Practice neco economics 2019 Past Questions | Edcrib

Question 1 View Details

An intercity bus company faces a daily demand function \(Q = 5000 - 20P\), where \(P\) is the ticket price in naira and \(Q\) the number of passengers. The variable cost per passenger is ₦30 and the fixed daily cost is ₦40,000. The government offers a subsidy equal to 10 % of the ticket price per passenger, but only if the price does not exceed ₦150. The company will set a price not exceeding ₦150 to qualify for the subsidy and wants to maximise daily profit. Determine the ticket price that maximises profit, the corresponding number of passengers, and the maximum profit (in naira).

A. Ticket price ₦140.00, passengers 2,200, maximum profit ₦230,000

B. Ticket price ₦135.50, passengers 2,290, maximum profit ₦235,500

C. Ticket price ₦150.00, passengers 2,000, maximum profit ₦210,000

Correct D. Ticket price ₦138.64, passengers 2,227, maximum profit ₦232,442

Correct Answer: D

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Question 2 View Details

A bank advertises a nominal interest rate of 12 % per annum, compounded annually. An investor expects inflation to be 5 % in the first year, 7 % in the second year and 6 % in the third year. Using the Fisher approximation \((1+i) = (1+r)(1+\pi)\), where \(i\) is the nominal rate, \(r\) the real rate and \(\pi\) inflation, (a) compute the real interest rate for each of the three years, (b) find the average real interest rate over the three‑year period, and (c) determine the real value of an initial ₦10,000 investment after three years.

Correct A. Average real rate 5.67 %, real value after 3 years ≈ ₦11,797

B. Average real rate 5.20 %, real value after 3 years ≈ ₦11,500

C. Average real rate 4.92 %, real value after 3 years ≈ ₦11,210

D. Average real rate 6.13 %, real value after 3 years ≈ ₦12,345

Correct Answer: A

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Question 3 View Details

Nigeria's population follows the logistic model \(P(t)=\frac{K}{1+Ae^{-rt}}\), where \(K\) is the carrying capacity, \(r\) the intrinsic growth rate and \(t\) years since 2010. In 2010 the population was 150 million and in 2020 it was 180 million. The carrying capacity is estimated at 300 million. (a) Determine the intrinsic growth rate \(r\) (to four decimal places). (b) Predict the first calendar year in which the population will exceed 250 million.

A. Intrinsic growth rate r = 0.0405 per year; population exceeds 250 million in the year 2048

Correct B. Intrinsic growth rate r = 0.0405 per year; population exceeds 250 million in the year 2050

C. Intrinsic growth rate r = 0.0452 per year; population exceeds 250 million in the year 2060

D. Intrinsic growth rate r = 0.0350 per year; population exceeds 250 million in the year 2045

Correct Answer: B

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Question 4 View Details

Nigeria's Human Development Index (HDI) is the equally weighted average of three component indices: Life‑expectancy index (LEI), Education index (EI) and Income index (II). In 2019 the values are LEI = 0.55, EI = 0.48 and II = 0.52, giving an HDI of 0.5167. The government plans to raise HDI to at least 0.600 by the end of 2025 (six years later). Policy measures will increase LEI by 0.02 per year and EI by 0.015 per year. The Income index is assumed to rise each year by 0.05 g, where \(g\) is the constant annual real GDP growth rate (expressed as a decimal). Determine the minimum constant real GDP growth rate \(g\) (to two decimal places) required to meet the HDI target, and give the projected values of LEI, EI and II in 2025.

