Practice neco model questions vol1 economics 2022 Past Questions

Question 1 View Details

Given the following macro‑economic data (in billions of Naira): 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 $D = 400$ and Net factor income from abroad $NFFI = 150$. Calculate the National Income (NI).

A. 3950

Correct B. 4150

C. 4050

D. 4250

Correct Answer: B

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Question 2 View Details

The market for wheat is described by the linear demand equation $Q_d = 500 - 2P$ and the linear supply equation $Q_s = 3P - 150$, where $P$ is the price per kilogram in naira and $Q$ is quantity in thousands of kilograms. Determine the equilibrium price and quantity.

A. Price = 115, Quantity = 275

B. Price = 120, Quantity = 260

Correct C. Price = 130, Quantity = 240

D. Price = 140, Quantity = 210

Correct Answer: C

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Question 3 View Details

A country has a labour force of 8 million people. The actual unemployment rate is 9 %. The frictional unemployment rate is 2 % and the structural unemployment rate is 3 %. Compute (a) the total number of unemployed persons, (b) the number of cyclical unemployed persons, and (c) the number of employed persons.

Correct A. Total unemployed = 720000; Cyclical unemployed = 320000; Employed = 7280000

B. Total unemployed = 720000; Cyclical unemployed = 280000; Employed = 7280000

C. Total unemployed = 650000; Cyclical unemployed = 250000; Employed = 7350000

D. Total unemployed = 800000; Cyclical unemployed = 400000; Employed = 7200000

Correct Answer: A

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Question 4 View Details

A monopolist faces the demand curve $P = 200 - 4Q$ and has a constant marginal cost of $MC = 40$ (no fixed cost).\n(a) Find the profit‑maximising output and price.\n(b) Calculate the monopoly profit.\n(c) If the market were perfectly competitive, determine the competitive output and price, and compute the dead‑weight loss caused by the monopoly.

A. Monopoly output = 20, price = 110, profit = 1400; Competitive output = 40, price = 40; Dead‑weight loss = 700

B. Monopoly output = 25, price = 100, profit = 1500; Competitive output = 50, price = 30; Dead‑weight loss = 900

C. Monopoly output = 15, price = 140, profit = 2100; Competitive output = 30, price = 80; Dead‑weight loss = 600

Correct D. Monopoly output = 20, price = 120, profit = 1600; Competitive output = 40, price = 40; Dead‑weight loss = 800

Correct Answer: D

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Question 5 View Details

Okun's law states that $(\text{Potential GDP growth} - \text{Actual GDP growth}) = k\,(U - U_{n})$, where $U$ is the actual unemployment rate, $U_{n}$ the natural rate and $k$ the Okun coefficient. In a certain economy the potential GDP growth is 5 %, the actual GDP growth is 2 %, the natural unemployment rate is 6 % and the Okun coefficient is 2. Find the actual unemployment rate.

A. 9.0

B. 8.0

Correct C. 7.5

D. 6.5

Correct Answer: C

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Question 6 View Details

National income is measured using the following data (in billions of naira): consumption $C = 2,400$, investment $I = 1,200$, government expenditure $G = 1,800$, exports $X = 500$ and imports $M = 700$. Indirect taxes equal 15 % of GDP, depreciation equals 8 % of GDP, and net factor income from abroad is -2 % of GDP. Calculate the Net National Income (NNI).

A. 3,600

B. 4,500

Correct C. 3,900

D. 4,200

Correct Answer: C

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Question 7 View Details

The total product (TP) of a factory when employing $L$ workers is given by $TP = 10L^{2} - 0.25L^{3}$. Determine the number of workers at which the marginal product (MP) equals the average product (AP).

Correct A. 20

B. 10

C. 25

D. 15

Correct Answer: A

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Question 8 View Details

A bus company operates a 100 km round‑trip route each day. Fixed costs are ₦50,000 per day and the variable cost is ₦150 per kilometre. The number of passengers willing to travel each day depends on the fare $p$ (in naira) according to the demand function $Q = 1,200 - 5p$ (where $Q$ is the number of passengers).\n\n(a) Write the profit function $\Pi(p)$ in terms of $p$.\n(b) Find the minimum fare that allows the company to break even (i.e., $\Pi = 0$). Give your answer to the nearest naira.

