Practice neco economics 2024 Past Questions | Edcrib

Question 1 View Details

The market demand for a good is given by $ P = 120 - 2Q $ where $P$ is the price in naira and $Q$ is the quantity demanded. A single firm operates as a monopoly with total cost function $ TC = 20Q + 0.5Q^{2} $. (a) Determine the profit‑maximising output and the corresponding price. (b) Assuming the same market were perfectly competitive, find the competitive equilibrium price and quantity. (c) Calculate the dead‑weight loss caused by the monopoly. Express your answer as a fraction.

Correct A. $ \frac{1600}{9} $

B. $ \frac{1500}{9} $

C. $ \frac{1600}{8} $

D. $ \frac{1800}{9} $

Correct Answer: A

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Question 2 View Details

A country's initial population is 5,000,000. The annual crude birth rate is 30 per 1,000 and the crude death rate is 12 per 1,000. Net migration is -0.5% per year. After year 5 a health programme reduces the death rate by 20 % each year for the next three years, after which the reduced death rate remains constant. Assuming the birth and migration rates stay unchanged, calculate the population at the end of year 10. Give your answer rounded to the nearest whole person.

A. 5,790,500

B. 5,812,340

Correct C. 5,827,072

D. 5,845,210

Correct Answer: C

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Question 3 View Details

In a given economy the following aggregate data are known: Consumption $C = 2,500$ billion ₦, Investment $I = 800$ billion ₦, Net exports $NX = 150$ billion ₦, Net factor income from abroad $NFIA = -30$ billion ₦, and total Gross Domestic Product $GDP = 4,200$ billion ₦. Government spending $G$ is not given. Using the expenditure approach, first determine $G$. Then compute Gross National Product $GNP$ and finally express $GNP$ as a percentage of $GDP$. Give the percentage to one decimal place.

A. 101.5

Correct B. 99.3

C. 95.4

D. 98.7

Correct Answer: B

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Question 4 View Details

If the price of a good rises from $\,200$ ₦ to $\,250$ ₦ and the quantity demanded falls from 1,200 units to 960 units, calculate the price elasticity of demand using the midpoint method. State whether demand is elastic, inelastic, or unit elastic.

Correct A. -1

B. -0.5

C. -1.2

D. -0.8

Correct Answer: A

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Question 5 View Details

A consumer has a weekly income of $\,5,000$ ₦. The price of good X is $\,20$ ₦ per unit and the price of good Y is $\,50$ ₦ per unit. If the consumer wishes to purchase at least 30 units of Y, what is the maximum number of units of X that can be bought while spending the entire income?

A. 220

Correct B. 175

C. 140

D. 250

Correct Answer: B

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Question 6 View Details

The central bank requires banks to hold a required reserve ratio of 10% and the public holds currency equal to 25% of bank deposits. Initially total bank deposits are ₦500 million. (a) Calculate the total money supply under these conditions. (b) The central bank later changes the required reserve ratio to 12% and the currency‑deposit ratio to 20% while deposits remain unchanged. Calculate the new money supply and the percentage change from the initial level.

A. -6%

Correct B. -4%

C. -2%

D. 4%

Correct Answer: B

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Question 7 View Details

When the price of good X falls from ₦200 to ₦150, the quantity demanded rises from 400 units to 560 units. Using the midpoint method, calculate the price elasticity of demand and state whether demand is elastic, inelastic or unitary.

A. -2.45 (elastic)

B. -1.00 (unitary)

C. -0.85 (inelastic)

Correct D. -1.17 (elastic)

Correct Answer: D

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Question 8 View Details

In the wheat market the demand function is $Q_d = 1200 - 2P$ and the supply function is $Q_s = 3P - 300$, where $P$ is the price per unit in naira. The government imposes a specific tax of ₦50 per unit on producers. Determine (a) the price paid by consumers, (b) the price received by producers, (c) the quantity traded after the tax, and (d) the proportion of the tax burden borne by consumers and by producers.

A. Consumers 40%, producers 60%

B. Consumers 50%, producers 50%

Correct C. Consumers 60%, producers 40%

D. Consumers 70%, producers 30%

Correct Answer: C

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Question 9 View Details

A country has a labour force of 12 million workers. The natural rate of unemployment is 5%. Because of a recession, the actual unemployment rate rises to 9%. The government launches a job‑creation programme that reduces cyclical unemployment by 1.5 percentage points. What is the new unemployment rate after the programme?

