Free GCE O Level Economics South West Mock March 2024 Past Paper 1 Questions

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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 firm enjoys economies of scale when:

A. Marginal cost is falling

B. Fixed cost is falling

C. Average cost is falling

D. Total cost is falling

The correct answer is "C. Average cost is falling." Economies of scale occur when increased production lowers the cost per unit.

2. Which of the following is NOT a reason for international trade?

A. To prevent dumping

B. To extend the product life cycle

C. Differences in technology

D. Immobility of factors of production

The correct answer is "D. Immobility of factors of production." International trade is primarily driven by factors like comparative advantage and market expansion.

3. Paper money backed by gold at the central bank is described as:

A. Token

B. Fiat money

C. Bank Notes

D. Fiduciary issue

The correct answer is "D. Fiduciary issue." This refers to currency issued against the gold reserves held by a central bank.

4. Which of the following factors can explain the shift of the supply curve from S0 to S2?

A. Increase in price of the good

B. Increase in the cost of production

C. Increase in consumer's disposable income

D. Reduction in indirect taxes

The correct answer is "D. Reduction in indirect taxes." Lower indirect taxes reduce production costs, increasing supply.

5. Which of the following is an unincorporated form of business unit?

A. Partnership

B. Joint stock companies

C. Cooperative societies

D. Public corporation

The correct answer is "A. Partnership." Partnerships are unincorporated business units as they do not form a separate legal entity from their owners.

6. Calculate the price elasticity of supply if a 25% increase in price causes the quantity supplied to increase by 75%.

A. 0.33

B. 1

C. 1.5

D. 3

The correct answer is "C. 1.5." Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. (75% ÷ 25% = 1.5)

7. Which of the following items is used in the expenditure method of measuring national income?

A. Value added in agriculture

B. Wages and salaries

C. Investment

D. Income from self-employment

The correct answer is "C. Investment." The expenditure method calculates GDP by adding consumption, investment, government spending, and net exports.

8. A negative cross elasticity of demand suggests that the goods are:

A. Complements

B. Unrelated

C. Substitutes

D. Dependent

The correct answer is "A. Complements." A negative cross elasticity means that when the price of one good rises, the demand for the other good falls.

9. National income will increase when the economy witnesses an:

A. Increase in the size of the black economy

B. Increase in the value of depreciation

C. Increase in self-provided services

D. Improvement in technology

The correct answer is "D. Improvement in technology." Technological advancements enhance productivity, increasing national income.

10. The table below relates to the utility schedule of a pupil in a school canteen. What is the Total utility when the 2nd bottle was consumed?

A. 10 utils

B. -5 utils

C. 5 utils

D. 31 utils

The correct answer is "C. 5 utils." Total utility is the sum of marginal utilities, and for the second bottle, it corresponds to the provided data.

11. A two-channel distribution system involves which of the following?

A. Two channel distribution

B. Three channel distribution

C. Four channel distribution

D. Direct dealing

The correct answer is "B. Three channel distribution." This involves three intermediaries in the process of distributing goods to customers.

12. In a certain economy, if Gross National Product stands at 27 Million FCFA and population is 9,000,000 inhabitants, the per capita income will be:

A. 3 million FCFA

B. 3 FCFA

C. 0.33 Million FCFA

D. 0.33 FCFA

The correct answer is "A. 3 million FCFA." Per capita income is calculated as GNP divided by the population (27,000,000 ÷ 9,000,000 = 3 million FCFA).

13. The population of country X in 2023 is 10,000,000 inhabitants. If the number of life births was 300,000, what was the birth rate?

A. 25 per thousand

B. 30 per thousand

C. 40 per thousand

D. 40 percent

The correct answer is "B. 30 per thousand." Birth rate is calculated as (300,000 ÷ 10,000,000) × 1,000 = 30 per thousand.

14. What is the value of the current account balance based on the following table:

A. 45 Million FCFA

B. -5 Million FCFA

C. 20 Million FCFA

D. 5 Million FCFA

The correct answer is "A. 45 Million FCFA." This is derived from balancing the capital, visible, and invisible balances in the given table.

15. A trade gap exists when:

A. Visible balance is negative

B. Invisible balance is negative

C. Visible balance is positive

D. Invisible balance is positive

The correct answer is "B. Invisible balance is negative." A trade gap occurs when the income from exports is less than the expenditure on imports.

16. What is the value of BOP in this economy?

A. 40 Million FCFA

B. 35 Million FCFA

C. 25 Million FCFA

D. 20 Million FCFA

The correct answer is "B. 35 Million FCFA." The Balance of Payments (BOP) is calculated based on the visible, invisible, and capital account balances provided.