A. 70

B. 90

C. 78

Correct D. 83

Correct Answer: D

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Question 9 View Details

The central bank purchases government securities worth ₦500 million, injecting this amount into the banking system. The required reserve ratio is 10 % and the public holds currency equal to 0.25 times the amount of deposits (currency‑deposit ratio $c = 0.25$). Using the money multiplier, determine the total increase in the money supply resulting from this open‑market operation. Express your answer in millions of naira, rounded to the nearest million.

A. 1600

Correct B. 1786

C. 2000

D. 1500

Correct Answer: B

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Question 10 View Details

A commercial bank offers a 12‑month loan with a simple interest rate of 15 % per annum. In addition, the bank charges a processing fee equal to 2 % of the loan amount and requires a down‑payment of 5 % of the loan amount. If a borrower needs net proceeds of exactly ₦1,000,000, calculate (i) the loan amount that must be applied for, and (ii) the total amount that must be repaid at the end of the year. Round your answers to the nearest naira.

Correct A. 1075269, 1236559

B. 1020408, 1173469

C. 1075270, 1236561

D. 1052632, 1210527

Correct Answer: A

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Question 11 View Details

A farmer can produce either 100 kg of rice or 200 kg of beans with the same resources. If he decides to produce 60 kg of rice, how many kilograms of beans must he give up?

A. 200

Correct B. 120

C. 140

D. 80

Correct Answer: B

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Question 12 View Details

Using the expenditure approach, the following data (in millions of naira) are given for a country: $C = 2500$, $I = 800$, $G = 1200$, exports $X = 500$, imports $M = 700$, and net factor income from abroad $= -150$. Calculate the Gross National Income (GNI).

Correct A. 4150

B. 4300

C. 4450

D. 4850

Correct Answer: A

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Question 13 View Details

The Consumer Price Index (CPI) for the base year 2015 is 100. In 2020 the prices and quantities in the consumption basket are: rice $\text{price}=260$ (base price 200) for 30 kg, maize $\text{price}=180$ (base price 150) for 20 kg, and oil $\text{price}=360$ (base price 300) for 10 litres. Compute the CPI for 2020 and the inflation rate between 2015 and 2020.

A. 35

B. 30

Correct C. 25

D. 20

Correct Answer: C

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Question 14 View Details

A firm's total cost function is $TC = 0.5Q^{2} + 10Q + 50$ and its total revenue function is $TR = 40Q - 0.3Q^{2}$, where $Q$ is output in units. Determine the output level that maximizes profit and state the maximum profit.

A. Q = 15.00 units; profit = 200.00

Correct B. Q = 18.75 units; profit = 231.25

C. Q = 20.00 units; profit = 250.00

D. Q = 12.50 units; profit = 150.00

Correct Answer: B

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Question 15 View Details

The price of a product rises from $\text{₦}200$ to $\text{₦}250$ and the quantity demanded falls from 5,000 units to 4,000 units. Using the midpoint (arc) method, calculate the price elasticity of demand and state whether demand is elastic, inelastic or unit‑elastic.

A. -2

B. -1.2

C. -0.8

Correct D. -1

Correct Answer: D

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Question 16 View Details

A country exports coffee and imports wheat. Initially the export price of coffee is $\$2.00$ per kg and the country exports 1,000,000 kg. The import price of wheat is $\$1.20$ per kg and the country imports 500,000 kg. Afterwards the coffee price rises to $\$2.50$ per kg and coffee exports fall to 800,000 kg, while the wheat price falls to $\$1.00$ per kg and wheat imports rise to 600,000 kg.\n\n(i) Compute the terms of trade (export price ÷ import price) before and after the change and state the percentage change.\n(ii) Calculate export revenue, import expenditure and the trade balance (exports - imports) before and after the change.\n(iii) Based on these figures, does the country's trade position improve, worsen or stay the same?

A. Initial ToT = 1.67, new ToT = 2.00 (≈20% increase). Export revenue = $2,000,000 both periods; import expenditure = $600,000 both periods; trade balance = $1,400,000 both periods. The trade position stays the same.

