WAEC 2025 ECONOMICS CLASS NOTES
1. Introduction to Economics
Economics is the study of how individuals, businesses, and governments allocate
scarce resources to satisfy human wants. Basic concepts include scarcity, choice,
and opportunity cost. Economics is divided into microeconomics, which focuses on
individual behavior, and macroeconomics, which studies economy-wide trends.
2. Factors of Production
The four factors of production are:
1. Land – Natural resources used in production (reward: rent).
2. Labor – Human effort, skilled and unskilled (reward: wages).
3. Capital – Tools, machines, and money (reward: interest).
4. Entrepreneurship – Risk-taking and innovation in business (reward:
profit).
3. Demand and Supply
Demand is the quantity of goods consumers are willing and able to buy at different
prices. The Law of Demand states that as price increases, demand decreases (inverse
relationship). Determinants of Demand include income, prices of related goods,
consumer preferences, population, and future expectations.
Supply is the quantity of goods producers are willing and able to sell at different
prices. The Law of Supply states that as price increases, supply increases (direct
relationship). Determinants of Supply include cost of production, technology,
taxes, and weather conditions.
Market Equilibrium occurs when demand and supply intersect. A price above
equilibrium causes a surplus, while a price below equilibrium leads to a shortage.
4. Production and Costs
Types of Production:
• Primary production (farming, mining)
• Secondary production (manufacturing, construction)
• Tertiary production (services like banking, healthcare)
Cost Concepts:
• Fixed Cost (FC) – Costs that do not change with output (e.g., rent).
• Variable Cost (VC) – Costs that change with output (e.g., wages).
• Total Cost (TC) = FC + VC
• Average Cost (AC) = TC ÷ Quantity
• Marginal Cost (MC) – Additional cost of producing one more unit.
5. Market Structures
1. Perfect Competition – Many sellers, identical products, no barriers to
entry (e.g., agricultural markets).
2. Monopoly – One seller, high barriers to entry, price maker (e.g.,
electricity companies).
3. Oligopoly – Few large firms dominate, interdependent pricing (e.g., oil
companies).
4. Monopolistic Competition – Many sellers, differentiated products, some
price control (e.g., clothing brands).
6. Money and Banking
Functions of Money: Medium of exchange, store of value, unit of account, standard
of deferred payment. Types of Money include commodity money (gold), fiat money
(paper currency), and bank money (electronic transfers).
Functions of Commercial Banks: Accept deposits, grant loans, transfer money, and
handle foreign exchange. Functions of the Central Bank: Issuing currency,
controlling inflation, regulating banks, managing reserves.
7. National Income
National Income Concepts:
• Gross Domestic Product (GDP) – Total value of goods and services within
a country.
• Gross National Product (GNP) – GDP plus income from abroad.
• Net National Product (NNP) – GNP minus depreciation.
• Per Capita Income – National income divided by population.
Methods of Measuring National Income:
1. Output Method – Total value of goods and services.
2. Income Method – Total earnings (wages, rent, interest, profit).
3. Expenditure Method – Total spending on goods and services.
8. Inflation and Unemployment
Inflation is the persistent rise in general price levels. Causes include demand-
pull inflation (excess demand), cost-push inflation (higher production costs), and
excessive money supply. Inflation reduces purchasing power and increases living
costs. It is controlled through monetary policy (interest rates, money supply
control) and fiscal policy (taxation, government spending).
Unemployment occurs when people willing to work cannot find jobs. Types include
frictional unemployment (short-term job transitions), structural unemployment
(skills mismatch), and cyclical unemployment (due to economic downturns).
Unemployment increases poverty and crime, reducing government revenue. Solutions
include job creation policies and investment in skills training.
9. International Trade and Balance of Payments
Trade Types:
• Domestic trade – Buying and selling within a country.
• International trade – Exchange of goods and services between countries.
Balance of Payments (BOP):
• Current Account – Exports and imports of goods and services.
• Capital Account – Foreign investments and loans.
• BOP Surplus – More exports than imports.
• BOP Deficit – More imports than exports.
Trade Barriers:
• Tariffs – Taxes on imports.
• Quotas – Limits on imported goods.
• Subsidies – Government support for local industries.
10. Economic Development and Planning
Economic Growth vs. Development: Growth refers to increased GDP, while development
focuses on improving living standards through better healthcare, education, and
infrastructure.
Indicators of Development:
• High literacy rate
• Increased life expectancy
• Improved healthcare and infrastructure
Government Strategies for Economic Growth:
• Investment in infrastructure
• Promoting industrialization
• Encouraging foreign investment
• Reducing corruption
Conclusion
This Economics note covers all essential topics for WAEC 2025. Study thoroughly,
understand key concepts, and apply them to real-life situations. Stay ahead and
succeed!
