neco 2025 economics | Essay

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Question 1 View Details
A developing country has a limited amount of arable land that can be used for agricultural production.
Question Parts
(a)
Define scarcity and illustrate the definition with a relevant example from the agricultural sector.
(b)
Explain the concept of opportunity cost using the farmer’s decision to grow either a cash crop (e.g., cotton) or a food crop (e.g., maize).
(c)
The government imposes a price ceiling on wheat at a level below the prevailing market price. Discuss two likely effects of this intervention on consumers and producers.
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Question 2 View Details
The following tables show the demand and supply schedules for Good X in a closed economy. Demand Schedule: Price (₦) : 100 80 60 40 20 Quantity Demanded (units): 20 30 45 65 90 Supply Schedule: Price (₦) : 100 80 60 40 20 Quantity Supplied (units): 80 65 45 30 15
Question Parts
(a)
Determine the equilibrium price and quantity of Good X.
(b)
The government introduces a specific tax of ₦10 per unit on producers of Good X. Calculate the new equilibrium price paid by consumers and the new equilibrium quantity.
(c)
Using the midpoint method, compute the price elasticity of demand at the original equilibrium (₦60, 45 units).
(d)
Briefly discuss one limitation of relying on the elasticity calculated in part (c) for making long‑term tax policy decisions.
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Question 3 View Details
The government is considering increasing the price of electricity for households. The price elasticity of demand for electricity is -0.4. The current average monthly consumption per household is 250 kWh at a price of ₦15 per kWh. The government plans to raise the price to ₦18 per kWh. Assuming other factors remain unchanged:
Question Parts
(a)
Calculate the expected percentage change in the quantity demanded of electricity.
(b)
Determine the new average monthly consumption per household (in kWh).
(c)
Compute the change in total monthly expenditure on electricity for a typical household and comment on the likely effect on government revenue if the tax is collected on the price increase.
(d)
Discuss two broader economic impacts of the price increase on households and on the economy as a whole.
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Question 4 View Details
A small manufacturing firm produces two products, A and B, using a common fixed factor of production (factory space) and variable labour. The total cost function for the firm is:
Question Parts
(a)
Write down the profit function in terms of Q_A and Q_B.
(b)
Derive the first‑order conditions for profit maximisation with respect to Q_A and Q_B.
(c)
Solve the simultaneous equations obtained in part (b) to find the profit‑maximising output levels of A and B (give answers to the nearest whole unit).
(d)
Calculate the maximum profit at these output levels.
(e)
Explain briefly how the interaction term (0.05 Q_A Q_B) in the cost function influences the firm’s production decision.
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Question 5 View Details
A small manufacturing firm produces widgets. Its fixed cost is ₦150,000 per month. The variable cost per widget is ₦200. The market price per widget depends on the quantity sold according to the linear demand equation P = 1200 - 0.5Q, where P is the price in naira and Q is the quantity of widgets produced and sold in a month.
Question Parts
(a)
Determine the break‑even output (the quantity at which total revenue equals total cost).
(b)
If the firm decides to produce 800 widgets, calculate the profit (or loss) for that month.
(c)
Assume the variable cost per widget rises by 10 %. Explain how this change affects the break‑even output and state the new break‑even quantity (rounded to the nearest unit).
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Question 6 View Details
The market for a particular agricultural product is described as monopolistically competitive. The market demand is given by P = 500 - 2Q, where P is the price in naira per unit and Q is the total quantity demanded (in thousands of units). The firm's total cost function is TC = 100,000 + 100Q + Q² (costs are in naira).
Question Parts
(a)
State three characteristic features of a monopolistically competitive market.
(b)
Derive the firm's marginal revenue (MR) function.
(c)
Determine the profit‑maximising output and the corresponding price. Then compute the firm's profit (or loss) at that output.
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Question 7 View Details
The following macro‑economic data are for Country X for the year 2024 (all figures are in ₦ billions): - Consumption (C) = 2,500 - Investment (I) = 800 - Government expenditure (G) = 1,200 - Exports (X) = 600 - Imports (M) = 500 - Indirect taxes (T) = 300 - Subsidies (S) = 100 - Depreciation (D) = 250 - Net factor income from abroad (NFIA) = 150 - Statistical discrepancy = 50 Using this information, answer the questions that follow.
Question Parts
(a)
Calculate the Gross Domestic Product (GDP) at market price.
(b)
Determine the Gross National Product (GNP).
(c)
Find the Net National Product (NNP).
(d)
Calculate the National Income (NI) for the year.
(e)
Explain, with reference to the formula used, how an increase in indirect taxes, holding all other variables constant, would affect National Income and the distribution of income in the economy.
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Question 8 View Details
The Central Bank of Country Y has set the reserve requirement ratio at 10 %. The banking sector currently holds the following balances (all figures in ₦ billions): - Total deposits = 2,000 - Excess reserves = 200 - Required reserves are calculated on the basis of the reserve requirement. In addition, the Central Bank has recently purchased government securities worth ₦500 bn in an open‑market operation. Answer the questions that follow.
Question Parts
(a)
Calculate (i) the amount of required reserves, (ii) the money multiplier, and (iii) the current potential money supply before the open‑market purchase.
(b)
After the open‑market purchase of ₦500 bn securities, determine (i) the new monetary base, (ii) the unchanged money multiplier, and (iii) the new potential money supply.
(c)
Discuss qualitatively how lowering the reserve requirement to 8 % would affect the money supply and the equilibrium interest rate, using the liquidity‑preference framework.
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