A. Minimum real GDP growth rate g = 13.34 %; projected indices in 2025: LEI = 0.66, EI = 0.56, II = 0.55 (HDI = 0.590)

B. Minimum real GDP growth rate g = 14.50 %; projected indices in 2025: LEI = 0.68, EI = 0.58, II = 0.58 (HDI = 0.613)

C. Minimum real GDP growth rate g = 12.00 %; projected indices in 2025: LEI = 0.67, EI = 0.57, II = 0.53 (HDI = 0.590)

Correct D. Minimum real GDP growth rate g = 13.34 %; projected indices in 2025: LEI = 0.67, EI = 0.57, II = 0.56 (HDI = 0.600)

Correct Answer: D

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Question 5 View Details

Nigeria exports 0.8 million tonnes of cocoa and imports 0.5 million tonnes of wheat. In 2019 the export price index (EPI) for cocoa was 120 (base 2010 = 100) and the import price index (IPI) for wheat was 150. The government imposes a 10 % ad‑valorem export tax on cocoa and a 15 % tariff on wheat imports. Assuming world prices stay unchanged, (a) compute the net export and net import price indices after the taxes, (b) calculate the new terms‑of‑trade ratio (net EPI ÷ net IPI), (c) determine the percentage change in real national income approximated by \(Y = (\text{EPI}_{net}\times Q_{exp}) - (\text{IPI}_{net}\times Q_{imp})\), and (d) if the initial exchange rate is 1 USD = 360 Naira, find the new exchange rate that would keep real national income unchanged after the taxes.

A. Net EPI = 108, Net IPI = 165; Terms‑of‑trade ≈ 0.655; Real income falls by about 95 %; New exchange rate ≈ 45,000 Naira/USD

B. Net EPI = 112, Net IPI = 172.5; Terms‑of‑trade ≈ 0.649; Real income falls by about 97 %; New exchange rate ≈ 48,000 Naira/USD

C. Net EPI = 108, Net IPI = 172.5; Terms‑of‑trade ≈ 0.600; Real income falls by about 100 %; New exchange rate ≈ 52,000 Naira/USD

Correct D. Net EPI = 108, Net IPI = 172.5; Terms‑of‑trade ≈ 0.626; Real income falls by about 99.3 %; New exchange rate ≈ 50,400 Naira/USD

Correct Answer: D

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Question 6 View Details

The economy's Gross Domestic Product (GDP) at market price is \(15{,}000\) billion naira. Depreciation (consumption of fixed capital) equals 8\% of GDP. Net National Product (NNP) at factor cost is \(12{,}500\) billion naira. Assuming that Net Factor Income from abroad (NFIA) is the only unknown component, determine the value of NFIA (in billion naira).

Correct A. -1300

B. -1200

C. 1300

D. -1400

Correct Answer: A

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Question 7 View Details

The labour force in a country is \(8{,}000{,}000\) persons. The unemployment rate is 12\%. A government programme reduces the number of cyclically unemployed workers by 20\% while the number of structurally unemployed workers remains unchanged. After the programme the overall unemployment rate falls to 10\%. Find the original number of structurally unemployed workers (in persons).

A. 140000

B. 120000

Correct C. 160000

D. 200000

Correct Answer: C

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Question 8 View Details

A firm produces output according to the Cobb‑Douglas production function \(Q = 50 L^{0.6} K^{0.4}\), where \(L\) is labour units and \(K\) is capital units. The market price of output is \(P = \text{₦}200\) per unit. The wage rate is \(w = \text{₦}500\) per labour unit and the rental rate of capital is \(r = \text{₦}800\) per capital unit. Currently the firm employs \(L = 64\) units of labour and \(K = 16\) units of capital. Determine whether the firm is using a profit‑maximising combination of inputs. If not, state the direction (increase or decrease) in which each input should be adjusted, assuming the other input is held constant.

A. Both labour and capital should be decreased

B. Labour should be increased while capital should be decreased

Correct C. Both labour and capital should be increased

D. Labour should be decreased while capital should be increased

Correct Answer: C

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Question 9 View Details

The market demand for a good is given by \(P = 200 - 2Q\) and the market supply by \(P = 20 + Q\), where \(P\) is price in naira and \(Q\) is quantity. Find the equilibrium price and quantity.

