neco model questions vol1 2019 economics | Essay

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Question 1 View Details
Explain the concepts of scarcity, choice and opportunity cost, and illustrate how they are inter‑related using a simple example from a Nigerian household.
Question Parts
(a)
Define scarcity and explain why it is a fundamental economic problem.
(b)
Define opportunity cost and illustrate with an example involving a household decision.
(c)
Discuss how the concept of choice is linked to scarcity and opportunity cost in the example you gave.
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Question 2 View Details
The market for bottled water in a Nigerian city is described as follows: - At a price of ₦150 per bottle, quantity demanded = 8,000 bottles/week and quantity supplied = 4,000 bottles/week. - At a price of ₦250 per bottle, quantity demanded = 5,000 bottles/week and quantity supplied = 7,000 bottles/week. Using this information, answer the questions that follow.
Question Parts
(a)
Derive the linear demand equation and the linear supply equation. Show all steps.
(b)
Determine the equilibrium price and quantity in this market.
(c)
The government imposes a per‑unit tax of ₦50 on producers. Assuming the tax is fully passed on to consumers, calculate the new equilibrium price paid by consumers and the quantity traded.
(d)
Explain how the tax affects consumer surplus and producer surplus. State which group bears the larger burden and why, referring to price elasticity.
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Question 3 View Details
The table below shows the quantity demanded of a certain good at three different prices in a competitive market. | Price (₦) | Quantity demanded (units) | |-----------|---------------------------| | 100 | 500 | | 120 | 400 | | 150 | 300 | Using the information above, answer the following:
Question Parts
(a)
Calculate the price elasticity of demand between the first two price points using the midpoint method.
(b)
Suppose the government imposes a specific tax of ₦20 per unit on this good. Assuming the price elasticity you calculated remains constant, estimate the percentage change in quantity demanded and discuss the likely impact on tax revenue.
(c)
If the good has a positive cross‑price elasticity of 0.5 with respect to another good, interpret this relationship and explain how a 10 % increase in the price of the other good would affect demand for the original good.
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Question 4 View Details
A firm produces a single product using labour (L) as the only variable input while capital (K) is fixed at 100 units. The table shows the total product (TP) obtained at different levels of labour employed. | Labour (L) | Total Product (TP) | |------------|--------------------| | 0 | 0 | | 1 | 30 | | 2 | 70 | | 3 | 120 | | 4 | 150 | | 5 | 160 | | 6 | 165 | Answer the following questions:
Question Parts
(a)
Compute the marginal product (MP) and average product (AP) of labour for each additional worker. (i) Show the calculations. (ii) Identify the range of labour where diminishing marginal returns set in and explain the observation.
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Question 5 View Details
A small manufacturing firm produces a single product. Its total cost (TC) function is TC = 200 + 5Q + 0.02Q^2, where Q is the quantity produced per month. The market demand for the product is represented by the inverse demand equation P = 150 – 0.5Q, where P is the price per unit in naira.
Question Parts
(a)
Derive the expressions for marginal cost (MC) and marginal revenue (MR).
(b)
Determine the profit‑maximising output level and the corresponding price. Show all steps.
(c)
Calculate the maximum profit (or loss) at that output.
(d)
If the fixed cost (the constant term in the TC function) rises by 10 %, explain qualitatively how the profit‑maximising output and profit will be affected, without re‑solving the whole problem.
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Question 6 View Details
In a certain Nigerian region, the market for cassava displays the following features: there are many farmers, each of whom sells a slightly differentiated variety; the product is not perfectly homogeneous; farmers have some ability to set their own price; and the market is characterised by modest advertising and occasional government intervention.
Question Parts
(a)
Briefly define the four main market structures studied in NECO Economics: perfect competition, monopoly, monopolistic competition and oligopoly.
(b)
Based on the features given, identify which market structure best describes the cassava market and justify your choice with two specific reasons.
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Question 7 View Details
The following data are extracted from the national accounts of Nigeria for the year 2022 (all figures are in billions of naira).
Question Parts
(a)
Calculate Gross Domestic Product (GDP) at market price.
(b)
Using the data, determine Net National Product (NNP) at factor cost.
(c)
The government wishes to raise NNP at factor cost by 5 % without altering any component other than those it can directly influence. Suggest two feasible policy measures and explain briefly how each measure would affect the relevant components of national income.
(d)
Discuss two important limitations of using NNP as a measure of the economic welfare of a nation.
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Question 8 View Details
The Central Bank of Nigeria has adopted the following monetary policy stance: - Required reserve ratio (RRR) = 10 %. - It conducts an open‑market operation by selling government securities worth ₦5 000 million. - The discount rate is 6 %. - Commercial banks are holding excess reserves of ₦2 000 million. Assume the simple money multiplier formula applies and that there are no other changes in the banking system.
Question Parts
(a)
Calculate the theoretical change in the money supply resulting from the open‑market sale, assuming banks lend out all required reserves and hold no excess reserves.
(b)
If banks actually retain the stated excess reserves of ₦2 000 million, determine the actual change in the money supply.
(c)
Explain how a change in the discount rate could influence the money supply, outlining the transmission mechanism involved.
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