gce model questions vol1 2025 economics | Essay

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Question 1 View Details
Consider the current economic environment in Nigeria, characterised by rapid urbanisation, changing consumer preferences and limited resources.
Question Parts
(a)
Define scarcity and explain why it is regarded as the fundamental economic problem.
(b)
Distinguish between wants and needs, and discuss how opportunity cost arises from this distinction.
(c)
Using the concept of choice, outline how a household decides between purchasing a television set and saving for a future education expense. Include the role of marginal analysis.
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Question 2 View Details
The table below shows the market for wheat in Nigeria at three different price levels. | Price (₦ per kg) | Quantity Demanded (tons) | Quantity Supplied (tons) | |------------------|--------------------------|--------------------------| | 200 | 120 | 80 | | 250 | 90 | 110 | | 300 | 60 | 140 | Assume that demand and supply are linear between the given points.
Question Parts
(a)
From the table, identify the equilibrium price and quantity.
(b)
Calculate the price elasticity of demand between the price points ₦200 and ₦250 using the midpoint method, and interpret the result.
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Question 3 View Details
The table below shows the price (₦) and quantity demanded (units) of smartphones in Nigeria at two points in time. | Period | Price (₦) | Quantity Demanded (units) | |--------|-----------|---------------------------| | 1 | 250,000 | 12,000 | | 2 | 300,000 | 9,000 | Using this information, answer the following questions:
Question Parts
(a)
Calculate the price elasticity of demand between the two periods using the midpoint (arc) method. Show all steps of your calculation.
(b)
Interpret the magnitude of the elasticity you have obtained. What does it imply about consumer responsiveness to price changes in this market?
(c)
The government is considering imposing a specific tax of ₦5,000 on each smartphone sold. Discuss how the elasticity you calculated would affect: (i) the likely incidence of the tax on consumers versus producers; (ii) the impact of the tax on total revenue for sellers.
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Question 4 View Details
A small firm manufactures handcrafted wooden chairs. The table below shows the firm’s total product (TP), total variable cost (TVC) and total fixed cost (TFC) for different levels of output per month. | Output (units) | TP (units of labour) | TVC (₦) | TFC (₦) | |----------------|----------------------|----------|----------| | 0 | 0 | 0 | 150,000 | | 50 | 5 | 40,000 | 150,000 | | 100 | 10 | 85,000 | 150,000 | | 150 | 15 | 135,000 | 150,000 | | 200 | 20 | 200,000 | 150,000 | | 250 | 25 | 280,000 | 150,000 | | 300 | 30 | 375,000 | 150,000 | Using this information, answer the following questions:
Question Parts
(a)
Calculate the Average Product (AP) and Marginal Product (MP) of labour for each increase in output. Identify the range of output where diminishing marginal returns set in.
(b)
Using the cost data, compute the Average Total Cost (ATC) and Marginal Cost (MC) for each output level. Present the results in a concise table.
(c)
Discuss how the firm’s short‑run cost curves relate to the concepts of economies of scale and diseconomies of scale. In your discussion, explain how a technological improvement that reduces the amount of labour required per chair would shift the cost curves.
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Question 5 View Details
A manufacturing firm produces widgets. The following information is given for a typical month: - Fixed costs are ₦120,000. - Variable cost per unit is ₦45. - The firm sells each widget at a price that varies with quantity sold according to the demand schedule below: | Quantity (units) | Price per unit (₦) | |------------------|--------------------| | 2,000 | 80 | | 3,000 | 70 | | 4,000 | 62 | | 5,000 | 55 | The firm is considering whether to increase production to 5,000 units.
Question Parts
(a)
Calculate total cost and total revenue at each quantity level and state whether the firm makes a profit or incurs a loss.
(b)
Using the data, determine the approximate output level at which the firm breaks even. Explain the method you used.
(c)
Discuss two non‑price factors that could influence the firm’s decision to produce 5,000 units even if the break‑even analysis suggests a small loss.
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Question 6 View Details
The government is contemplating the introduction of a price ceiling of ₦150 on a staple food item that is currently sold in a perfectly competitive market. The market equilibrium price is ₦180 and the equilibrium quantity is 10,000 units per month. The price elasticity of demand for the product is –0.6 and the price elasticity of supply is 0.8.
Question Parts
(a)
Explain, with reference to the characteristics of perfect competition, how the market would adjust to the imposed price ceiling in the short run.
(b)
Calculate the expected percentage change in quantity demanded and quantity supplied resulting from the price ceiling. Then find the new quantities demanded and supplied.
(c)
Evaluate the likely welfare effects of the price ceiling, commenting on consumer surplus, producer surplus and dead‑weight loss, using the quantities you have calculated.
(d)
Suggest one alternative policy instrument that could achieve the same consumer benefit without creating a dead‑weight loss, and justify your suggestion.
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Question 7 View Details
A developing economy is analysing the determinants of its national income. The following macro‑economic data are given: - Consumption function: C = 200 + 0.8(Y – T) - Investment: I = 150 - Government expenditure: G = 100 - Tax function: T = 0.2Y - Exports: X = 50 - Imports: M = 0.1Y All values are expressed in millions of naira. Answer the questions that follow.
Question Parts
(a)
Define national income and list its major components in the expenditure approach.
(b)
Using the data supplied, calculate the equilibrium level of national income (Y). Show all steps of your calculation.
(c)
The government decides to increase its expenditure by ₦50 million. Determine the new equilibrium national income and the change in Y, using the appropriate multiplier derived from the data.
(d)
Discuss two limitations of applying the simple expenditure multiplier analysis to the Nigerian economy.
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Question 8 View Details
The Central Bank of Nigeria has increased its policy rate from 12 % to 14 % in an effort to curb inflation. Examine the likely effects of this policy move on the money supply, output and price level, using the data supplied below. Data: - Initial statutory reserve ratio (rr₀) = 10 % - Monetary base (MB) = ₦500 billion - After the rate hike, commercial banks voluntarily raise their reserve ratio to 12 %. Answer the following questions.
Question Parts
(a)
Explain how a change in the Central Bank's policy rate can affect the money supply through open‑market operations and banks' reserve behaviour.
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Question 9 View Details
The table below shows the Consumer Price Index (CPI) for Nigeria over a five‑year period. | Year | CPI Index | |------|-----------| | 2018 | 115 | | 2019 | 121 | | 2020 | 130 | | 2021 | 140 | | 2022 | 152 | The Central Bank of Nigeria (CBN) is concerned that inflation has been persistently high. Answer the following questions:
Question Parts
(a)
Define inflation and distinguish between demand‑pull and cost‑push inflation, giving one realistic example of each in the Nigerian context.
(b)
Using the CPI data above:
() Calculate the average annual inflation rate over the period 2018‑2022.
() Comment on the trend shown by the CPI and discuss two possible macro‑economic implications for the Nigerian economy.
(c)
The CBN is considering two policy measures to curb inflation:
() Raising the policy interest rate.
() Tightening open‑market operations by selling government securities.
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Question 10 View Details
The Labour Force Survey for Nigeria provides the following data for the year 2022: - Total labour force: 20 million persons\n- Employed persons: 18 million persons\n- Unemployed persons: 2 million persons A subsequent quarterly update (Q3 2023) reports: - Total labour force: 22 million persons\n- Employed persons: 19 million persons Answer the following questions:
Question Parts
(a)
Define unemployment and differentiate between structural, frictional and cyclical unemployment, providing a Nigerian example for each type.
(b)
Using the data provided:
() Calculate the unemployment rate for 2022.
() Based on the Q3 2023 figures, compute the new unemployment rate and comment on the change relative to 2022.
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