A. Price = 60, Quantity = 80

B. Price = 120, Quantity = 40

C. Price = 70, Quantity = 65

Correct D. Price = 80, Quantity = 60

Correct Answer: D

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Question 10 View Details

A firm's total product function (with capital fixed) is \(Q = L^{3} - 3L^{2} + 4L\), where \(L\) denotes labour units and \(Q\) output units. Determine the level of labour at which average product of labour equals marginal product of labour, and compute the corresponding output.

Correct A. L = 1.5, Q = 2.625

B. L = 2.0, Q = 4.0

C. L = 1.5, Q = 3.0

D. L = 1.0, Q = 2.0

Correct Answer: A

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Question 11 View Details

A bank offers a nominal annual interest rate of (6\%) compounded annually. A depositor places \(\text{₦}20,000\) in the bank for \(2\) years. He wants to earn at least \(\text{₦}5,000\) interest. Assuming any additional amount he deposits now will also earn the same interest under the same terms, what is the minimum additional amount (in naira) he must deposit to meet his target?

Correct A. 20,447

B. 63,334

C. 21,667

D. 20,400

Correct Answer: A

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Question 12 View Details

A farmer can either grow maize earning a profit of \(\text{₦}150,000\) or grow beans earning a profit of \(\text{₦}120,000\) in a season. If he chooses to grow maize, what is the opportunity cost of his decision in terms of forgone profit?

A. 270,000

Correct B. 120,000

C. 30,000

D. 150,000

Correct Answer: B

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Question 13 View Details

In 2010 the population of a country was \(12\) million. The annual natural increase rate is \(2.5\%\) and net migration adds \(30,000\) persons each year. Assuming these rates remain constant, in which year will the population first exceed \(15\) million?

A. 2020

Correct B. 2019

C. 2022

D. 2018

Correct Answer: B

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Question 14 View Details

A firm can transport its goods by truck or by rail. Truck transport incurs a fixed monthly cost of \(\text{₦}100,000\) and a variable cost of \(\text{₦}250\) per ton. Rail transport has a fixed monthly cost of \(\text{₦}250,000\) and a variable cost of \(\text{₦}500\) per ton, but if the monthly shipment exceeds \(800\) tons the rail variable cost is reduced by \(60\%\) (i.e., to \(40\%\) of the original). What is the minimum monthly shipment (in tons) at which rail transport becomes cheaper than truck transport?

Correct A. 3,001

B. 3,500

C. 4,000

D. 2,800

Correct Answer: A

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Question 15 View Details

The price of a product rises from \(\text{₦}200\) to \(\text{₦}250\) and the quantity demanded falls from \(1,200\) units to \(960\) units. Calculate the price elasticity of demand using the midpoint method and state whether demand is elastic, inelastic, or unit elastic.

A. 1

B. -1.2

Correct C. -1

D. -0.8

Correct Answer: C

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Question 16 View Details

The economy recorded a nominal GDP of ₦15,000 billion in 2019. The GDP deflator for that year is 125 (base year = 100). Depreciation of capital stock amounted to ₦1,200 billion, net factor income from abroad was a credit of ₦300 billion, and indirect taxes collected were ₦800 billion. Calculate the Real National Income for 2019 (in billion Naira) using the relationships \( \text{Real GDP}= \frac{\text{Nominal GDP}}{\text{Deflator}/100} \) and \( \text{NNI}= \text{Real GDP}-\text{Depreciation}+\text{Net factor income} \) and \( \text{NI}= \text{NNI}-\text{Indirect taxes} \).

A. 13300

Correct B. 10300

C. 11500

D. 11100

Correct Answer: B

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Question 17 View Details

The price of a product rises from ₦200 to ₦250. The price elasticity of demand for the product is constant at -2. Initially, 1,000 units are sold per month. Estimate the new quantity demanded after the price change using \( \varepsilon = \frac{\%\Delta Q}{\%\Delta P} \).

