Practice neco model questions vol1 economics 2023 Past Questions

Question 1 View Details

A firm's production function for a single product is $Q = 20L - 0.5L^{2}$, where $Q$ is output (units) and $L$ is labour employed (workers). The product sells for ₦200 per unit and the wage rate is ₦150 per worker. Assuming the firm aims to maximise profit, determine the number of workers it should employ and the maximum profit attainable.

A. 19.25 workers; ₦35,000.00

Correct B. 19.25 workers; ₦37,056.25

C. 18.00 workers; ₦34,800.00

D. 20.00 workers; ₦36,500.00

Correct Answer: B

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Question 2 View Details

In an economy with a labour force of 5 million, the unemployment rate is 12 %. Of the unemployed, 4 % of the labour force are structurally unemployed and 3 % are frictionally unemployed. (a) Calculate the number of people unemployed due to cyclical factors. (b) If the unemployment rate falls to 8 % while the structural and frictional unemployment numbers remain unchanged, how many people are now unemployed due to cyclical factors?

A. Initially 300,000; after the fall 100,000

B. Initially 250,000; after the fall 75,000

Correct C. Initially 250,000; after the fall 50,000

D. Initially 200,000; after the fall 50,000

Correct Answer: C

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Question 3 View Details

The public holds currency equal to 30 % of bank deposits. The required reserve ratio is 10 % and banks hold excess reserves equal to 2 % of deposits. (a) Compute the money multiplier. (b) If the central bank injects ₦500 million of new reserves into the banking system, what is the resulting increase in the money supply?

A. Money multiplier ≈ 2.86; money supply increase ≈ ₦1.43 billion

Correct B. Money multiplier ≈ 3.10; money supply increase ≈ ₦1.55 billion

C. Money multiplier ≈ 3.33; money supply increase ≈ ₦1.67 billion

D. Money multiplier ≈ 2.50; money supply increase ≈ ₦1.25 billion

Correct Answer: B

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Question 4 View Details

A monopoly faces the linear demand curve $P = 100 - 2Q$ and has a constant marginal cost of ₦20 per unit. Fixed costs are ₦200. (a) Determine the profit‑maximising output and price. (b) Compute the monopoly's profit. (c) Compare this outcome with perfect competition (price equal to marginal cost) and calculate the dead‑weight loss caused by monopoly power.

A. Output 25 units, price ₦50, profit ₦500; dead‑weight loss ₦250

B. Output 15 units, price ₦70, profit ₦450; dead‑weight loss ₦350

C. Output 18 units, price ₦55, profit ₦540; dead‑weight loss ₦300

Correct D. Output 20 units, price ₦60, profit ₦600; dead‑weight loss ₦400

Correct Answer: D

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Question 5 View Details

Country X imports cloth and exports wheat. The world price of wheat is \$2 per kg and the world price of cloth is \$4 per metre. Domestic demand for wheat is $Q^{d}_{w}=500-100P_{w}$ and domestic supply of wheat is $Q^{s}_{w}=400+50P_{w}$. Domestic demand for cloth is $Q^{d}_{c}=800-150P_{c}$; cloth is imported at the world price. The government imposes a specific tariff of \$0.5 per metre on cloth imports. (a) After the tariff, what is the domestic price of cloth, the quantity imported, and the tariff revenue? (b) Calculate the change in consumer surplus for cloth and the net welfare loss. (c) Determine the percentage change in Country X's terms of trade (export price of wheat divided by import price of cloth) resulting from the tariff.

A. (a) \$4.0 per metre; 125 m imported; tariff revenue \$0. (b) Consumer surplus loss \$70.00; net welfare loss \$10.00. (c) Terms of trade fall by ≈5.0 %.

Correct B. (a) \$4.5 per metre; 125 m imported; tariff revenue \$62.5. (b) Consumer surplus loss \$81.27; net welfare loss \$18.77. (c) Terms of trade fall by ≈11.2 %.

