neco model questions vol1 2022 economics | Essay

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Question 1 View Details
A small bakery has a single oven that can be used either to bake loaves of bread or to bake pastries. The owner can produce a maximum of 200 loaves of bread per day if the oven is used solely for bread, or a maximum of 150 pastries per day if the oven is used solely for pastries.
Question Parts
(a)
Define opportunity cost and illustrate it with the bakery’s choice between bread and pastries.
(b)
Explain how scarcity of the oven’s capacity creates the need for choice in the bakery’s production plan.
(c)
Discuss how the concept of marginal utility influences a consumer’s decision to purchase bread instead of rice, assuming both are staple foods.
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Question 2 View Details
The table below shows the quantity of wheat demanded and supplied in a local market at two different price levels before and after a government health campaign that encourages people to eat more whole‑grain wheat products. | Situation | Price per kg (₦) | Quantity Demanded (kg) | Quantity Supplied (kg) | |-----------|------------------|------------------------|------------------------| | Before campaign | 200 | 500 | 520 | | After campaign | 180 | 620 | 520 | Assume that the supply of wheat remained unchanged during the period.
Question Parts
(a)
State the direction of the shift in the demand curve and give the most likely reason for this shift based on the information provided.
(b)
Calculate the price elasticity of demand between the two price‑quantity points using the midpoint (arc) method and interpret the result.
(c)
Based on the shift in demand and the calculated elasticity, predict the likely effect on the equilibrium price and quantity, and explain your reasoning.
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Question 3 View Details
A small electronics retailer observes that the quantity demanded for a particular model of smartphone is related to its price by the demand function Q = 200 - 5P, where Q is quantity demanded per month and P is price in naira.
Question Parts
(a)
Define price elasticity of demand and state the formula used to compute it.
(b)
Calculate the price elasticity of demand for this smartphone when the price is ₦20. Show all steps and indicate whether demand is elastic, inelastic or unit‑elastic at that price.
(c)
If the retailer raises the price by 10 % from ₦20, predict the likely percentage change in total revenue and explain the reasoning using the elasticity result obtained in part (b).
(d)
Identify two possible factors that could shift the demand curve for this smartphone and discuss qualitatively how each factor would affect the price elasticity of demand.
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Question 4 View Details
A manufacturing firm produces widgets using labor (L) and capital (K) according to the production function Q = 10 L^{0.5} K^{0.5}, where Q is output per day.
Question Parts
(a)
Define marginal product of labor (MPL) and derive the expression for MPL from the given production function.
(b)
Calculate the MPL when L = 25 workers and K = 16 machines. Show your working.
(c)
Compute the average product of labor (APL) at the same input levels and compare it with the MPL obtained in part (b). State what the comparison indicates about the stage of production.
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Question 5 View Details
A small manufacturing firm produces a single product. Its total cost (TC) function is given by TC = ₦500,000 + ₦8,000 Q, where Q is the quantity of output produced per month. The current market price of the product is ₦15,000 per unit.
Question Parts
(a)
Determine the break‑even output level (in units) for the firm at the current price.
(b)
If the market price falls to ₦12,000 per unit, recalculate the break‑even output and discuss briefly how this change would affect the firm’s short‑run production decision.
(c)
Assuming the firm continues to produce 200 units per month at the original price of ₦15,000, calculate the monthly profit (or loss) and advise whether the firm should maintain, increase or reduce its output, giving a short justification.
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Question 6 View Details
The table below summarises the characteristics of a particular product market in Nigeria. - A large number of firms operate in the market. - The product offered by each firm is essentially identical. - There are no barriers to entry or exit. - Firms are price takers; each firm accepts the prevailing market price. - Information about prices and technology is freely available to all participants. Recently, the government announced a price ceiling of ₦20,000 per unit for this product, which is below the prevailing market price of ₦25,000 per unit.
Question Parts
(a)
Identify the market structure that best fits the description before the price ceiling was introduced, giving two defining features that support your choice.
(b)
Explain briefly how price is determined in this market structure and contrast it with the way price is set in a monopolistic competition market.
(c)
Analyse the likely short‑run impact of the imposed price ceiling on the market, mentioning at least two effects on producers and consumers.
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Question 7 View Details
The following data relate to the economy of Country X for the year 2022 (all figures are in billions of naira): - Consumption expenditure (C) = 1,500 - Investment expenditure (I) = 400 - Government expenditure (G) = 600 - Exports (X) = 300 - Imports (M) = 350 - Indirect taxes (T) = 200 - Subsidies (S) = 50 - Depreciation (D) = 120 - Net factor income from abroad (NFIA) = 80 Using the above information, answer the following: a) Calculate the Gross Domestic Product (GDP) at market price. b) Determine the Net National Product (NNP) at factor cost. c) Discuss two limitations of using GNP (or NNP) as a measure of the welfare of a nation.
Question Parts
(a)
Calculate the Gross Domestic Product (GDP) at market price.
(b)
Determine the Net National Product (NNP) at factor cost.
(c)
Discuss two limitations of using GNP (or NNP) as a measure of the welfare of a nation.
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Question 8 View Details
Country Y’s central bank is attempting to curb rising inflation. The following monetary‑policy actions have been taken in the current quarter: - The statutory reserve requirement was increased from 8% to 10%. - Commercial banks held excess reserves of 200 billion naira before the change. - The central bank sold 150 billion naira of government securities in an open‑market operation. - The discount (policy) rate was raised from 5% to 6%. Assume that the money multiplier is given by the reciprocal of the reserve‑requirement ratio and that the only source of reserves is the excess reserves mentioned above. Answer the following: a) Calculate the theoretical change in the money supply resulting from the increase in the reserve‑requirement ratio. b) Determine the immediate change in the money supply caused by the open‑market sale of securities. c) Explain how the increase in the discount rate reinforces the other measures in controlling inflation, and evaluate which of the three tools (reserve‑requirement change, open‑market sale, discount‑rate increase) is likely to have the greatest short‑run impact on the money supply.
Question Parts
(a)
Calculate the theoretical change in the money supply resulting from the increase in the reserve‑requirement ratio.
(b)
Determine the immediate change in the money supply caused by the open‑market sale of securities.
(c)
Explain how the increase in the discount rate reinforces the other measures in controlling inflation, and evaluate which of the three tools is likely to have the greatest short‑run impact on the money supply.
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