Practice neco economics 2017 Past Questions | Edcrib

Question 1 View Details

A firm transports wheat from a farm to a market located 120 km away. The total transportation cost (in Naira) for a shipment of Q tonnes is given by \( C = 5000 + 20D + \frac{0.5 Q^{2}}{D} \), where D is the distance in km. The market price of wheat is ₦1500 per tonne. Determine the smallest integer quantity of wheat (in tonnes) that must be shipped so that the profit on the trip is at least ₦200,000. Also state the profit obtained at that quantity.

Correct A. Minimum quantity Q = 139 tonnes; profit ≈ ₦201,020

B. Minimum quantity Q = 140 tonnes; profit ≈ ₦202,500

C. Minimum quantity Q = 150 tonnes; profit ≈ ₦210,000

D. Minimum quantity Q = 138 tonnes; profit ≈ ₦199,500

Correct Answer: A

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Question 2 View Details

A firm's total cost function for output Q (units) is \( C = 5000 + 150Q + 0.05Q^{2} \). The product sells for ₦250 per unit. Find the output level that maximises profit and compute the maximum profit.

A. Output Q = 1000 units; maximum profit = ₦40,000

B. Output Q = 900 units; maximum profit = ₦44,500

C. Output Q = 800 units; maximum profit = ₦43,000

Correct D. Output Q = 1000 units; maximum profit = ₦45,000

Correct Answer: D

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Question 3 View Details

A firm uses labour L (workers) and capital K (machines) to produce output according to the Cobb‑Douglas function \( Q = 5 L^{0.5} K^{0.5} \). The price of labour is ₦100 per worker per day and the price of capital is ₦200 per machine per day. The firm must produce at least 500 units per day and wishes to minimise total daily cost. Determine the optimal numbers of workers and machines and the minimum total cost (in Naira).

A. Labour ≈ 100 workers, Capital ≈ 100 machines; minimum daily cost ≈ ₦30,000

B. Labour ≈ 200 workers, Capital ≈ 50 machines; minimum daily cost ≈ ₦35,000

Correct C. Labour ≈ 141 workers, Capital ≈ 71 machines; minimum daily cost ≈ ₦28,284

D. Labour ≈ 120 workers, Capital ≈ 80 machines; minimum daily cost ≈ ₦29,600

Correct Answer: C

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Question 4 View Details

A farmer's maize yield per hectare (in tonnes) depends on the amount of nitrogen fertilizer N (kg ha\(^{-1}\)) according to \( Y = 2 + 0.04N - 0.0001 N^{2} \). The market price of maize is ₦30,000 per tonne. Fertilizer costs ₦20 per kg and other variable costs amount to ₦10,000 per hectare. The farmer can spend at most ₦50,000 on fertilizer per hectare. Determine the quantity of fertilizer (kg ha\(^{-1}\)) that maximises profit per hectare, the corresponding profit, and state whether the budget constraint is binding.

A. Optimal fertilizer ≈ 100 kg ha⁻¹; maximum profit ≈ ₦120,000 per hectare; budget not binding

B. Optimal fertilizer ≈ 250 kg ha⁻¹; maximum profit ≈ ₦150,000 per hectare; budget binding

C. Optimal fertilizer ≈ 180 kg ha⁻¹; maximum profit ≈ ₦170,500 per hectare; budget not binding

Correct D. Optimal fertilizer ≈ 197 kg ha⁻¹; maximum profit ≈ ₦166,033 per hectare; budget not binding

Correct Answer: D

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Question 5 View Details

An enterprise produces two products A and B. The total cost (in Naira) of producing \( Q_{A} \) units of A and \( Q_{B} \) units of B is\n\[ C = 10\,000 + 4Q_{A} + 6Q_{B} + 0.02 Q_{A}^{2} + 0.03 Q_{B}^{2} + 0.01 Q_{A} Q_{B} \].\nThe selling prices are ₦50 per unit of A and ₦80 per unit of B. Find the combination of non‑negative integer quantities \((Q_{A},Q_{B})\) that yields zero profit (break‑even) with the smallest possible total output \( Q_{A}+Q_{B} \). State the quantities and the total output.

A. Q_A = 0, Q_B = 150; minimum total output = 150 units

Correct B. Q_A = 0, Q_B = 144; minimum total output = 144 units

C. Q_A = 12, Q_B = 132; minimum total output = 144 units

D. Q_A = 20, Q_B = 130; minimum total output = 150 units

Correct Answer: B

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Question 6 View Details

Given a firm's total cost function \(TC = 2000 + 5Q + 0.02Q^{2}\) where Q is output, and the market demand inverse function \(P = 120 - 0.1Q\): (a) Determine the output level that maximises profit and compute the maximum profit. (b) Find the lower break‑even output (the smallest Q where profit becomes non‑negative). (c) If fixed cost rises by 10%, by how many units does this lower break‑even output increase? Give your answer to one decimal place.