C. (a) \$5.0 per metre; 100 m imported; tariff revenue \$50. (b) Consumer surplus loss \$85.00; net welfare loss \$15.00. (c) Terms of trade fall by ≈12.0 %.

D. (a) \$4.5 per metre; 150 m imported; tariff revenue \$75. (b) Consumer surplus loss \$90.00; net welfare loss \$20.00. (c) Terms of trade fall by ≈9.5 %.

Correct Answer: B

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Question 6 View Details

The labour force of a country is 2,500,000 persons, of whom 200,000 are unemployed. A government training programme reduces the number of unemployed persons by $15\%$ of the original unemployed, and at the same time 30,000 persons who were previously not in the labour force enter the labour force and are all employed. What is the new unemployment rate (in \% ) expressed to two decimal places?

A. 7.20

B. 5.84

C. 8.15

Correct D. 6.72

Correct Answer: D

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Question 7 View Details

Two transport operators serve the same route. Operator A incurs a fixed cost of $\text{₦}80,000$ per trip and a variable cost of $\text{₦}25$ per passenger‑km. Operator B incurs a fixed cost of $\text{₦}20,000$ per trip and a variable cost of $\text{₦}35$ per passenger‑km for the first 100 km per passenger; for any distance beyond 100 km the variable cost falls to $\text{₦}20$ per passenger‑km. Each bus carries 40 passengers. Determine the distance (in km) at which the total cost per passenger for Operator B equals that of Operator A.

Correct A. 200

B. 300

C. 150

D. 250

Correct Answer: A

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Question 8 View Details

In a country with a labour force of 3,000,000, the unemployment rate is 10\%. Of the unemployed, 40\% are frictionally unemployed and the remaining 60\% are structurally unemployed. A training programme reduces frictional unemployment by 25\% of its original amount, but structural unemployment rises by 10\% of its original amount because of skill‑mismatch. What is the new unemployment rate (in \% ) after the programme?

A. 8.5

B. 9.2

C. 10.4

Correct D. 9.6

Correct Answer: D

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Question 9 View Details

The market demand for a good is given by $Q_d = 500 - 5P$ and the market supply by $Q_s = 2P + 20$, where $Q$ is quantity and $P$ is price in naira. Find the equilibrium price (in naira) rounded to two decimal places.

A. 70.00

B. 72.86

Correct C. 68.57

D. 65.00

Correct Answer: C

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Question 10 View Details

When the price of a product rises from $\text{₦}200$ to $\text{₦}250$, the quantity demanded falls from 1,200 units to 960 units. Using the midpoint method, calculate the price elasticity of demand, state whether demand is elastic, inelastic or unitary, and indicate the percentage change in total revenue.

A. elasticity = -1.2 (elastic), revenue decreased

Correct B. elasticity = -1 (unitary), revenue unchanged

C. elasticity = -0.8 (inelastic), revenue increased

D. elasticity = -1 (unitary), revenue increased

Correct Answer: B

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Question 11 View Details

The government's tax revenue function is assumed to be $T = aY - bY^{2}$, where $Y$ is the national income (in billions of naira) and $T$ is tax revenue (in billions of naira). When $Y = 200$ the revenue is 30 bn, and when $Y = 300$ the revenue is 42 bn. Determine the marginal tax rate (the derivative $dT/dY$) at an income level of $Y = 250$. Express your answer as a percentage.

A. 14%

Correct B. 12%

C. 10%

D. 8%

Correct Answer: B

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Question 12 View Details

At the beginning of a fiscal year the debt‑to‑GDP ratio is 60 %. The primary deficit equals 2 % of GDP. The real interest rate on government debt is 5 % and the real GDP growth rate is 3 %. Assuming the debt‑to‑GDP ratio evolves according to $d_{t+1}= \frac{1+r}{1+g}\,d_{t}+p$, where $p$ is the primary balance as a proportion of GDP (positive for a deficit), what primary balance is required to keep the debt‑to‑GDP ratio unchanged after one year? State the required primary balance as a percentage of GDP (a surplus is a negative number).