A. 7%

B. 8%

Correct C. 7.5%

D. 6.5%

Correct Answer: C

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Question 10 View Details

An economy follows the Solow growth model with a production function per effective worker $y = k^{0.5}$. The parameters are: savings rate $s = 20\%$, depreciation rate $\delta = 5\%$, population growth rate $n = 2\%$, and technological progress rate $g = 1\%$.\n(a) Compute the steady‑state capital per effective worker $k^*$ and steady‑state output per effective worker $y^*$.\n(b) State the steady‑state growth rate of output per worker.\n(c) If the savings rate rises to $s = 25\%$, find the new $k^*$ and the percentage increase in steady‑state output per worker.

A. k* = 6.25, y* = 2.5, growth = 2%, new k* = 9.7656, output increase = 30%

B. k* = 5.00, y* = 2.24, growth = 1%, new k* = 8.5000, output increase = 20%

Correct C. k* = 6.25, y* = 2.5, growth = 1%, new k* = 9.7656, output increase = 25%

D. k* = 7.00, y* = 2.65, growth = 1%, new k* = 10.2000, output increase = 28%

Correct Answer: C

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Question 11 View Details

During Year 1 the country exported 2 000 000 tonnes of cocoa at an average price of \$2 500 per tonne and imported 1 500 000 tonnes of wheat at \$300 per tonne. In Year 2 the world price of cocoa fell by $12\%$ while the country's export volume rose by $8\%$. At the same time the import‑price index for wheat increased by $5\%$ and the import volume remained unchanged. $ (a)$ Calculate the percentage change in the terms of trade from Year 1 to Year 2. $ (b)$ Assuming real national income is proportional to export earnings minus import expenditures, determine whether national income increased or decreased and by what percentage.

A. Terms of trade fell by approximately 20.0 % and real national income decreased by about 9.5 %.

B. Terms of trade fell by approximately 12.5 % and real national income decreased by about 4.3 %.

Correct C. Terms of trade fell by approximately 16.2 % and real national income decreased by about 6.0 %.

D. Terms of trade rose by approximately 3.8 % and real national income increased by about 2.1 %.

Correct Answer: C

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Question 12 View Details

A firm can transport its product either by road truck or by rail. For a distance of 800 km the cost functions are: Road - fixed cost $F_r = \₦150\,000$ and variable cost $v_r = \₦45$ per tonne‑km. Rail - fixed cost $F_{ra}=\₦5\,000\,000$ and variable cost $v_{ra}=\₦30$ per tonne‑km. The firm ships between 200 and 800 tonnes per trip. $ (a)$ Find the smallest shipment size (in tonnes) for which rail transport is cheaper than road. $ (b)$ If the firm ships 600 tonnes, calculate the cost saving (or extra cost) when using rail instead of road.

A. Rail becomes cheaper for shipments larger than 350.0 tonnes (i.e., at least 351 tonnes). For a 600‑tonne shipment rail saves \₦1 800 000 compared with road.

B. Rail becomes cheaper for shipments larger than 500 tonnes (i.e., at least 501 tonnes). For a 600‑tonne shipment rail saves \₦2 100 000 compared with road.

Correct C. Rail becomes cheaper for shipments larger than 404.2 tonnes (i.e., at least 405 tonnes). For a 600‑tonne shipment rail saves \₦2 350 000 compared with road.

D. Rail becomes cheaper for shipments larger than 450.5 tonnes (i.e., at least 451 tonnes). For a 600‑tonne shipment rail saves \₦2 800 000 compared with road.

Correct Answer: C

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Question 13 View Details

A firm's total‑cost function is $TC = 5\,000 + 20Q + 0.05Q^{2}$, where $Q$ is output in units. $ (a)$ Determine the output level that minimises average total cost (ATC) and compute that minimum ATC. $ (b)$ Find the marginal cost (MC) at this output. $ (c)$ If the market price is $\₦150$ per unit, should the firm produce at the output found in part (a)?

