Practice neco economics 2021 Past Questions | Edcrib

Question 1 View Details

The population of a country was 12 million in 2010. It grew at a compound annual rate of $2.5\%$ until the end of 2015, after which a new policy reduced the growth rate to $1.8\%$ per year. In which calendar year will the population first exceed 15 million?

Correct A. 2021

B. 2022

C. 2024

D. 2020

Correct Answer: A

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Question 2 View Details

A farmer has 120 hectares of land to allocate between maize and soybeans. Yield per hectare: maize 3.2 tonnes, soybeans 2.5 tonnes. Market prices: maize $\text{\u20A6}45{,}000$ per tonne, soybeans $\text{\u20A6}68{,}000$ per tonne. Production cost per hectare: maize $\text{\u20A6}30{,}000$, soybeans $\text{\u20A6}40{,}000$. The government offers a subsidy of $\text{\u20A6}5{,}000$ per tonne of soybeans if total soybean production exceeds 150 tonnes. How many hectares of maize and soybeans should the farmer plant to maximise profit?

A. Maize: 120 ha, Soybeans: 0 ha

B. Maize: 60 ha, Soybeans: 60 ha

Correct C. Maize: 0 ha, Soybeans: 120 ha

D. Maize: 30 ha, Soybeans: 90 ha

Correct Answer: C

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Question 3 View Details

In an economy the currency‑to‑deposit ratio is $c = 0.25$ and the required reserve ratio is $rr = 0.10$. The central bank purchases securities worth $\text{\u20A6}500$ million, adding this amount to bank reserves. Assuming banks lend out all excess reserves, what is the eventual increase in the total money supply? Give your answer in billions of naira, rounded to two decimal places.

A. 1.57

B. 2.00

Correct C. 1.79

D. 1.43

Correct Answer: C

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Question 4 View Details

A construction company must transport exactly 800 tonnes of cement from a factory to a site. Two transport modes are available:\n\n- Rail: fixed cost per trip $\text{\u20A6}120{,}000$, capacity 40 tonnes per trip, variable cost $\text{\u20A6}800$ per tonne.\n- Road: fixed cost per trip $\text{\u20A6}45{,}000$, capacity 10 tonnes per trip, variable cost $\text{\u20A6}1{,}200$ per tonne.\n\nThe contract requires at least 2 rail trips and no more than 5 road trips. Determine the number of rail trips and road trips that minimise total transportation cost while delivering the 800 tonnes.

A. Rail trips: 15, Road trips: 20

B. Rail trips: 19, Road trips: 4

Correct C. Rail trips: 20, Road trips: 0

D. Rail trips: 18, Road trips: 8

Correct Answer: C

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Question 5 View Details

The following data (in billions of naira) are recorded for a year:\n\nCompensation of employees: 1,200\nGross operating surplus: 450\nGross mixed income: 300\nIndirect taxes: 250\nSubsidies: 70\nDepreciation (consumption of fixed capital): 180\nNet factor income from abroad: -20\n\nCalculate (a) the Gross Domestic Product (GDP) at market prices, and (b) the Net National Income (NNI) at factor cost.

A. GDP = 2,200 billion naira; NNI = 1,820 billion naira

B. GDP = 2,050 billion naira; NNI = 1,690 billion naira

Correct C. GDP = 2,130 billion naira; NNI = 1,770 billion naira

D. GDP = 2,130 billion naira; NNI = 1,950 billion naira

Correct Answer: C

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Question 6 View Details

A firm's total cost function is $TC = 5000 + 20Q + 0.05Q^{2}$ where $Q$ is output in units. The market demand for its product is given by $P = 120 - 0.1Q$. Determine the output level that maximises profit and state the maximum profit (give the profit as an exact fraction).

Correct A. 35000/3

B. 35000/2

C. 34000/3

D. 36000/3

Correct Answer: A

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Question 7 View Details

A farmer can use his land and labour to produce either 10 bags of rice or 15 bags of beans. What is the opportunity cost of producing one bag of rice in terms of beans? Express your answer as a decimal.

A. 1.0

Correct B. 1.5

C. 2.0

D. 0.7

Correct Answer: B

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Question 8 View Details

The demand for a good is described by $P = 200 - 2Q$ and the supply by $P = 20 + Q$, where $P$ is price in naira and $Q$ is quantity. Find the equilibrium quantity and price.

Correct A. 60 units, price 80

B. 70 units, price 70

C. 40 units, price 100

D. 50 units, price 90

Correct Answer: A

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Question 9 View Details

When the price of a product rises from $200$ to $250$ naira, the quantity demanded falls from 500 units to 400 units. Calculate the price elasticity of demand and state whether demand is elastic, inelastic or unit‑elastic. Give the elasticity value to two decimal places.