B. Initial ToT = 1.67, new ToT = 2.50 (≈50% increase). Export revenue = $2,500,000 before, $2,000,000 after; import expenditure = $600,000 both periods; trade balance = $1,900,000 before, $1,400,000 after. The trade position improves.

Correct C. Initial ToT = 1.67, new ToT = 2.50 (≈50% increase). Export revenue = $2,000,000 both periods; import expenditure = $600,000 both periods; trade balance = $1,400,000 both periods. The trade position stays the same.

D. Initial ToT = 1.67, new ToT = 2.50 (≈50% increase). Export revenue = $2,000,000 both periods; import expenditure = $500,000 before, $600,000 after; trade balance = $1,500,000 before, $1,400,000 after. The trade position worsens.

Correct Answer: C

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Question 17 View Details

A firm produces output according to the Cobb‑Douglas function $Q = 0.5\,L^{0.6}K^{0.4}$. The wage rate is $\text{₦}2$ per unit of labour and the rental rate of capital is $\text{₦}4$ per unit of capital. The firm can spend at most $\text{₦}10,000$ on labour and capital combined.\n\nDetermine the cost‑minimising quantities of labour $L$ and capital $K$ that the firm should employ, and compute the maximum output it can produce with the given budget.

Correct A. Labour L = 3,000 units, Capital K = 1,000 units; maximum output ≈ 968 units.

B. Labour L = 3,500 units, Capital K = 800 units; maximum output ≈ 1,050 units.

C. Labour L = 2,000 units, Capital K = 1,500 units; maximum output ≈ 720 units.

D. Labour L = 2,500 units, Capital K = 1,250 units; maximum output ≈ 850 units.

Correct Answer: A

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Question 18 View Details

The market for a good is described by the demand equation $Q_d = 500 - 5P$ and the supply equation $Q_s = 2P$, where $P$ is the price in Naira and $Q$ is quantity. The government imposes a specific tax of $\text{₦}20$ per unit on producers.\n\nDetermine (i) the price paid by consumers, (ii) the price received by producers, and (iii) the total tax revenue collected by the government.

A. Consumer price ≈ ₦70.00, producer price ≈ ₦50.00, tax revenue ≈ ₦2,000.00.

B. Consumer price ≈ ₦80.00, producer price ≈ ₦60.00, tax revenue ≈ ₦2,400.00.

C. Consumer price ≈ ₦75.00, producer price ≈ ₦55.00, tax revenue ≈ ₦2,200.00.

Correct D. Consumer price ≈ ₦77.14, producer price ≈ ₦57.14, tax revenue ≈ ₦2,285.71.

Correct Answer: D

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Question 19 View Details

A monopolist faces the linear demand curve $P = 200 - 0.5Q$. Its total cost function is $TC = 20Q + 0.02Q^{2}$.\n\nDetermine the profit‑maximising output level, the corresponding price, and the maximum profit the firm can earn.

Correct A. Output ≈ 173 units, price ≈ ₦113.46, maximum profit ≈ ₦15,577.

B. Output ≈ 180 units, price ≈ ₦110.00, maximum profit ≈ ₦15,000.

C. Output ≈ 200 units, price ≈ ₦100.00, maximum profit ≈ ₦13,000.

D. Output ≈ 150 units, price ≈ ₦125.00, maximum profit ≈ ₦14,250.

Correct Answer: A

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Question 20 View Details

A country produces only rice and cassava using a fixed 1,000 labour‑hours.\n\nBefore a technological change each hour of labour can produce either 2 kg of rice or 3 kg of cassava. After the change the productivity of rice rises to 3 kg per hour, while cassava productivity remains 3 kg per hour.\n\n(a) Write the production‑possibility frontier (PPF) equations for rice (R) and cassava (C) before and after the technology.\n(b) Compute the opportunity cost of producing one additional kilogram of rice before and after the change.\n(c) State which good the country has a comparative advantage in each period.\n(d) If the country wishes to produce 800 kg of rice, how many labour hours are required and how much cassava can be produced before and after the technology?

