neco model questions vol1 2017 economics | Essay

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Question 1 View Details
A small community in a rural area has a limited amount of arable land, a fixed number of workers and a given amount of capital equipment. The community must decide how to allocate these scarce resources among farming, small‑scale manufacturing and education.
Question Parts
(a)
Define scarcity and explain why it is the fundamental problem of economics.
(b)
Explain the concept of opportunity cost and illustrate it with an example taken from the community described above.
(c)
Distinguish between a positive statement and a normative statement, and give one of each related to the community’s resource allocation.
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Question 2 View Details
In a local market the following observations were recorded: - When the price of a commodity is ₦200 per unit, the quantity demanded is 500 units and the quantity supplied is 200 units. - When the price rises to ₦300 per unit, the quantity demanded falls to 300 units while the quantity supplied rises to 400 units. Assume that both demand and supply are linear over this range.
Question Parts
(a)
Derive the linear demand equation and the linear supply equation from the data given.
(b)
Using the equations obtained in part (a), calculate the equilibrium price and quantity before any tax is imposed.
(c)
A tax of ₦50 per unit is now imposed on sellers. Determine the new equilibrium price paid by buyers, the equilibrium quantity, and state how the tax burden is shared between buyers and sellers.
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Question 3 View Details
The table below shows the quantity demanded of a locally produced mobile phone model at different price levels. | Price (₦) | Quantity Demanded (units) | |-----------|---------------------------| | 15,000 | 8,000 | | 20,000 | 6,500 | | 25,000 | 5,200 | | 30,000 | 4,300 | Using this information, answer the following questions:
Question Parts
(a)
Calculate the price elasticity of demand between the price points ₦20,000 and ₦25,000 using the midpoint (arc) method. State whether demand is elastic, inelastic or unit‑elastic in this range.
(b)
Based on the elasticity calculated in part (a), explain how total revenue will change if the price is increased from ₦20,000 to ₦25,000.
(c)
The government imposes a specific tax of ₦5,000 per unit on this phone. Discuss the likely impact on (i) the equilibrium price paid by consumers, (ii) the equilibrium quantity sold, and (iii) how the tax burden is shared between consumers and producers.
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Question 4 View Details
A small bakery uses two ovens (fixed capital) to bake loaves of bread. The table shows the total product (TP) of loaves produced per day when varying the number of workers (labour, L) employed. | Labour (L) | Total Product (TP) – loaves per day | |------------|--------------------------------------| | 1 | 120 | | 2 | 280 | | 3 | 420 | | 4 | 520 | | 5 | 580 | | 6 | 610 | | 7 | 620 | Answer the following:
Question Parts
(a)
Calculate the marginal product of labour (MP) and the average product of labour (AP) for each additional worker from the second worker onward.
(b)
From the data, identify the stage of production at which diminishing marginal returns set in and explain the economic reasoning behind it.
(c)
The bakery wishes to increase its daily output by 30 loaves. Discuss the most cost‑effective way to achieve this increase, considering the concepts of returns to scale, marginal product, and the possibility of adding another oven.
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Question 5 View Details
A manufacturing firm incurs a fixed cost of ₦200,000 per month. The total cost (TC) at various output levels is given in the table below. | Output (units) | Total Cost (₦) | |----------------|----------------| | 0 | 200,000 | | 500 | 350,000 | | 1,000 | 460,000 | | 1,500 | 540,000 | | 2,000 | 600,000 | The market price of the product is constant at ₦350 per unit. Answer the following questions:
Question Parts
(a)
Calculate the average cost (AC) at each output level and state at which output the firm is most technically efficient.
(b)
Determine the marginal cost (MC) between each successive output level.
(c)
Using the market price, explain whether the firm should increase output beyond 2,000 units.
(d)
Identify the output level at which profit is maximised. Show all necessary calculations.
(e)
State the profit (or loss) at the profit‑maximising output and advise whether the firm should continue operating in the short run.
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Question 6 View Details
A firm operates in a market where the demand for its product is given by the linear equation P = 150 – 0.1Q, where P is the price per unit (₦) and Q is the quantity demanded. The firm’s total cost (TC) at various output levels is shown below. | Output (units) | Total Cost (₦) | |----------------|----------------| | 0 | 200,000 | | 100 | 260,000 | | 200 | 340,000 | | 300 | 440,000 | | 400 | 560,000 | | 500 | 700,000 | Using the information provided, answer the following questions:
Question Parts
(a)
Compute the average cost (AC) at each output level and indicate the output at which AC is minimum.
(b)
Determine the marginal cost (MC) between each successive output level.
(c)
For each output level, calculate total revenue (TR) and marginal revenue (MR). Show your work.
(d)
Using the MR and MC figures, determine the profit‑maximising output level. Explain the rule you applied.
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Question 7 View Details
The table below gives selected macro‑economic aggregates for the economy of Azara for the year 2022 (all values in ₦ billions).
Question Parts
(a)
Using the expenditure approach, calculate Azara's Gross Domestic Product (GDP) for 2022.
(b)
Given that Net Factor Income from Abroad (NFIA) for 2022 is ₦ 50 billion, determine Azara's Gross National Product (GNP) and Net National Product (NNP).
(c)
If Azara's mid‑year population was 25 million, compute the per‑capita NNP for 2022 and comment on what this figure suggests about the average standard of living.
(d)
Suggest two policy measures that the government could adopt to raise national income in the next year. For each measure, explain briefly how it would affect the components of GDP.
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Question 8 View Details
The Central Bank of Borland operates under a fractional‑reserve system. The required reserve ratio is 10 %. At the end of 2022 the banking system holds total reserves of ₦ 70 billion, of which excess reserves amount to ₦ 20 billion. Total deposits in the banking system are ₦ 500 billion. In March 2023 the Central Bank purchases government securities worth ₦ 30 billion from commercial banks.
Question Parts
(a)
Calculate the money multiplier that would apply in this economy.
(b)
Based on the multiplier calculated in (a), estimate the maximum potential money supply that could be created by the banking system, assuming all excess reserves are lent out.
(c)
Explain how the open‑market purchase of ₦ 30 billion of government securities in March 2023 will affect the money supply, assuming the same reserve ratio and that banks fully lend out any new excess reserves generated by the operation.
(d)
Identify two other monetary‑policy tools available to the Central Bank of Borland and briefly discuss how each tool influences the money supply.
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