Correct A. -0.80 (inelastic)

B. -0.60 (inelastic)

C. -0.80 (elastic)

D. -1.00 (elastic)

Correct Answer: A

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Question 10 View Details

A town had a population of 120,000 in 2010. From 2010 to 2015 the annual growth rate was constant at 4 %. Beginning in 2015 the growth rate fell by 0.5 percentage points each year (i.e., 3.5 % in 2015‑2016, 3.0 % in 2016‑2017, …). Compute the population at the end of 2020. Then, assuming the same decreasing pattern continues (the rate keeps falling by 0.5 % each year until it reaches 0 % and then stays at 0 %), determine the first calendar year after 2020 in which the population will exceed 166,000. Give the population as a whole number and the year as a four‑digit number.

A. Population 165,164; Year 2022

Correct B. Population 165,164; Year 2021

C. Population 166,000; Year 2022

D. Population 164,900; Year 2021

Correct Answer: B

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Question 11 View Details

The government imposes a specific tax of $20$ Naira per unit on a good. The market demand is $Q_d = 500 - 2P$ and the original supply (before tax) is $Q_s = 100 + P$, where $P$ is the price in Naira. Determine (i) the consumer price after the tax, (ii) the price received by producers, (iii) the tax revenue, and (iv) the dead‑weight loss caused by the tax.

A. Consumer price = 130 Naira, Producer price = 110 Naira, Tax revenue = 3,600 Naira, Dead‑weight loss = \frac{300}{3} Naira (≈100 Naira)

B. Consumer price = 150 Naira, Producer price = 130 Naira, Tax revenue = 5,000 Naira, Dead‑weight loss = \frac{500}{3} Naira (≈166.67 Naira)

Correct C. Consumer price = 140 Naira, Producer price = 120 Naira, Tax revenue = 4,400 Naira, Dead‑weight loss = \frac{400}{3} Naira (≈133.33 Naira)

D. Consumer price = 145 Naira, Producer price = 125 Naira, Tax revenue = 4,800 Naira, Dead‑weight loss = \frac{450}{3} Naira (≈150 Naira)

Correct Answer: C

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Question 12 View Details

A monopolist faces the linear demand curve $P = 120 - 0.5Q$ and has a constant marginal cost of $MC = 30$. Determine (i) the profit‑maximising output and price, (ii) the monopoly profit, (iii) the competitive equilibrium output and price, and (iv) the dead‑weight loss caused by monopoly power.

A. Profit‑max output = 120 units, Price = 60 Naira, Monopoly profit = 3,600 Naira, Competitive output = 180 units, Competitive price = 30 Naira, Dead‑weight loss = 900 Naira

B. Profit‑max output = 90 units, Price = 75 Naira, Monopoly profit = 4,050 Naira, Competitive output = 150 units, Competitive price = 45 Naira, Dead‑weight loss = 1,800 Naira

C. Profit‑max output = 90 units, Price = 75 Naira, Monopoly profit = 6,750 Naira, Competitive output = 180 units, Competitive price = 30 Naira, Dead‑weight loss = 1,800 Naira

Correct D. Profit‑max output = 90 units, Price = 75 Naira, Monopoly profit = 4,050 Naira, Competitive output = 180 units, Competitive price = 30 Naira, Dead‑weight loss = 2,025 Naira

Correct Answer: D

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Question 13 View Details

Two firms produce a homogeneous product. Market demand is $P = 200 - Q$ where $Q = q_1 + q_2$. Firm 1 has constant marginal cost $MC_1 = 20$ and Firm 2 has constant marginal cost $MC_2 = 40$. Assuming Cournot competition, find (i) each firm's equilibrium output, (ii) the market price, (iii) each firm's profit, and (iv) the total profit if the firms collude as a monopoly.

A. Cournot outputs: q1 = \frac{200}{3}, q2 = \frac{140}{3}; Market price = \frac{250}{3}; Profits: \pi1 = \frac{40000}{9}, \pi2 = \frac{19600}{9}; Collusive monopoly profit = 7,500 Naira

Correct B. Cournot outputs: q1 = \frac{200}{3}, q2 = \frac{140}{3}; Market price = \frac{260}{3}; Profits: \pi1 = \frac{40000}{9}, \pi2 = \frac{19600}{9}; Collusive monopoly profit = 8,000 Naira

C. Cournot outputs: q1 = \frac{180}{3}, q2 = \frac{120}{3}; Market price = \frac{200}{3}; Profits: \pi1 = \frac{32400}{9}, \pi2 = \frac{14400}{9}; Collusive monopoly profit = 7,200 Naira

D. Cournot outputs: q1 = \frac{210}{3}, q2 = \frac{130}{3}; Market price = \frac{260}{3}; Profits: \pi1 = \frac{44100}{9}, \pi2 = \frac{16900}{9}; Collusive monopoly profit = 8,500 Naira

Correct Answer: B

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Question 14 View Details

Country X had a GNI per capita of $\$2,500$ in 2015. The government aims to double it to $\$5,000$ by the end of 2030 (15 years). Population is projected to grow at a constant rate of $2\%$ per year. (i) What average annual real GNI growth rate (overall GNI) is required to meet the target? (ii) What is the implied average annual real GNI per‑capita growth rate? (iii) Given that the historical average real GNI growth rate has been $4\%$ per year, assess the feasibility of the target.

