This is the real Level 1 question set — 20 questions, free, no account needed.
Tap a question to check your answer and read the explanation.
1. The study of Nigeria's total national income and general price level falls under
A. microeconomics
B. macroeconomics
C. welfare economics
D. consumer economics
Explanation: Macroeconomics deals with the study of the economy as a whole, including aggregate measures such as national income, general price level, and total employment.
2. In a socialist economy, the major means of production are
A. owned by private individuals only
B. owned and controlled by the state
C. left entirely to market forces
D. owned equally by foreign investors
Explanation: In socialism, the state owns and controls the major means of production and makes key economic decisions on behalf of society, unlike capitalism where private individuals own resources.
3. Which of the following is NOT one of the fundamental economic problems faced by every society?
A. What to produce
B. How to produce
C. For whom to produce
D. Where to advertise products
Explanation: The three fundamental economic problems every society faces are what to produce, how to produce, and for whom to produce. Advertising location is not one of the basic economic problems.
4. A curve that shows the maximum combinations of two goods an economy can produce with its available resources and technology is called the
A. demand curve
B. supply curve
C. production possibility curve
D. indifference curve
Explanation: The production possibility curve (PPC) illustrates the maximum output combinations of two goods that an economy can produce given fixed resources and technology.
5. An economic system in which resources are owned and controlled mainly by private individuals with little government interference is known as
A. socialism
B. capitalism
C. communism
D. mixed economy
Explanation: Capitalism (a free market economy) is characterised by private ownership of resources and minimal government intervention, with prices determined by market forces.
6. An economic system in which the government owns and controls all the major means of production and decides what, how and for whom to produce is known as a
A. Free market economy
B. Mixed economy
C. Command economy
D. Traditional economy
Explanation: In a command (planned) economy, the state or central authority owns the major resources and makes the key economic decisions, unlike a free market economy where private individuals make such decisions.
7. The statement 'The Nigerian government should reduce fuel subsidy' is an example of
A. positive economics
B. normative economics
C. microeconomics only
D. descriptive economics
Explanation: Normative economics deals with value judgements and opinions about what ought to be done, such as recommending a policy action, unlike positive economics which deals with facts.
8. When a country such as Nigeria concentrates on producing crude oil, in which it has a comparative advantage, and trades with other countries for goods it does not produce, this practice is called
A. Autarky
B. Specialisation
C. Subsistence farming
D. Protectionism
Explanation: Specialisation occurs when an individual, firm, region, or country concentrates on producing a particular good or service in which it has an advantage, and depends on trade to obtain other needs.
9. A worker at a textile factory in Kaduna receives payment for her labour. This payment is known as
A. rent
B. wages
C. interest
D. profit
Explanation: Wages (or salaries) are the reward paid to labour for the work done, while rent goes to land, interest to capital, and profit to the entrepreneur.
10. Which of the following is one of the three basic economic problems that every society must solve?
A. What goods and services to produce
B. Which political party to vote for
C. What language to speak
D. Where to hold elections
Explanation: The three basic economic problems facing every society are: what to produce, how to produce, and for whom to produce, all arising from the scarcity of resources.
11. When a student with limited pocket money arranges his wants in order of importance before spending, he is applying the concept of
A. scale of preference
B. division of labour
C. opportunity cost only
D. specialisation
Explanation: A scale of preference is a list showing wants arranged in order of importance, from the most pressing to the least, to help guide spending decisions under scarcity.
12. Economics is best defined as the social science that studies how
A. government makes laws to guide businesses
B. society allocates scarce resources to satisfy unlimited wants
C. companies advertise their products to consumers
D. banks create employment for citizens
Explanation: Economics studies how individuals and society make choices to allocate scarce resources among competing unlimited wants.
13. The basic economic problem of scarcity arises because
A. human wants are limited while resources are unlimited
B. human wants are unlimited while resources are limited
C. government fails to produce enough goods
D. traders refuse to sell their goods at low prices
Explanation: Scarcity exists because human wants are unlimited while the resources available to satisfy them are limited, forcing society to make choices.
14. Which of the following is NOT one of the four traditional factors of production?
A. Land
B. Labour
C. Money
D. Capital
Explanation: The four traditional factors of production are land, labour, capital, and entrepreneurship. Money is a medium of exchange, not a factor of production itself.
15. In economics, the term 'land' as a factor of production refers to
A. only farmland used for agriculture
B. all natural resources provided by nature
C. buildings constructed by man for business
D. the money used to purchase real estate
Explanation: In economics, land refers to all natural resources provided by nature such as soil, water, minerals, forests, and climate, not just farmland.
16. An economy where the government and private individuals both play significant roles in resource allocation is called a
A. traditional economy
B. command economy
C. mixed economy
D. barter economy
Explanation: A mixed economy, like Nigeria's, combines features of both capitalism (private ownership) and socialism (government control) in allocating resources.
17. Which of the following statements is an example of positive economics?
A. Nigeria should increase minimum wage
B. The inflation rate in Nigeria rose to 24% last year
C. Government ought to ban food imports
D. Workers deserve higher salaries
Explanation: Positive economics deals with objective, factual statements that can be tested and verified, such as reporting an actual inflation rate, unlike normative statements which express opinions.
18. Which of the following is a benefit of division of labour in a shoe factory in Aba?
A. It reduces the total output produced
B. It increases efficiency and productivity of workers
C. It eliminates the need for raw materials
D. It guarantees equal pay for all workers
Explanation: Division of labour allows workers to specialise in specific tasks, leading to increased skill, speed, and overall efficiency, which raises productivity.
19. The statement "the Nigerian government should increase the minimum wage of workers" is an example of
A. Positive economics
B. Normative economics
C. Descriptive economics
D. Microeconomics only
Explanation: Normative economics deals with value judgements and opinions about what ought to be done, expressed with words such as "should", unlike positive economics which deals with facts that can be tested.
20. Which of the following is an example of a free good?
A. Bag of rice sold in Mile 12 market
B. Sunlight enjoyed by everyone
C. Petrol bought at a filling station
D. A pair of shoes made in Aba
Explanation: A free good, such as sunlight, is available in unlimited supply and does not require payment because it is not scarce, unlike economic goods like rice, petrol, or shoes.
That's a real Level 1 — free, every time.
Create a free account to play this for real: track your score, earn XP, unlock Level 2, and work
toward a certificate in Economics.