A. 1.5

B. 2.0

Correct C. 1.8

D. 2.2

Correct Answer: C

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Question 7 View Details

The following data are for a closed economy in a given year: GDP at market price = \(5{,}200\) billion Naira; indirect taxes = \(300\) billion; subsidies = \(50\) billion; depreciation (capital consumption) = \(400\) billion; net factor income from abroad = \(120\) billion. Compute the National Income at factor cost for the year, in billion Naira.

A. 4470

Correct B. 4670

C. 4950

D. 5270

Correct Answer: B

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Question 8 View Details

A single firm operates as a monopoly with demand curve \(P = 200 - 2Q\) and constant marginal cost \(MC = 20\). (a) Find the profit‑maximising output and price, and compute the monopoly profit. (b) Under perfect competition the price equals marginal cost. Determine the competitive output and price, and the corresponding profit. (c) By how many Naira does the monopoly price exceed the competitive price?

A. 70

Correct B. 90

C. 50

D. 110

Correct Answer: B

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Question 9 View Details

A firm's production function is \(Q = 10 L^{0.5} K^{0.5}\). The wage rate is \(w = 20\) Naira per unit of labour and the rental rate of capital is \(r = 30\) Naira per unit of capital. The firm has a total budget of \(1{,}200\) Naira for labour and capital. Determine the quantities of labour \(L\) and capital \(K\) that maximise output subject to the budget, and compute the maximum output. Give the maximum output to the nearest whole unit.

A. 250

B. 260

C. 240

Correct D. 245

Correct Answer: D

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Question 10 View Details

When the price of a good rises and, ceteris paribus, the quantity demanded of that good falls, which fundamental economic law is illustrated?

A. Law of supply

Correct B. Law of demand

C. Law of comparative advantage

D. Law of diminishing returns

Correct Answer: B

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Question 11 View Details

Given the following macroeconomic data for Country Z (in billions of naira): Consumption \(C = 2500\), Investment \(I = 1200\), Government expenditure \(G = 1800\), Exports \(X = 900\), Imports \(M = 1100\), Indirect taxes \(T = 300\), Subsidies \(S = 50\), Depreciation (capital consumption) \(D = 200\), and Net factor income from abroad \(NFIA = 120\). Calculate the National Income at factor cost.

A. 5170

Correct B. 4970

C. 5220

D. 5050

Correct Answer: B

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Question 12 View Details

The public holds currency equal to 30% of bank deposits, the required reserve ratio is 10%, and banks keep excess reserves equal to 2% of deposits. If the central bank injects a monetary base of \(500\) billion naira, calculate the resulting money supply, rounding to the nearest billion.

A. 1528

Correct B. 1548

C. 1580

D. 1490

Correct Answer: B

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Question 13 View Details

The price elasticity of demand for a product is \(-1.5\). If the price rises from \(20\) naira to \(24\) naira, what is the percentage change in the quantity demanded?

A. -35%

Correct B. -30%

C. -25%

D. -20%

Correct Answer: B

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Question 14 View Details

Initially, bank deposits total \(2000\) billion naira. The public holds currency equal to 25% of deposits, the required reserve ratio is 8%, and banks keep excess reserves equal to 1% of deposits. The central bank reduces the required reserve ratio to 5% while the other ratios stay unchanged. Assuming the monetary base remains the same, calculate the new total money supply and the increase in money supply (in billions of naira).

Correct A. 242

B. 245

C. 240

D. 250

Correct Answer: A

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Question 15 View Details

Country Y had a population of \(12\) million in 2020. The annual growth rate from 2015 to 2020 was \(1.8\)\% and is expected to remain the same for the next decade. Assuming this rate continues, estimate the population in 2030. The projected age structure for 2030 is 30\% aged 0‑14, 60\% aged 15‑64 and 10\% aged 65+. Compute the dependency ratio (dependents per 100 working‑age persons) for 2030.

A. Population ≈ 14.16 million; Dependency ratio ≈ 66

B. Population ≈ 14.62 million; Dependency ratio ≈ 70

C. Population ≈ 14.34 million; Dependency ratio ≈ 60

Correct D. Population ≈ 14.34 million; Dependency ratio ≈ 67

Correct Answer: D

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Question 16 View Details

From the year 2000 the population of Country X was 20 million. Between 2000 and 2005 it grew at a constant annual compound rate of \(2.5\%\) with no net migration. From 2005 onward the annual growth rate fell to \(1.8\%\) and the country experienced a constant net migration of 50 000 persons each year. Assuming the migration is added at the end of each year, calculate the population at the end of 2010. Then determine the average annual growth rate (including migration) that would give the same increase from 2000 to 2010.

A. 2.31\\%

Correct B. 2.26\%

C. 2.19\\%

D. 2.40\\%

Correct Answer: B

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Question 17 View Details

A firm produces output according to the Cobb‑Douglas production function \(Q = 100 L^{0.5} K^{0.5}\). The market price of output is \(\text{₦}1{,}500\) per unit, the wage rate is \(\text{₦}200\) per unit of labour and the rental rate of capital is \(\text{₦}500\) per unit of capital. Currently the firm employs \(L = 16\) units of labour and \(K = 9\) units of capital.\n(a) Compute the marginal product of labour (MPL).\n(b) Compute the marginal revenue product of labour (MRP\_L).\n(c) Should the firm increase labour by one unit? Justify using marginal analysis.\n(d) What is the change in profit if labour is increased from 16 to 17 units while capital remains unchanged?