A. Required overall GNI growth ≈ 6.0 % per annum; implied per‑capita growth ≈ 4.0 % per annum; target feasible if productivity improves beyond historic 4 % growth.

B. Required overall GNI growth ≈ 5.5 % per annum; implied per‑capita growth ≈ 3.5 % per annum; target marginally feasible given historic 4 % growth.

C. Required overall GNI growth ≈ 7.2 % per annum; implied per‑capita growth ≈ 5.0 % per annum; target unlikely but possible despite historic 4 % growth.

Correct D. Required overall GNI growth ≈ 6.8 % per annum; implied per‑capita growth ≈ 4.7 % per annum; target not feasible given historic 4 % growth.

Correct Answer: D

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Question 15 View Details

Given the demand function $P = 100 - 5Q$ and the supply function $P = 20 + 2Q$, find the market equilibrium price and quantity.

A. Equilibrium quantity \$Q = \\frac{80}{8}\$ units, Equilibrium price \$P = \\frac{300}{8}\$ (≈ 37.5).

B. Equilibrium quantity \$Q = \\frac{80}{5}\$ units, Equilibrium price \$P = \\frac{300}{5}\$ (≈ 60).

Correct C. Equilibrium quantity $Q = \frac{80}{7}$ units, Equilibrium price $P = \frac{300}{7}$ (≈ 42.86).

D. Equilibrium quantity \$Q = \\frac{80}{6}\$ units, Equilibrium price \$P = \\frac{300}{6}\$ (≈ 50).

Correct Answer: C

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Question 16 View Details

An economy can produce either $120$ tonnes of cassava or $80$ tonnes of maize with its available resources. If the economy decides to produce $30$ tonnes of cassava, how many tonnes of maize must be forgone? Also state the opportunity cost of one tonne of cassava in terms of maize.

Correct A. Maize forgone = 20 tonnes; Opportunity cost = $\frac{2}{3}$ tonne of maize per tonne of cassava.

B. Maize forgone = 25 tonnes; Opportunity cost = $\frac{5}{6}$ tonne of maize per tonne of cassava.

C. Maize forgone = 30 tonnes; Opportunity cost = $1$ tonne of maize per tonne of cassava.

D. Maize forgone = 15 tonnes; Opportunity cost = $\frac{1}{2}$ tonne of maize per tonne of cassava.

Correct Answer: A

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Question 17 View Details

The firm's total cost (in naira) for producing $Q$ units is $TC = 1000 + 10Q$. The market demand is linear and given by the price‑quantity relation $P = 200 - 0.5Q$. Determine the output level that maximizes profit and state the maximum profit.

A. Output = 200 units; Maximum profit = \$\\text{₦}17{,}000\$.

B. Output = 95 units; Maximum profit = \$\\text{₦}12{,}538\$.

Correct C. Output = 190 units; Maximum profit = $\text{₦}17{,}050$.

D. Output = 190 units; Maximum profit = \$\\text{₦}18{,}050\$.

Correct Answer: C

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Question 18 View Details

The transport company has a fixed monthly cost of $\text{₦}500{,}000$. Variable cost per kilometre is $\text{₦}150$, but traffic congestion raises this cost by 20 % for the month. Each round‑trip covers $120$ km and the bus makes two round‑trips per day for 30 days. The fare per passenger is $\text{₦}2{,}500$ and the bus capacity is 40 passengers. Without any discount the average occupancy is 60 %. The company is considering a 10 % fare discount that will be applied whenever average occupancy exceeds 75 %; the discount is expected to raise average occupancy to 85 %. Should the company adopt the discount policy? Compute the monthly profit in both cases and state the preferred policy.

A. Do not adopt the discount; profit with discount = $\text{₦}2{,}500{,}000$ (lower than profit without discount = $\text{₦}2{,}000{,}000$).

Correct B. Adopt the discount; profit with discount = $\text{₦}2{,}794{,}000$ (higher than profit without discount = $\text{₦}1{,}804{,}000$).

