neco 2018 economics | Essay

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Question 1 View Details
A small rural community in Nigeria faces limited resources for agricultural production. Using this context:
Question Parts
(a)
Define scarcity and explain why it forces individuals and societies to make choices.
(b)
Define opportunity cost and illustrate it with an example of a farmer who must decide between planting maize or cassava on a 2‑hectare plot.
(c)
Explain how marginal analysis can help the farmer decide which crop to plant in order to maximise profit.
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Question 2 View Details
The government of Nigeria decides to subsidise wheat to make it more affordable. Before the subsidy, the market equilibrium price of wheat was ₦200 per kilogram and the equilibrium quantity was 5,000 tonnes. After the subsidy, the price paid by consumers fell to ₦150 per kilogram and the quantity traded increased to 6,500 tonnes. The price elasticity of demand for wheat is –0.5 and the price elasticity of supply is 0.8.
Question Parts
(a)
Using the given elasticities, calculate the monetary value of the subsidy per kilogram of wheat.
(b)
Determine the approximate change in (i) consumer surplus and (ii) producer surplus resulting from the subsidy. Show your working.
(c)
Discuss the impact of the subsidy on (i) government expenditure and (ii) overall economic welfare.
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Question 3 View Details
A certain commodity has the following data: when its price increased from ₦200 to ₦250, the quantity demanded fell from 500 units to 400 units.
Question Parts
(a)
Calculate the price elasticity of demand using the midpoint method.
(b)
Classify the elasticity and explain what this implies for total revenue when price rises.
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Question 4 View Details
In Year 2022, Nigeria's nominal GDP was ₦90 trillion and the GDP deflator was 150. In Year 2023, nominal GDP rose to ₦99 trillion and the GDP deflator increased to 165.
Question Parts
(a)
Calculate the real GDP for each year.
(b)
Determine the real GDP growth rate between the two years and comment on the economic implication of the result.
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Question 5 View Details
A small manufacturing firm produces widgets. Its fixed cost is ₦200,000 per month. The variable cost per month is given by \(VC = 0.02Q^{2} + 5Q\), where \(Q\) is the number of widgets produced. The market price per widget is determined by the demand function \(P = 120 - 0.1Q\).
Question Parts
(a)
Derive the total cost (TC) and total revenue (TR) functions in terms of output \(Q\).
(b)
Determine the break‑even output level (the quantity at which profit is zero). Show all steps.
(c)
The firm plans to produce 400 units. Calculate:
() The profit (or loss) at \(Q = 400\).
() The marginal cost at \(Q = 400\).
(d)
If the fixed cost rises by 10 %:
() Explain qualitatively how the break‑even output will be affected.
() Calculate the new break‑even quantity.
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Question 6 View Details
In a perfectly competitive market the market supply curve is \(Q_S = 3P - 30\) (where \(Q_S\) is in thousand units and \(P\) is the price in ₦ per unit) and the market demand curve is \(Q_D = 150 - 2P\). The government introduces a per‑unit tax of ₦10 on producers.
Question Parts
(a)
Find the equilibrium price and quantity before the tax is imposed.
(b)
After the ₦10 per‑unit tax on producers, write the new supply equation and determine the new equilibrium price paid by consumers (\(P_c\)) and the price received by producers (\(P_p\)). Show all steps.
(c)
Compute the tax incidence:
() The amount of the tax borne by consumers.
() The amount of the tax borne by producers.
(d)
Discuss how the market would adjust in the long run if firms are free to enter or exit the industry. Include the likely effect on price, output and overall welfare.
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Question 7 View Details
A developing country recorded the following macro‑economic data for the two most recent fiscal years:
Question Parts
(a)
Define nominal GDP and real GDP. Explain why real GDP is preferred when assessing economic growth over time.
(b)
Using the data below, calculate the real GDP for each year and the percentage growth rate of real GDP from 2021 to 2022. - Nominal GDP 2021 = ₦13,500 billion, GDP deflator 2021 = 110. - Nominal GDP 2022 = ₦15,000 billion, GDP deflator 2022 = 120.
(c)
Discuss the likely impact of a recession on unemployment and outline two fiscal policy measures the government could adopt to mitigate the recessionary pressures.
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Question 8 View Details
Consider an economy where the central bank has recently injected ₦500 million of new cash into the banking system.
Question Parts
(a)
Explain the mechanism of money creation in a fractional‑reserve banking system. State the formula for the money multiplier and define each component.
(b)
If the statutory reserve requirement is 10 %, calculate the maximum possible increase in the money supply resulting from the ₦500 million cash injection.
(c)
Identify two non‑bank channels through which the money supply can expand and discuss briefly how each channel can influence inflationary pressure.
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