The NGR is calculated by subtracting the death rate from the birth rate and then multiplying by 10%.
2. Specific taxes are levied:
Explanation: Specific taxes are charged per unit of a product, regardless of its value.
3. Which of the following is a limitation to the Division of Labour?
Explanation: Division of labour depends on the size of the market, which can limit its application.
4. Which of the tax systems is Regressive?
Explanation: A regressive tax system imposes a higher tax burden on low-income earners compared to high-income earners.
5. Which of the following factors will cause an increase in quantity demanded of a commodity?
Explanation: Lower income tax increases disposable income, leading to higher demand.
6. The age distribution of the population of a country as a percentage of the total population is as follows: Young 40%, Adult 45%, and Old 15%. What is the size of the dependent population?
Explanation: The dependent population includes young and old people, totaling 85%.
7. ABC, a public limited company (plc), issued 100 preference shares at 60,000 FCFA per share and 150 ordinary shares at 20,000 FCFA per share. What percentage of the company’s capital is contributed by the ordinary shareholders?
Explanation: The contribution of ordinary shareholders is calculated based on the total share capital issued and their value.
8. What is the main objective of a monopolist?
Explanation: A monopolist seeks to maximize profits by setting prices and output levels strategically.
9. In which market structure are firms considered price takers?
Explanation: In perfect competition, firms have no control over the price and must accept the market-determined price.
10. What is the shape of the demand curve in a perfectly competitive market?
Explanation: In a perfectly competitive market, the demand curve faced by a single firm is perfectly elastic due to the identical nature of goods.
11. Which type of unemployment is caused by a mismatch of skills?
Explanation: Structural unemployment occurs when workers' skills do not match job requirements in the market.
12. What is a characteristic of a centrally planned economy?
Explanation: In a centrally planned economy, the government makes all economic decisions.
13. What is the role of an entrepreneur in production?
Explanation: Entrepreneurs coordinate and manage resources to produce goods and services.
14. What is the main advantage of specialization?
Explanation: Specialization enables workers to become more skilled, leading to higher productivity.
15. What is the relationship between price and quantity demanded?
Explanation: As price increases, quantity demanded typically decreases, and vice versa.
16. What is the opportunity cost of a choice?
Explanation: Opportunity cost is the value of what is foregone to undertake an activity.
17. Which economic system relies on supply and demand?
Explanation: In a market economy, prices and production are determined by supply and demand forces.
18. Which one of the following is a characteristic of plantation agriculture?
Explanation: Plantation agriculture focuses on the cultivation of cash crops like tea, coffee, and rubber on a large scale, often for export.
19. If a country’s national income is 800 billion FCFA and the total population is 20 million people, calculate the per capita income for this country.
Explanation: Per capita income is calculated by dividing the national income by the population: 800 billion FCFA ÷ 20 million = 40,000 FCFA.
20. Which one of the following is another name for a capitalist economic system?
Explanation: A capitalist system is characterized by private ownership of resources and minimal government interference, also known as a free enterprise system.
21. Which of these is the most appropriate reason for ensuring that industries be created in rural areas?
Explanation: Establishing industries in rural areas can lead to equitable economic development and reduce regional disparities.
22. An example of transfer payment is:
Explanation: Transfer payments are payments made by the government to individuals without receiving goods or services in return, such as unemployment benefits or pensions.
23. The scale of preference has the least pressing wants at the bottom of the list because:
Explanation: The scale of preference prioritizes wants based on the scarcity of resources.
24. Study the table and calculate the terms of trade for 2008:
Explanation: Terms of trade are calculated as (export price index ÷ import price index) × 100 for the year 2008.
25. The weekly income of a staff in a company was increased from 10,000 FCFA to 12,500 FCFA consequently he can now buy 300 units of a good instead of 200 units per week. His income elasticity of demand is:
Explanation: Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income.
26. The main factor that influences the location of industries that produce bulky products is the:
Explanation: Industries producing bulky products are typically located near raw material sources to minimize transportation costs.
27. Study this diagram and answer the question that follows:
A movement from point A to point B indicates:
Explanation: Economic development is represented by a movement to a higher production possibility curve, reflecting better allocation and use of resources.
28. Study the table and answer the question that follows:
| Number of Workers | Total Output |
|---|---|
| 1 | 10 |
| 2 | 16 |
| 3 | 36 |
| 4 | 40 |
| 5 | 45 |
The average product when the 4th worker is employed is:
Explanation: Average product is calculated as Total Output ÷ Number of Workers. For the 4th worker, it is 40 ÷ 4 = 9.
29. Assume that 1 F.CFA buys €0.65. How many Euros will buy 1 million F.CFA?
Explanation: Multiply 1 million F.CFA by €0.65 to find the equivalent in Euros.
30. Which of the following factors will influence the rate of economic growth in an economy?
Explanation: Technological advancements improve productivity, which accelerates economic growth.
31. Study the table and answer the question that follows:
| Country | Coffee (units) | Wine (units) |
|---|---|---|
| A | 100 | 50 |
| B | 200 | 40 |
| Total | 300 | 90 |
What is the opportunity cost of a unit of coffee in country B?
Explanation: The opportunity cost is calculated as the ratio of the goods given up. In this case, for every unit of coffee, 40/200 = 0.2 (or â…•) units of wine is given up in country B.
32. Which one of the following falls under primary production?
Explanation: Primary production involves activities directly related to natural resources, such as farming, fishing, and mining.
33. A tax should be levied according to people’s ability to pay. This will be termed:
Explanation: The principle of equity ensures taxes are levied based on individuals' ability to pay, making the system fairer.
34. Which one of the following is the most important quality of good money?
Explanation: For money to serve as a medium of exchange, it must be widely accepted by people.
35. The term used in restricting the physical quantity of goods entering the country is called:
Explanation: Embargoes are restrictions imposed on the quantity of specific goods entering a country, often for economic or political reasons.
40. When planned revenue is 500 billion F CFA and planned expenditure is 450 billion F CFA, the budget is known as:
Explanation: A budget surplus occurs when revenue exceeds expenditure.
41. Which one of the following is an effect of rural-urban migration?
Explanation: Rural-urban migration often depletes the workforce in rural areas, leading to a reduced labour force.
42. Production process is ended up by:
Explanation: The production process ends when goods or services reach the consumer.
43. When the value of a country's visible exports exceeds those of its visible imports, this indicates:
Explanation: A favourable balance of trade occurs when a country's export values exceed its import values.
44. Suppose the price of a loaf of bread rises from 200 FCFA to 250 FCFA, and quantity bought falls from 100 loaves to 80 loaves. The price elasticity of demand will be:
Explanation: Elasticity is calculated as the percentage change in quantity divided by the percentage change in price.
45. The Articles of Association is a document:
Explanation: Articles of Association are key documents detailing a company's internal governance structure.
46. The value of the total output of all the inhabitants of a country irrespective of where they are, is called:
Explanation: GNP measures the total economic output of a country's residents, regardless of location.
47. The optimum size of a firm occurs at the output level where the firm's:
Explanation: The optimal size minimizes total cost while maximizing efficiency.
48. Which of the following assets of the commercial bank will you classify as the least liquid?
Explanation: Advances are the least liquid as they are loans granted to customers that take time to recover.
49. The desire for people to hold wealth in cash instead of investing it is called:
Explanation: Liquidity preference refers to the desire to hold cash or liquid assets rather than investing in less liquid assets.
50. Which of the diagrams can best explain the case of an inferior good?
Explanation: For inferior goods, demand decreases as income increases, as shown in Diagram C.
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