Neco 2020 Economics Question 1

Practice essay / theory question 1 from the 2020 Neco Economics examination. This question covers Scarcity, Opportunity Cost, Production Possibilities Frontier, Government Intervention .

Neco 2020 Economics Essay / Theory
Topics: Scarcity Opportunity Cost Production Possibilities Frontier Government Intervention
Question 1 NECO • 2020 • ECONOMICS • essay

A small island community produces only two goods: fish (Good X) and woven baskets (Good Y). The community has limited resources of labour, capital and fish‑catching equipment.

Question Parts

( a )
Define scarcity and explain why it is regarded as the fundamental problem of economics.
( b )
Draw a simple Production Possibilities Frontier (PPF) for the island showing the maximum combinations of fish and baskets that can be produced. Using the diagram, explain the opportunity cost of moving from point A (20 fish, 0 baskets) to point B (15 fish, 10 baskets).
( c )
Assume a new fishing net is introduced that raises the island’s ability to catch fish without affecting basket production. Describe how the PPF changes and discuss the resulting effect on the opportunity cost of producing baskets.
( d )
Identify and briefly discuss two policy measures a government could adopt to alleviate the problem of scarcity without changing the PPF.

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About This Question

This is Neco 2020 Economics Question 1. It is one of the essay questions from the 2020 Neco Economics examination.

The question covers Scarcity, Opportunity Cost, Production Possibilities Frontier, Government Intervention .

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