A. 400

B. 600

Correct C. 500

D. 750

Correct Answer: C

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Question 18 View Details

A factory's total cost (in thousand Naira) for producing Q units of output is given by \( TC = 200 + 5Q + 0.02Q^{2} \). The market price per unit is ₦12, and the government imposes a per‑unit tax of ₦2 on the product. Determine the output level that maximizes profit and compute the maximum profit (in thousand Naira).

A. 130 units; profit = 115 thousand Naira

B. 125 units; profit = 100 thousand Naira

Correct C. 125 units; profit = 112.5 thousand Naira

D. 120 units; profit = 108 thousand Naira

Correct Answer: C

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Question 19 View Details

A firm faces the total cost function (in thousand Naira) \( TC = 500 + 8Q + 0.5Q^{2} \) and the market demand \( P = 100 - 0.5Q \). Find the quantity of output that yields maximum profit and state the maximum profit (in thousand Naira).

A. 1716

B. 1600

Correct C. 1616

D. 1516

Correct Answer: C

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Question 20 View Details

The price of a good increases from ₦80 to ₦100, and the quantity demanded falls from 500 units to 400 units. Using the midpoint (arc) method, calculate the price elasticity of demand.

Correct A. -1

B. -1.2

C. -2

D. -0.8

Correct Answer: A

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Question 21 View Details

Given that the Consumer Price Index (CPI) was 120 in 2015, 126 in 2016 and 133.2 in 2017, the government aims for an average annual inflation rate of 5\% over the five‑year period 2015‑2019. Assuming the inflation rate is the same for 2018 and 2019, what constant annual inflation rate (as a percentage, to one decimal place) must apply in each of those two years to meet the target? Use the compound‑growth expression \((1+0.05)^{5}\).

A. 8.1\%

B. 6.5\%

C. 5.9\%

Correct D. 7.2\%

Correct Answer: D

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Question 22 View Details

An entrepreneur can use a fixed amount of resources to produce either 10 tonnes of rice or 15 tonnes of cassava. What is the opportunity cost of producing one tonne of rice, expressed in tonnes of cassava?

A. 1.0

Correct B. 1.5

C. 2.0

D. 0.75

Correct Answer: B

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Question 23 View Details

Country X had a population of 20 million in the year 2000. From 2000 to 2010 it grew at a constant annual rate of 2.5\%. Thereafter, from 2011 to 2020 the annual growth rate fell linearly each year, reaching 1.5\% in 2020. Assuming the decline is uniform each year, estimate the population in 2020 (to one decimal place in millions).

A. 32.2 million

Correct B. 31.1 million

C. 28.7 million

D. 30.4 million

Correct Answer: B

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Question 24 View Details

In a monopolistically competitive market the firm's demand curve is \( P = 120 - 4Q \) and its total cost function is \( TC = 20Q + 0.5Q^{2} \). Determine the output level that maximises profit and compute the maximum profit (to two decimal places).

Correct A. Output = 100/9 units (≈11.1), Profit = 555.56

B. Output = 90\/9 units (≈10.0), Profit = 500.00

C. Output = 100\/9 units (≈11.1), Profit = 600.00

D. Output = 110\/9 units (≈12.2), Profit = 600.00

Correct Answer: A

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Question 25 View Details

The world price of a good is ₦150 per unit. Country Y imposes a specific tariff of ₦30 per unit. Domestic demand is \( Q_{d}=800-2P \) and domestic supply is \( Q_{s}=3P-150 \), where \( P \) is the domestic price inclusive of the tariff. Find the quantity of imports after the tariff is applied and the government's tariff revenue (in ₦).

A. Imports = 60 units, Revenue = ₦1,800

B. Imports = 40 units, Revenue = ₦1,200

C. Imports = 70 units, Revenue = ₦2,100

Correct D. Imports = 50 units, Revenue = ₦1,500

Correct Answer: D

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