A. Pre‑technology PPF: C = 3000 - 1.5R; post‑technology PPF: C = 3000 - R. Opportunity cost of rice: 1.5 kg cassava before, 0.8 kg cassava after. Comparative advantage: cassava before, cassava after. To produce 800 kg rice: before - 500 labour hrs, 1800 kg cassava; after - 300 labour hrs, 2200 kg cassava.

Correct B. Pre‑technology PPF: C = 3000 - 1.5R; post‑technology PPF: C = 3000 - R. Opportunity cost of rice: 1.5 kg cassava before, 1 kg cassava after. Comparative advantage: cassava before, rice after. To produce 800 kg rice: before - 400 labour hrs, 1800 kg cassava; after - 266.7 labour hrs, 2200 kg cassava.

C. Pre‑technology PPF: C = 3000 - 1.5R; post‑technology PPF: C = 3000 - R. Opportunity cost of rice: 1.5 kg cassava before, 1 kg cassava after. Comparative advantage: cassava before, rice after. To produce 800 kg rice: before - 400 labour hrs, 1800 kg cassava; after - 266.7 labour hrs, 2100 kg cassava.

D. Pre‑technology PPF: C = 3000 - 2R; post‑technology PPF: C = 3000 - 1.2R. Opportunity cost of rice: 2 kg cassava before, 1.2 kg cassava after. Comparative advantage: rice before, cassava after. To produce 800 kg rice: before - 400 labour hrs, 1400 kg cassava; after - 266.7 labour hrs, 2000 kg cassava.

Correct Answer: B

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Question 21 View Details

A country's population was $5$ million at the start of 2020. For the first $5$ years it grew at a constant annual rate of $2\%$. Thereafter, over the next $10$ years the annual growth rate fell linearly from $2\%$ at the end of 2024 to $1\%$ at the end of 2034, after which it remained constant at $1\%$ per year. In which year will the population first exceed $8$ million? Give the year (e.g., 2058).

A. 2060

Correct B. 2058

C. 2059

D. 2056

Correct Answer: B

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Question 22 View Details

Consider a country's population that follows the logistic model $P(t)=\frac{K}{1+ae^{-bt}}$, where $t$ is measured in years from 2020. The carrying capacity is $K=120$ million. At $t=0$ the population was $20$ million and after 5 years it was $40$ million. (i) Determine the values of $a$ and $b$. (ii) In which year will the annual increase in population be greatest, and what is that maximum increase (in million persons per year)?

A. 2030; 5.2

B. 2027; 4.8

Correct C. 2029; 5.5

D. 2028; 6.0

Correct Answer: C

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Question 23 View Details

An automobile manufacturer has total cost (in million Naira) given by $TC(Q)=0.5Q^{2}+20Q+100$, where $Q$ is output in thousands of units. The market price of each unit is constant at N80. The government imposes a specific tax of N10 per unit produced. (i) What output level maximises profit after tax? (ii) What is the profit at that output (in million Naira)?

Correct A. 50; 1150

B. 45; 1000

C. 40; 950

D. 55; 1200

Correct Answer: A

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Question 24 View Details

At the start of 2022, a government's annual budget (in billions of naira) is as follows: Tax revenue 150, non‑tax revenue 30, grants 20; current spending 180, capital investment 40, interest payments 15. The country's GDP is 800. The government plans to increase tax revenue by 10 % and cut current spending by 5 % while keeping all other items unchanged. (i) What is the new primary deficit (or surplus) after the changes? (ii) Assuming the initial public debt is 200 billion and that the total deficit adds to debt, what will be the debt‑to‑GDP ratio after one year? Give the ratio as a percentage to one decimal place.

A. 5; 28.0%

B. 6; 30.2%

Correct C. 4; 26.4%

D. 3; 24.5%

Correct Answer: C

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Question 25 View Details

In an economy that can allocate all its resources to produce either wheat or cloth, the maximum attainable output is 100 units of wheat or 200 units of cloth. What is the opportunity cost of producing one unit of wheat in terms of cloth?

Correct A. 2

B. 4

C. 0.5

D. 1

Correct Answer: A

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