C. Adopt the discount; profit with discount = $\text{₦}2{,}600{,}000$ (higher than profit without discount = $\text{₦}1{,}900{,}000$).

D. Do not adopt the discount; profit with discount = $\text{₦}2{,}300{,}000$ (higher than profit without discount = $\text{₦}2{,}100{,}000$).

Correct Answer: B

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Question 19 View Details

Country X imports wheat and exports oil. The world price of wheat is US\$5 per tonne and that of oil is US\$60 per barrel. The exchange rate is $1\ \text{US\$}=\text{₦}380$. Wheat imports are subject to a 20 % ad valorem tariff. In addition, a transport cost of US\$0.5 per tonne is added to the wheat price before the tariff is applied. The government gives a subsidy of $\text{₦}2{,}000$ for each barrel of oil exported. If Country X imports $200{,}000$ tonnes of wheat and exports $50{,}000$ barrels of oil, calculate: (a) the total expenditure on wheat in naira after the tariff, (b) the total revenue from oil exports after the subsidy, (c) the net trade balance (exports revenue minus imports expenditure). Does the trade policy improve the trade balance?

Correct A. (a) ₦501,600,000; (b) ₦1,240,000,000; (c) ₦738,400,000 surplus; therefore the policy improves the trade balance.

B. (a) ₦456,000,000; (b) ₦1,240,000,000; (c) ₦784,000,000 surplus; therefore the policy improves the trade balance.

C. (a) ₦600,000,000; (b) ₦1,100,000,000; (c) ₦500,000,000 deficit; therefore the policy does not improve the trade balance.

D. (a) ₦501,600,000; (b) ₦1,140,000,000; (c) ₦638,400,000 surplus; therefore the policy improves the trade balance.

Correct Answer: A

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Question 20 View Details

The firm's production function is $Q = 4L^{0.5}K^{0.5}$, where $L$ is labour units and $K$ is capital units. The firm currently employs $L = 16$ and $K = 9$. (a) Compute the current output. (b) The firm wishes to increase output by 20 % while keeping the labour‑to‑capital ratio unchanged. Determine the new quantities of labour and capital required. (c) Calculate the marginal product of labour at the original input levels.

A. (a) 42 units; (b) L = 20.5 units, K = 11.5 units; (c) MPL = 1.4 output per labour unit.

Correct B. (a) 48 units; (b) L = 19.2 units, K = 10.8 units; (c) MPL = 1.5 output per labour unit.

C. (a) 36 units; (b) L = 18.0 units, K = 10.2 units; (c) MPL = 1.2 output per labour unit.

D. (a) 54 units; (b) L = 19.2 units, K = 9.6 units; (c) MPL = 1.8 output per labour unit.

Correct Answer: B

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Question 21 View Details

Fixed cost of a firm is $\text{₦}200$. Its total cost function is of the form $TC = aQ^{2} + bQ + 200$. At an output of 10 units the average total cost is $\text{₦}30$, and at an output of 5 units the marginal cost is $\text{₦}10$. If the market price is $\text{₦}40$, determine the total profit (or loss) the firm makes at the output level where average total cost equals marginal cost.

A. 170

B. 200

C. 130

Correct D. 150

Correct Answer: D

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Question 22 View Details

The total product of a firm is given by the cubic function $Q = -L^{3} + 12L^{2}$, where $L$ is the number of workers employed. Find the number of workers at which marginal product equals average product, and state the total product at that labour level.

A. 196

B. 256

C. 144

Correct D. 216

Correct Answer: D

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Question 23 View Details

In an economy the public holds currency equal to 30% of bank deposits and banks maintain a required reserve ratio of 10% of deposits. The central bank purchases government securities worth $\text{₦}500$ million, thereby increasing bank reserves by that amount. Assuming no excess reserves, calculate the eventual increase in the money supply.

Correct A. 1625

B. 1300

C. 1250

D. 5000

Correct Answer: A

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Question 24 View Details

The demand for a good is described by $Q = 120 - 4P$, where $P$ is the price in Naira and $Q$ is quantity demanded. Compute the price elasticity of demand at $P = 10$. Based on this elasticity, will a 5% increase in price increase or decrease total revenue?

A. -0.5, revenue will decrease

Correct B. -0.5, revenue will increase

C. -0.2, revenue will increase

D. -2, revenue will increase

Correct Answer: B

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Question 25 View Details

Given the following data (in million Naira): Consumption = 1500, Investment = 400, Government spending = 600, Exports = 300, Imports = 350, Indirect taxes = 200, Subsidies = 50, Net factor income from abroad = -30. Compute Gross Domestic Product (GDP) using the expenditure approach and then calculate Net National Income (NNI).

A. 2470

B. 2670

C. 2220

Correct D. 2270

Correct Answer: D

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