A. The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦70.0. MC at this output is also \₦70.0. Because the market price (\₦150) exceeds ATC, the firm should produce.

B. The ATC is minimised at Q \approx 200 units, giving a minimum ATC of about \₦60.0. MC at this output is also \₦60.0. Because the market price (\₦150) exceeds ATC, the firm should produce.

Correct C. The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦51.6. MC at this output is also \₦51.6. Because the market price (\₦150) exceeds ATC, the firm should produce.

D. The ATC is minimised at Q \approx 316 units, giving a minimum ATC of about \₦51.6. MC at this output is also \₦51.6. Because the market price (\₦150) is below ATC, the firm should not produce.

Correct Answer: C

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Question 14 View Details

Country X runs a current‑account deficit of \$2\,billion. Its export‑price elasticity with respect to the real exchange rate is 0.4 and its import‑price elasticity is 0.6. If the real exchange rate depreciates by $10\%$, estimate the expected percentage change in the trade balance (ignore capital flows). Will the current‑account deficit improve or worsen?

A. The trade balance is expected to fall by about 2 %, improving the current‑account deficit (by roughly \\$40 million).

Correct B. The trade balance is expected to fall by about 2 %, worsening the current‑account deficit (by roughly \$40 million).

C. The trade balance is expected to fall by about 5 %, worsening the current‑account deficit (by roughly \\$100 million).

D. The trade balance is expected to rise by about 2 %, improving the current‑account deficit (by roughly \\$40 million).

Correct Answer: B

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Question 15 View Details

A farmer can use his land either for maize or beans. With all land devoted to maize the output is 120 tonnes of maize and 0 beans; with all land devoted to beans the output is 0 maize and 80 tonnes of beans. If the farmer currently produces 48 tonnes of maize, (a) what is the maximum possible beans output? (b) What is the opportunity cost of producing one additional tonne of maize in terms of beans?

A. Maximum beans = 56 tonnes; opportunity cost of one extra tonne of maize = 3\/4 tonne of beans.

B. Maximum beans = 48 tonnes; opportunity cost of one extra tonne of maize = 1\/1 tonne of beans.

C. Maximum beans = 32 tonnes; opportunity cost of one extra tonne of maize = 1\/2 tonne of beans.

Correct D. Maximum beans = 48 tonnes; opportunity cost of one extra tonne of maize = 2/3 tonne of beans.

Correct Answer: D

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Question 16 View Details

The central bank requires banks to hold a required reserve ratio of $8\%$ and banks keep an excess reserve of $4\%$ on their deposits. Households hold $6\%$ of their deposits as cash. The effective reserve ratio is therefore the sum of required and excess reserves. If the central bank wishes to increase the money supply by ₦250 million, how many million naira of government securities must it purchase in an open‑market operation? Express your answer as a number of millions (to the nearest whole number).

A. 55

Correct B. 45

C. 30

D. 40

Correct Answer: B

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Question 17 View Details

The demand for a product is given by $ Q = 500 - 5P + 2I $, where $P$ is the price in naira and $I$ is consumer income measured in thousands of naira. At a price of $20$ naira and an income level of $30$ (i.e., ₦30,000), calculate the price elasticity of demand (rounded to two decimal places).

A. -0.25

B. -0.18

C. -0.20

Correct D. -0.22

Correct Answer: D

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Question 18 View Details

A country's population follows the logistic growth model $ P(t)=\frac{K}{1+\left(\frac{K-P_{0}}{P_{0}}\right)e^{-rt}} $ with carrying capacity $K=80$ million, initial population $P_{0}=20$ million and intrinsic growth rate $r=0.04$ per year. How many years (to one decimal place) will it take for the population to reach $40$ million?

A. 35.2

B. 31.0

C. 22.5

Correct D. 27.5

Correct Answer: D

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Question 19 View Details

A country's Human Development Index (HDI) is the arithmetic mean of three dimension indices: life‑expectancy index $L$, education index $E$ and GNI per‑capita index $G$. Currently $L=0.85$, $E=0.70$ and $G=0.60$. The government plans to raise $E$ by 0.10 and $G$ by 0.15 while $L$ stays unchanged. To achieve an overall HDI of at least $0.82$, what is the minimum increase (to two decimal places) required in the life‑expectancy index $L$?