17. A market structure comprising of many buyers and sellers with identical but differentiated products is a:

A. Monopolistic competition

B. Monopoly

C. Perfect competition

D. Duopoly

The correct answer is "A. Monopolistic competition." This market structure is characterized by many competitors selling slightly differentiated products.

18. Which of the following is used to measure the value of money?

A. Real National Income

B. Per Capita Income

C. Retail Price Index

D. Nominal Interest Rate

The correct answer is "A. Real National Income." It reflects the purchasing power of money over time by accounting for inflation.

19. A situation where payment is made and the goods are delivered on a later date is known as:

A. Capital market

B. Credit sales

C. Future market

D. Delivery market

The correct answer is "C. Future market." This refers to transactions where goods or commodities are delivered at a specified future date.

20. Commercial banks act as agents of payment through the following ways except:

A. By Discounting bills of exchange

B. By Granting Loans

C. By Accepting Cheques

D. By Standing Order

The correct answer is "D. By Standing Order." Standing orders are regular payments set up by customers, not a direct payment agent function of banks.

21. The fixed cost of producing the fourth bottle is:

A. 30,000 FCFA

B. 9,000 FCFA

C. 17,000 FCFA

D. 8,000 FCFA

The correct answer is "B. 9,000 FCFA." Fixed cost remains constant regardless of the output, as seen from the table provided.

22. A trade gap exists when:

A. Visible balance is negative

B. Invisible balance is negative

C. Visible balance is positive

D. Invisible balance is positive

The correct answer is "B. Invisible balance is negative." A trade gap indicates that invisible earnings are less than payments.

23. Which branch of economics deals with factual information?

A. Positive economics

B. Normative economics

C. Micro economics

D. Macro economics

The correct answer is "A. Positive economics." This branch focuses on objective and fact-based analysis, rather than subjective judgments.

24. Which of the following markets deals with the buying and selling of securities?

A. Spot market

B. Money market

C. The stock exchange market

D. Foreign exchange market

The correct answer is "C. The stock exchange market." This is where securities like stocks and bonds are traded.

25. Which of the following is a role of price mechanism in the allocation of economic resources?

A. Price control

B. Rationing

C. Equitable distribution of income

D. Fails to reward factors of production

The correct answer is "A. Price control." The price mechanism helps allocate resources by determining prices based on supply and demand.

26. Which location factor has influenced the location of the Tea Factory in Tole?

A. Proximity to power

B. Proximity to market

C. Proximity to raw material

D. Proximity to labor

The correct answer is "C. Proximity to raw material." Tea factories are often located near plantations to minimize transportation costs.

27. Goods which do not have opportunity cost are called?

A. Economic goods

B. Public goods

C. Private goods

D. Free goods

The correct answer is "D. Free goods." These are goods available in abundance and do not require trade-offs, such as air.

28. Which of the following is a method of privatization?

A. Deregulation

B. Joint ventures

C. Subsidization

D. Franchising

The correct answer is "B. Joint ventures." Privatization often involves partnerships between public and private sectors.

29. A movement from point S to D illustrates:

A. Economic growth

B. Potential growth

C. Economic decline

D. Consumer preference shift

The correct answer is "C. Economic decline." Movement from point S to D on a production possibility curve signifies less efficient use of resources.

30. Which of the following institution controls banking activities in Cameroon?

A. BEAC

B. CEMAC

C. IMF

D. COBAC

The correct answer is "D. COBAC." COBAC (Central African Banking Commission) regulates banking operations within CEMAC countries, including Cameroon.

31. Which of the following instrument of trade restriction is a source of revenue to the state?

A. Embargo

B. Tariffs

C. Quota

D. Subsidies

The correct answer is "B. Tariffs." Tariffs are taxes on imported goods and serve as a significant revenue source for governments.

32. A tax whose administration process is cost-effective, is said to possess the quality of:

A. Economy

B. Convenience

C. Efficiency

D. Certainty

The correct answer is "C. Efficiency." An efficient tax minimizes administrative costs relative to the revenue collected.

33. To encourage industrial growth in Cameroon, the government ought to:

A. Relieve restriction on importation

B. Increase excise duties

C. Encourage technical education

D. Encourage labor immobility

The correct answer is "C. Encourage technical education." This equips workers with skills needed for industrial development.

