neco 2017 economics | Essay

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Question 1 View Details
Consider the following statements about the Nigerian economy.
Question Parts
(a)
Define scarcity and explain why it is regarded as the fundamental economic problem.
(b)
A student can either work part‑time earning ₦15,000 per month or attend a short course that costs ₦30,000 and will increase future earnings by ₦10,000 per month. Using the concept of opportunity cost, which option should the student choose? Justify your answer.
(c)
Classify each of the following goods found in Nigeria as a private good, public good, common‑pool resource or club good, giving a brief reason for each classification: (i) Electricity supplied by the national grid. (ii) A privately owned restaurant. (iii) A public park in Lagos. (iv) A satellite TV subscription.
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Question 2 View Details
The market for bottled sachet water in a Nigerian city is described by the following observations:
Question Parts
(a)
Assuming linear demand and supply curves, derive the equations for the demand and supply functions using the data provided.
(b)
Calculate the equilibrium price and quantity in the market.
(c)
The government imposes a specific tax of ₦10 per sachet on producers. Assuming the supply curve shifts vertically upward by the amount of the tax, determine: (i) the new equilibrium price paid by consumers, (ii) the new equilibrium quantity traded, (iii) the proportion of the tax burden borne by consumers and producers expressed as a percentage of the new consumer price.
(d)
Briefly discuss how a rise in consumer income would affect the equilibrium, assuming sachet water is a normal good.
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Question 3 View Details
A local bakery sells loaves of bread. When the price of a loaf increased from \(\text{₦}200\) to \(\text{₦}250\), the quantity demanded fell from 500 loaves per week to 380 loaves per week.
Question Parts
(a)
Calculate the price elasticity of demand (PED) using the midpoint (arc) method. Show all steps.
(b)
Classify the elasticity (elastic, inelastic, or unit‑elastic) and explain what this classification implies for the bakery’s total revenue when price changes.
(c)
If the bakery wishes to increase its total revenue, should it raise or lower the price? Justify your answer using the elasticity result.
(d)
Suppose the bakery can reduce its variable cost per loaf by \(\text{₦}20\) through a new supplier. Discuss how this cost reduction might affect the bakery’s pricing decision in light of the elasticity you have computed.
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Question 4 View Details
A small‑scale furniture manufacturer produces wooden chairs. The short‑run total product (TP) for different levels of labour input (L) is shown in the table below. | L (workers) | TP (chairs) | |-------------|-------------| | 0 | 0 | | 1 | 15 | | 2 | 45 | | 3 | 78 | | 4 | 110 | | 5 | 135 | | 6 | 150 | | 7 | 158 | All other inputs are fixed in the short run.
Question Parts
(a)
Calculate the marginal product of labour (MP) for each additional worker from L = 1 to L = 7. Show your calculations.
(b)
Identify the range of labour input where diminishing marginal returns set in. Explain using the MP values obtained.
(c)
Using the data, calculate the average product of labour (AP) for L = 4 and L = 6. Which level of labour yields the higher AP? Explain briefly.
(d)
If the market price of a chair is \(\text{₦}5,000\) and the weekly wage rate per worker is \(\text{₦}30,000\), determine the profit‑maximising level of labour assuming other costs are fixed. Use marginal analysis (compare the value of marginal product to the wage). Show your reasoning.
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Question 5 View Details
A small manufacturing firm produces a single type of widget. The firm incurs a fixed cost of ₦1,200,000 per month. The variable cost per widget is ₦150. The widgets are sold at a constant price of ₦300 each.
Question Parts
(a)
Determine the break‑even output (the number of widgets that must be sold each month for total revenue to equal total cost).
(b)
If the variable cost per widget rises by 10 % because of an increase in raw‑material prices, calculate the new break‑even output.
(c)
Assuming the firm continues to produce and sell 5,000 widgets per month after the cost increase, compute the monthly profit (or loss) and comment on the financial implication for the firm.
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Question 6 View Details
The market for smartphones in Nigeria can be approximated by linear demand and supply curves. The following observations are available: - When the price is ₦150,000, the quantity demanded is 20,000 units and the quantity supplied is 8,000 units. - When the price is ₦200,000, the quantity demanded falls to 12,000 units while the quantity supplied rises to 14,000 units.
Question Parts
(a)
Derive the linear demand equation of the form P = a – bQ using the two demand observations.
(b)
Derive the linear supply equation of the form P = c + dQ using the two supply observations.
(c)
Calculate the market equilibrium price and quantity.
(d)
If the government imposes a price ceiling of ₦180,000, determine the resulting shortage (excess demand) and discuss the likely impact on consumer and producer surplus.
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Question 7 View Details
The Central Statistical Office released the following macro‑economic data for Country X for the year 2022 (all values in billions of naira): - Consumption (C) = 1,200 - Investment (I) = 350 - Government expenditure (G) = 500 - Exports (X) = 250 - Imports (M) = 300 - Indirect taxes (T) = 180 - Subsidies (S) = 40 - Depreciation (D) = 150 - Net factor income from abroad (NFIA) = ? It is known that the Net factor income from abroad (NFIA) equals the difference between the total factor income earned by residents abroad and the factor income earned by non‑residents in the country, and that the total factor income earned by residents abroad is 120 billion naira while the factor income earned by non‑residents domestically is 80 billion naira. Using the above information, answer the following:
Question Parts
(a)
Calculate the Gross Domestic Product (GDP) of Country X using the expenditure approach.
(b)
Determine the Net factor income from abroad (NFIA) and then compute the Gross National Product (GNP).
(c)
Using the income approach, compute the National Income (NI) of Country X.
(d)
Briefly discuss why the difference between GNP and NI matters for economic policy makers.
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Question 8 View Details
The Central Bank of Country Y is reviewing its monetary policy stance. The following data are available for the current quarter: - Total commercial bank deposits = ₦5,000 million - Required reserve ratio (RRR) = 10 % - Banks hold excess reserves equal to 5 % of total deposits. - The Central Bank purchases government securities worth ₦200 million in an open‑market operation. - The discount rate is reduced from 12 % to 10 %. - The interest rate on Treasury bills is currently 9 %. Using the above information, answer the following questions:
Question Parts
(a)
Calculate the theoretical money multiplier before the open‑market purchase.
(b)
Determine the change in the money supply (ΔM) resulting from the open‑market purchase, assuming the multiplier remains unchanged.
(c)
Explain how the reduction in the discount rate from 12 % to 10 % is expected to affect the money supply and interest rates, linking your answer to the data on Treasury bill yields.
(d)
Discuss two potential risks that the Central Bank should monitor when using open‑market purchases and discount‑rate cuts simultaneously as expansionary tools.
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