A. MPL = 30, MRP_L = 45,000 ₦, increase labour (yes), profit increase ≈ 30,000 ₦

B. MPL = 40, MRP_L = 60,000 ₦, increase labour (yes), profit increase ≈ 58,000 ₦

Correct C. MPL = 37.5, MRP_L = 56,250 ₦, increase labour (yes), profit increase ≈ 55,150 ₦

D. MPL = 35, MRP_L = 52,500 ₦, increase labour (no), profit increase ≈ -5,000 ₦

Correct Answer: C

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Question 18 View Details

The market for a good is described by the linear demand curve \(P = 500 - 2Q\) and the linear supply curve \(P = 100 + Q\), where \(P\) is price in ₦ and \(Q\) is quantity. The government imposes a specific tax of \(₦50\) per unit on producers.\n(a) Find the equilibrium price and quantity before the tax.\n(b) Find the new consumer price, producer price (after tax), and quantity after the tax.\n(c) Compute the tax revenue and the dead‑weight loss caused by the tax.\n(d) What proportion of the tax burden falls on consumers?

A. Before tax: P≈₦230.00, Q≈140.00. After tax: consumer price≈₦260.00, producer price≈₦210.00, Q≈120.00. Tax revenue≈₦6,000.00. DWL≈₦400.00. Consumers bear about 70% of the tax.

B. Before tax: P≈₦240.00, Q≈120.00. After tax: consumer price≈₦270.00, producer price≈₦220.00, Q≈115.00. Tax revenue≈₦5,750.00. DWL≈₦450.00. Consumers bear about 65% of the tax.

Correct C. Before tax: P≈₦233.33, Q≈133.33. After tax: consumer price≈₦266.67, producer price≈₦216.67, Q≈116.67. Tax revenue≈₦5,833.33. DWL≈₦416.67. Consumers bear about 66.7% of the tax.

D. Before tax: P≈₦250.00, Q≈125.00. After tax: consumer price≈₦275.00, producer price≈₦225.00, Q≈110.00. Tax revenue≈₦5,500.00. DWL≈₦500.00. Consumers bear about 60% of the tax.

Correct Answer: C

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Question 19 View Details

When the price of a product rises from \(\text{₦}200\) to \(\text{₦}250\), the quantity demanded falls from 500 units to 400 units. Using the midpoint method, calculate the price elasticity of demand over this range.

A. -2

Correct B. -1

C. -0.8

D. -0.5

Correct Answer: B

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Question 20 View Details

The population of a country follows the logistic growth model \(\frac{dP}{dt}= rP\left(1-\frac{P}{K}\right)\) with intrinsic growth rate \(r = 0.04\) per year and carrying capacity \(K = 50\) million. In the year 2000 the population was \(P_{0}=5\) million.\n(a) Write the explicit solution \(P(t)\) for the population as a function of time \(t\) (in years, with \(t=0\) in 2000).\n(b) In which year will the population first reach 40 million?

A. 2100

Correct B. 2090

C. 2095

D. 2085

Correct Answer: B

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Question 21 View Details

Last year the working‑age population was 5,000,000 and the labour‑force participation rate was \(60\%\). This year the participation rate increased to \(62\%\) and the unemployment rate fell by \(2\) percentage points from the previous year's rate of \(12\%\). Calculate the number of unemployed persons in the current year.

A. 360000

B. 300000

Correct C. 310000

D. 372000

Correct Answer: C

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Question 22 View Details

Last year the country's export revenue was \(200\) million naira and import expenditure was \(180\) million naira. This year export prices rose by \(30\%\) while import prices rose by \(15\%\), with quantities unchanged. Calculate the percentage change in the terms of trade.

A. 12.0

B. 14.5

Correct C. 13.0

D. 9.8

Correct Answer: C

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Question 23 View Details

In a country the labour force is \(8,000,000\) and the unemployment rate is \(15\%\). The natural rate of unemployment is \(9\%\). Determine the number of people who are unemployed due to cyclical factors.

Correct A. 480000

B. 600000

C. 1200000

D. 720000

Correct Answer: A

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Question 24 View Details

A farmer can produce either \(100\) kg of rice or \(200\) kg of beans with the same resources. What is the opportunity cost of producing one kilogram of rice in terms of beans?

A. 4

B. 0.5

Correct C. 2

D. 1

Correct Answer: C

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Question 25 View Details

Using the income approach, compute Net Domestic Product (NDP) given the following factor incomes (in billions of naira): wages = \(150\), rent = \(30\), interest = \(20\), profits = \(50\), indirect taxes net of subsidies = \(40\), and depreciation = \(25\).

A. 315

B. 250

Correct C. 290

D. 265

Correct Answer: C

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