A. 0.08

B. 0.10

C. 0.04

Correct D. 0.06

Correct Answer: D

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Question 20 View Details

A 5‑year government bond has a face value of ₦1,000,000 and pays an annual coupon of 8 % of the face value. The market yield (effective annual rate) is 6 %. Calculate the current price of the bond (rounded to the nearest naira).

A. 1129884

B. 1147258

Correct C. 1084248

D. 1000000

Correct Answer: C

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Question 21 View Details

A farmer uses labour (L units) and fertilizer (F kg) to produce a crop. The production function is $ Q = 10 L^{0.5} F^{0.3} $. The market price of the crop is ₦500 per unit. Labour costs ₦200 per unit and fertilizer costs ₦150 per kg. The farmer has a total budget of ₦30,000 for these inputs. Determine the combination of L and F that maximizes profit and compute the maximum profit.

A. Labour = 93.75 units, Fertiliser = 65 kg, Maximum profit = ₦140,000

B. Labour = 100 units, Fertiliser = 70 kg, Maximum profit = ₦150,000

C. Labour = 85 units, Fertiliser = 80 kg, Maximum profit = ₦140,500

Correct D. Labour = 93.75 units, Fertiliser = 75 kg, Maximum profit = ₦146,700

Correct Answer: D

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Question 22 View Details

A poultry farm has fixed costs of ₦500,000 per year and a variable cost of ₦2,500 per bird. The market price per bird depends on total output Q according to the demand function $ P = 20,000 - 0.5 Q $ (Naira). The government imposes a 10% levy on total revenue. Determine the output level that maximises profit after the levy and compute the maximum profit.

A. Output ≈ 15,000 birds, Maximum profit ≈ ₦120,000,000

Correct B. Output ≈ 17,222 birds, Maximum profit ≈ ₦132,972,219

C. Output ≈ 20,000 birds, Maximum profit ≈ ₦100,250,000

D. Output ≈ 18,500 birds, Maximum profit ≈ ₦140,500,000

Correct Answer: B

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Question 23 View Details

A manufacturing firm's total cost (in thousand Naira) for output Q (in thousand units) is given by $ TC = 0.02 Q^{3} - 0.3 Q^{2} + 50 Q + 200 $. Determine the output level where marginal cost equals average cost, and state the corresponding market price if the firm is a price‑taker in a perfectly competitive market (price equals marginal cost).

A. Output = 20,000 units, Price = ₦55 per unit

Correct B. Output = 20,000 units, Price = ₦62 per unit

C. Output = 15,000 units, Price = ₦58 per unit

D. Output = 25,000 units, Price = ₦70 per unit

Correct Answer: B

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Question 24 View Details

A farmer produces maize and beans using a joint production process. The joint cost is ₦120,000. Revenue from maize is $ R_m = 150 Q_m $ and from beans is $ R_b = 200 Q_b $ where $ Q_m $ and $ Q_b $ are quantities in kilograms. Additional processing costs are ₦30 per kg of maize and ₦50 per kg of beans. The farmer sells the two crops together and the market requires the ratio $ Q_m : Q_b = 3 : 2 $. Find the break‑even quantities of maize and beans (i.e., quantities that make total profit zero).

Correct A. Maize ≈ 545 kg, Beans ≈ 364 kg

B. Maize ≈ 500 kg, Beans ≈ 333 kg

C. Maize ≈ 450 kg, Beans ≈ 300 kg

D. Maize ≈ 600 kg, Beans ≈ 400 kg

Correct Answer: A

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Question 25 View Details

A monopolist faces the market demand $ P = 100 - 0.5 Q $ (price in Naira, Q in units) and has a constant marginal cost of ₦20 per unit. Determine the profit‑maximising output and price, and calculate the dead‑weight loss relative to the perfectly competitive outcome.

A. Monopoly output = 80 units, price = ₦70, dead‑weight loss = ₦1,200

Correct B. Monopoly output = 80 units, price = ₦60, dead‑weight loss = ₦1,600

C. Monopoly output = 100 units, price = ₦50, dead‑weight loss = ₦2,000

D. Monopoly output = 60 units, price = ₦70, dead‑weight loss = ₦2,400

Correct Answer: B

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