| 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. A good example of an incorporated business unit is:
Explanation: An incorporated business is legally recognized as a separate entity. Joint stock companies are examples of incorporated businesses.
2. A perfectly inelastic demand curve will be:
Explanation: A perfectly inelastic demand curve indicates that quantity demanded does not change regardless of price.
3. This question is based on the cost schedule below:
| Output (units) | Total Cost (FCFA) |
|---|---|
| 0 | 1000 |
| 1 | 2500 |
| 2 | 6000 |
| 3 | 9600 |
What is the fixed cost of the second unit of output produced?
Explanation: Fixed costs remain constant regardless of the output, as indicated by the cost at 0 output.
4. The low level of industrialization in Cameroon is caused by:
Explanation: Industrialization depends on sufficient infrastructure, which is lacking in many developing countries.
5. The most profitable function of a commercial bank is:
Explanation: Banks make most of their profits by lending money and earning interest.
6. Contractual payments made to owners of land and capital are:
Explanation: Owners of land earn rent, and owners of capital earn interest for their contributions.
7. A man has a monthly income of 200,000 FRS, and the tax rate is 5%. Determine his disposable income:
Explanation: Disposable income = Income - Tax = 200,000 - (5% of 200,000) = 200,000 - 10,000 = 190,000 FCFA.
8. A perfect definition of "demand" must contain the following:
Explanation: Demand is defined as the quantity of a good or service that consumers are willing and able to purchase at various prices over a given period of time.
9. A principle of taxation that requires that the tax yield be more than the cost of collection is:
Explanation: Economy refers to the principle that the cost of collecting taxes should be minimal compared to the revenue generated.
10. The documents given to company promoters by the registrar of companies are:
Explanation: These documents legally establish the company and allow it to begin operations.
11. When the government, through the central bank, decides to reduce the supply of money in an economy, the objective will likely be:
Explanation: Reducing the money supply can help control rising prices by limiting spending power in the economy.
12. If an increase in the price of good X leads to an increase in the demand for good Y, goods X and Y represent:
Explanation: Competitive demand occurs when goods serve as substitutes for each other.
13. The population where a greater proportion is made up of the young and adult is referred to as:
Explanation: A growing population is characterized by a high proportion of young individuals relative to the elderly.
14. The inability for a teacher in Yaounde to become a lawyer in Bamenda is brought about by:
Explanation: Certain professions, such as law, require specialized training and certification, which can take years to complete.
15. How many denominations of coins does the FCFA have?
Explanation: The FCFA currency includes a total of eight coin denominations commonly in circulation.
16. The composition of the national debt of a country is as follows:
Loans from IMF – 2 billion FCFA
Loans from institutions within the country – 1 billion FCFA
Loans from friendly countries – 3 billion FCFA
Loans from citizens who bought treasury bills – 2 billion FCFA
What is the percentage of internal debts?
Explanation: Internal debts include loans from institutions within the country and treasury bills, totaling 3 billion FCFA out of 8 billion FCFA, which is 62.5%.
17. When the government takes over a private business venture to manage and control, we call it:
Explanation: Nationalization occurs when the government assumes ownership and management of a private company.
18. A customer has 200,000 FCFA in his current account and withdraws 250,000 FCFA. If the rate of interest of the bank is 10%, how much interest will the customer pay?
Explanation: The overdraft is 50,000 FCFA (250,000 FCFA - 200,000 FCFA), and 10% of 50,000 FCFA is 5,000 FCFA in interest.
19. A large firm has the ability to employ expert salesmen and expert buyers. Such a firm is said to be enjoying:
Explanation: Technical economies refer to cost advantages due to the use of better technology or skilled labor.
20. When a country sells goods cheaper abroad than in the home market, this is termed:
Explanation: Dumping refers to exporting goods at a price lower than their cost or domestic market price.
21. The act of giving different names to products to make them appear different is known as:
Explanation: Branding involves naming and promoting a product to distinguish it from others in the market.
22. One of the problems faced by agriculture in Cameroon is:
Explanation: A shortage of skilled and unskilled labor remains a significant challenge in Cameroon's agricultural sector.
23. The regular organization of trade fairs in the economy of Cameroon is an example of:
Explanation: Organizing trade fairs facilitates economic activities without direct government management of businesses.
24. The term "ends" as used in the definition of economics refers to:
Explanation: In economics, "ends" generally refer to the goals of fulfilling human needs and necessities.
25. The most important characteristic of money is:
Explanation: Money must be universally accepted within an economy for it to serve its purpose effectively.
26. Trade between Cameroon and China only is known as:
Explanation: Bilateral trade involves trade agreements and activities between two countries.
27. Village X has a population of 10,000 people in January 20XX. During the year 2000 people moved into and 1000 people moved out of the village. Also, there were 1500 recorded live births and 500 recorded deaths. Determine the population at the end of the year:
Explanation: The population change is calculated as follows: 10,000 + 2000 (moved in) - 1000 (moved out) + 1500 (births) - 500 (deaths) = 13,500.
28. Given quantity demanded to be 400-P and quantity supplied to be 40+P, where P is price of the good in Fcfa. Calculate the equilibrium price:
Explanation: Equilibrium occurs when quantity demanded equals quantity supplied: 400 - P = 40 + P. Solving for P, P = 180fcfa.
29. One reason for measuring National Income is:
Explanation: National income measurement helps estimate government revenue from taxes based on economic activity.
30. The possible amalgamation between Guinness Cameroon SA and Brasseries du Cameroun is known as:
Explanation: Horizontal integration occurs when two companies in the same industry merge to consolidate market share.
31. An indicator of economic development is:
Explanation: Economic development is often measured by an increase in real per capita income, reflecting improved living standards.
32. The immediate effect of a maximum price instituted by the government is:
Explanation: A maximum price below the equilibrium price reduces supply, leading to excess demand and shortages.
33. The object on which a tax is placed is known as:
Explanation: The tax base refers to the object, transaction, or income on which tax is levied.
34. A population pyramid with a broad base is typical of:
Explanation: A broad-based population pyramid indicates a high birth rate, which is characteristic of underdeveloped countries.
35. The composition for the demand of money for an individual is as follows: Transaction balance – 150,000fcfa Precautionary balance – 50,000fcfa Speculative balance – 100,000fcfa Determine the active balance for this individual:
Explanation: Active balance refers to the portion of money actively used for transactions, which here is the transaction balance.
36. One factor affecting elasticity of supply is:
Explanation: Elasticity of supply increases when producers can store goods and adjust supply more easily.
37. A limitation of division of labour is:
Explanation: Repetitive tasks in specialized roles can lead to worker fatigue, reducing productivity.
38. A determinant of the size of a country’s national income is:
Explanation: Countries rich in natural resources often have a higher potential for national income generation.
39. The production decisions in a mixed economy are taken by:
Explanation: In a mixed economy, production is influenced by market forces and government intervention.
40. A measure of trade restriction that provokes retaliation from trade partners is:
Explanation: Tariffs raise the cost of imports, potentially provoking retaliatory measures from trade partners.
41. When income elasticity of demand is negative, the good is said to be:
Explanation: A negative income elasticity indicates that demand decreases as income increases, typical of inferior goods.
Explanation: Regional organizations like CEMAC facilitate reduced transportation costs through improved infrastructure and free trade agreements.