34. Agriculture as "the backbone" of Cameroon's economy implies that:

A. All Cameroonians are involved in the agricultural sector

B. Agriculture contributes highest to Cameroon's GDP

C. Agriculture is the original economic activity in Cameroon

D. Agriculture is the main source of food in Cameroon

The correct answer is "B. Agriculture contributes highest to Cameroon's GDP." It plays a crucial role in the economy, providing income, employment, and exports.

35. When a harmful good is inelastic in demand, consumption can be discouraged through:

A. Taxation

B. Subsidies

C. Price controls

D. Advertising

The correct answer is "A. Taxation." Higher taxes raise the price, making consumption less attractive despite inelastic demand.

36. Which of the following budgetary options can the government adopt to achieve full employment?

A. Budget deficit

B. Budget surplus

C. Budget equilibrium

D. Balanced budget

The correct answer is "A. Budget deficit." Increased government spending boosts employment by stimulating demand.

37. An economy that experiences a high rate of unemployment coexisting with a high rate of inflation is said to suffer from:

A. Stagflation

B. Hyperinflation

C. Slumpflation

D. Strato-inflation

The correct answer is "A. Stagflation." This occurs when high unemployment and inflation coexist.

38. Which of the following is an advantage of industrial concentration?

A. War target

B. Joint research

C. Rural exodus

D. High social costs

The correct answer is "B. Joint research." Industrial concentration allows collaboration and shared innovation.

39. Country X recorded a total population of 22 million inhabitants at the end of 2023. If the number of births stood at 3,000,000 and deaths at 900,000, what was the natural growth?

A. 17.7 percent

B. 0.04 percent

C. 9.54 percent

D. 1.8 percent

The correct answer is "C. 9.54 percent." Natural growth is calculated as (Births - Deaths) / Total Population × 100.

40. The assertion "The consumer is king" implies that:

A. They can make choices

B. They have the ability to determine what is produced

C. They have the power to decide when and how to buy

D. The producers are their subordinates

The correct answer is "B. They have the ability to determine what is produced." Consumer preferences drive production decisions.

41. Diminishing returns set in when:

A. Total product is increasing at an increasing rate

B. Total product is falling at a constant rate

C. Total product is increasing at a decreasing rate

D. Total product is falling at an increasing rate

The correct answer is "C. Total product is increasing at a decreasing rate." This defines the point where diminishing returns begin.

42. Which of the following stages of production deals with all necessary information needed for production?

A. Primary stage

B. Secondary stage

C. Quinary stage

D. Quaternary stage

The correct answer is "B. Secondary stage." This stage focuses on transforming raw materials into finished goods, requiring key information.

43. Which of the following motives for liquidity preference depends on the market rate of interest?

A. Transactions motive

B. Speculative motive

C. Precautionary motive

D. Savings motive

The correct answer is "B. Speculative motive." Speculative demand for money varies with interest rates.

44. Overpopulation occurs when:

A. Labor force is greater than resources

B. Average product is maximum

C. Average product is increasing

D. Average product is falling

The correct answer is "A. Labor force is greater than resources." Overpopulation results when resources cannot sustain the population.

45. If Mr. Aka's income increases from 48,000CFA to 54,000CFA and the amount of tax he pays increases from 3,000CFA to 6,000CFA, calculate his marginal rate of tax.

A. 50%

B. 12.5%

C. 5.5%

D. 16.6%

The correct answer is "A. 50%." Marginal tax rate = (Change in tax / Change in income) × 100.

46. Identify the letter Y on the diagram below:

Retailer → Y → Manufacturer

A. Consumer

B. Wholesaler

C. Manufacturer

D. Dealer

The correct answer is "B. Wholesaler." A wholesaler links manufacturers and retailers.

47. The desire of commercial banks to keep adequate cash in till to meet the demand for cash by their customers is meant to achieve the objective of:

A. Security

B. Liquidity

C. Productivity

D. Profitability

The correct answer is "B. Liquidity." Liquidity ensures that banks can meet customer demands for cash withdrawals.

48. Mono-cropping is a major feature of:

A. Plantation agriculture

B. Peasant farming

C. Subsistence farming

D. Small holder schemes

The correct answer is "A. Plantation agriculture." Mono-cropping involves growing a single crop extensively, typical of plantation systems.

49. Which of the following is an example of indirect tax?

A. Capital gain tax

B. Corporate tax

C. Value added tax

D. Payroll tax

The correct answer is "C. Value added tax." Indirect taxes are levied on goods or services, and VAT is a common example.

50. Which of the following enterprises has been fully privatized in Cameroon?

A. ENEO

B. CAMWATER

C. CDC

D. PAMOL

The correct answer is "D. PAMOL." PAMOL has been fully privatized in Cameroon compared to the other listed enterprises.

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