A. 0.95% surplus

Correct B. 1.17% surplus

C. 1.50% surplus

D. 1.17% deficit

Correct Answer: B

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Question 13 View Details

A farmer can use her land to produce either 100 kg of wheat or 80 kg of beans. If she decides to produce 40 kg of wheat, how many kilograms of beans can she produce with the remaining resources? Give your answer in kilograms.

A. 44

B. 56

C. 32

Correct D. 48

Correct Answer: D

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Question 14 View Details

Country X's export price index rose from 120 to 150 over a year, while its import price index fell from 110 to 95. The terms of trade (ToT) are defined as the ratio of the export price index to the import price index. Calculate the percentage change in the terms of trade over the year and state whether the ToT improved or deteriorated.

A. 44.8% deterioration

B. 33.3% improvement

C. 12.5% improvement

Correct D. 44.8% improvement

Correct Answer: D

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Question 15 View Details

A country has a current population of 12 million. The age distribution is 28 % aged 0-14, 62 % aged 15-64 and 10 % aged 65 +. The population is growing at an annual rate of 1.8 %. Each year the proportion of the 0-14 age group falls by 0.5 percentage points and the proportion of the 65 + group rises by 0.5 percentage points, while the 15-64 proportion adjusts to keep the total at 100 %. Assuming these trends continue for five years, estimate (i) the total population after five years (rounded to the nearest thousand) and (ii) the new dependency ratio, defined as $\frac{\text{population aged 0-14 + 65+}}{\text{population aged 15-64}}\times 100$. Provide your answer as "population; dependency ratio %".

A. 12,950,000; 63%

Correct B. 13,120,000; 61%

C. 13,250,000; 58%

D. 13,120,000; 55%

Correct Answer: B

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Question 16 View Details

A farmer can produce either $10$ tons of wheat or $5$ tons of corn with the same resources. If he decides to produce wheat, what is the opportunity cost of producing one ton of wheat in terms of corn?

A. 2

Correct B. 0.5

C. 0.2

D. 1

Correct Answer: B

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Question 17 View Details

A firm's production function is $Q = 2L^{0.5}K^{0.5}$. Initially the firm uses $L=16$ units of labour and $K=9$ units of capital. Labour is increased by $44\%$ while capital is reduced by $25\%$. What is the percentage change in output?

Correct A. 3.9

B. -2.1

C. 5.2

D. 0

Correct Answer: A

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Question 18 View Details

A firm's total cost function is $TC = 0.5Q^{2}+30Q+200$ and the market demand price is given by $P = 120-0.2Q$. Determine the output level that maximizes profit and state the maximum profit.

A. Quantity ≈ 80 units; Maximum profit ≈ 3500

B. Quantity ≈ 50 units; Maximum profit ≈ 2100

Correct C. Quantity ≈ 64 units; Maximum profit ≈ 2693

D. Quantity ≈ 70 units; Maximum profit ≈ 3000

Correct Answer: C

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Question 19 View Details

A bank offers a nominal interest rate of $12\%$ per annum compounded annually. Expected inflation for the next year is $8\%$. Another investment guarantees a real interest rate of $3\%$ per annum. Which option provides the higher nominal return, and what is the real return of the bank's offer?

A. Bank deposit gives higher nominal return; its real return ≈ 4.5%

Correct B. Bank deposit gives higher nominal return; its real return ≈ 3.7%

C. The other investment gives higher nominal return; its real return ≈ 3%

D. Bank deposit gives higher nominal return; its real return ≈ 2.0%

Correct Answer: B

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Question 20 View Details

The market demand function is $Q_d = 500 - 5P$ and the supply function is $Q_s = 3P - 30$, where $P$ is price in naira. Find the equilibrium price and quantity.

Correct A. Price = 66.25; Quantity = 168.75

B. Price = 60.00; Quantity = 200.00

C. Price = 65.00; Quantity = 175.00

D. Price = 70.00; Quantity = 150.00

Correct Answer: A

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Question 21 View Details

Given the following data for a country in a year: GDP at market price = 5,200 billion Naira, indirect taxes = 400 billion Naira, subsidies = 100 billion Naira, depreciation = 300 billion Naira, and net factor income from abroad = 150 billion Naira. Calculate the Net National Income at factor cost for that year.

Correct A. 4750

B. 5000

C. 4600

D. 4850

Correct Answer: A

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Question 22 View Details

A firm produces output according to the production function $Q = 2L^{0.5}K^{0.5}$, where $L$ is labour units and $K$ is capital units. The wage rate is ₦200 per unit of labour and the rental rate of capital is ₦500 per unit of capital. To produce 800 units of output, determine the cost‑minimising quantities of labour and capital and compute the minimum total cost.

A. Labour ≈ 650.00 units, Capital ≈ 250.00 units, Minimum total cost ≈ 255,000 Naira

B. Labour ≈ 700.00 units, Capital ≈ 200.00 units, Minimum total cost ≈ 250,000 Naira

C. Labour ≈ 600.00 units, Capital ≈ 300.00 units, Minimum total cost ≈ 260,000 Naira

Correct D. Labour ≈ 632.46 units, Capital ≈ 252.98 units, Minimum total cost ≈ 252,982 Naira

Correct Answer: D

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Question 23 View Details

Between Year 0 and Year 5, Country A's real GDP increased from ₦1,200 billion to ₦1,560 billion, while its population grew from 30 million to 33 million. (i) Calculate the average annual real GDP growth rate (compound). (ii) Calculate the average annual population growth rate (compound). (iii) Determine the average annual per‑capita real GDP growth rate. (iv) The government aims for per‑capita income to grow by at least 3 % per year. Based on the computed per‑capita growth rate, does the country meet this target?

Correct A. i) 5.39 % per year, ii) 1.93 % per year, iii) 3.38 % per year, iv) Yes, the target is met

B. i) 5.39 % per year, ii) 1.50 % per year, iii) 3.89 % per year, iv) Yes, the target is met

C. i) 6.00 % per year, ii) 1.93 % per year, iii) 4.07 % per year, iv) No, the target is not met

D. i) 5.00 % per year, ii) 2.00 % per year, iii) 3.00 % per year, iv) No, the target is not met

Correct Answer: A

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Question 24 View Details

A farmer can allocate all his resources to produce either 100 bags of rice or 150 bags of beans in a season. If he decides to produce 40 bags of rice, what is the maximum number of beans he can produce without reducing rice output? Also state the opportunity cost of one bag of rice in terms of beans.

A. Maximum beans = 95; Opportunity cost of 1 bag of rice = 1.2 beans

B. Maximum beans = 80; Opportunity cost of 1 bag of rice = 1.8 beans

C. Maximum beans = 90; Opportunity cost of 1 bag of rice = 2 beans

Correct D. Maximum beans = 90; Opportunity cost of 1 bag of rice = 1.5 beans

Correct Answer: D

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Question 25 View Details

A firm's short‑run total cost function (in thousand Naira) is $TC = 0.02Q^{3} - 0.3Q^{2} + 12Q + 50$, where $Q$ is output in units. Find the level of output that minimizes average total cost (ATC) and give the minimum ATC value (to two decimal places).

Correct A. Output ≈ 13.94 units (≈14), Minimum ATC ≈ 15.30 thousand Naira

B. Output ≈ 12.57 units (≈13), Minimum ATC ≈ 16.45 thousand Naira

C. Output ≈ 15.21 units (≈15), Minimum ATC ≈ 14.80 thousand Naira

D. Output ≈ 10.03 units (≈10), Minimum ATC ≈ 18.10 thousand Naira

Correct Answer: A

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