neco model questions vol1 2024 economics | Essay

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Question 1 View Details
A small community in northern Nigeria has limited resources to allocate between two projects: building a primary health centre and constructing a borehole for clean water. The community can either allocate ₦2,000,000 to the health centre, which would serve 500 patients per year, or allocate the same amount to the borehole, which would provide clean water to 1,200 households. The community decides to build the health centre.
Question Parts
(a)
Define scarcity and explain how it is illustrated in the above situation.
(b)
Using the concept of opportunity cost, calculate the implicit cost of the decision to build the health centre.
(c)
Discuss two possible long‑term economic consequences of the community’s choice, linking them to the concepts of utility and productivity.
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Question 2 View Details
The market for cassava chips in a Nigerian town is described as follows. When the price of cassava chips is ₦500 per kilogram, the quantity demanded is 800 kg per week and the quantity supplied is 300 kg per week. A survey shows that if the price falls to ₦400 per kilogram, the quantity demanded rises to 1,000 kg per week while the quantity supplied falls to 200 kg per week.
Question Parts
(a)
Construct a short‑run demand schedule and supply schedule for the given price points.
(b)
Using the two points for demand, calculate the price elasticity of demand between ₦500 and ₦400. Show all steps and interpret the result.
(c)
Explain, with reference to the calculated elasticity, how a further fall in price to ₦350 would likely affect total revenue for sellers.
(d)
The local government is considering a subsidy that would effectively increase the price received by producers by ₦50 per kilogram while consumers continue to pay the market price. Discuss how this subsidy would shift the supply curve and the likely impact on equilibrium price and quantity.
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Question 3 View Details
The table below shows the quantity demanded of a good at two different prices. | Price (₦ per unit) | Quantity Demanded (units) | |--------------------|---------------------------| | 40 | 500 | | 50 | 380 | In addition, a survey revealed that when consumers' average monthly income rose from ₦20,000 to ₦25,000, the quantity demanded of the same good increased from 380 units to 440 units. Using this information, answer the following:
Question Parts
(a)
Calculate the price elasticity of demand between the two price points using the midpoint (arc) method.
(b)
Interpret the sign and magnitude of the elasticity obtained in part (a). State whether demand is elastic, inelastic or unit‑elastic.
(c)
If the price of the good is increased by 10 % from the initial price of ₦40, estimate the percentage change in total revenue using the elasticity calculated in part (a). State whether total revenue will rise or fall.
(d)
Using the income data provided, compute the income elasticity of demand and classify the good as a normal or inferior good, and as a necessity or luxury.
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Question 4 View Details
A firm operates in the short run with a fixed amount of capital. The table shows the number of workers employed (labour, L) and the corresponding total product (TP) of output. | Labour (L) | Total Product (TP) | |------------|--------------------| | 0 | 0 | | 1 | 20 | | 2 | 45 | | 3 | 66 | | 4 | 80 | | 5 | 90 | | 6 | 95 | Using this information, answer the following:
Question Parts
(a)
Calculate the marginal product (MP) of labour and the average product (AP) of labour for each additional worker employed.
(b)
Identify the range of labour input over which the law of diminishing marginal returns sets in, and explain how you reached that conclusion.
(c)
Explain qualitatively how the shapes of the MP and AP curves relate to the shape of the TP curve.
(d)
Assume the market price of the product is ₦50 per unit and the wage rate for each worker is ₦200. Using the concept of value of marginal product (VMP = MP × price), determine the profit‑maximising level of labour employment and justify your answer.
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Question 5 View Details
A manufacturing firm produces widgets. Its total cost (TC) in ₦ for producing Q units is given in the table below. The market demand for widgets is described by the price‑output relationship P = 200 – 0.1Q, where P is the price per widget in ₦. | Q (units) | TC (₦) | |-----------|--------| | 0 | 20,000 | | 200 | 22,800 | | 400 | 27,200 | | 600 | 33,200 | | 800 | 40,800 | | 1,000 | 50,000 | Using the information above, answer the following:
Question Parts
(a)
Calculate total revenue (TR) and profit (π) for each output level shown in the table.
(b)
Identify the output level that yields the maximum profit and state the maximum profit value.
(c)
The government introduces a specific tax of ₦20 per widget. Re‑calculate the profit at the profit‑maximising output and comment on the effect of the tax on profit and on the firm’s break‑even point.
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Question 6 View Details
The market for a particular agricultural commodity is described by the inverse demand equation P = 250 – 0.2Q, where P is the market price in ₦ per tonne and Q is the total quantity supplied in thousand tonnes. There are four identical firms (A, B, C and D) operating in this market. Each firm has the same total cost function TC = 200 + 5Q_i (in ₦), where Q_i is the output of the individual firm in thousand tonnes. Answer the following:
Question Parts
(a)
Determine the short‑run equilibrium price and total market output assuming the firms are price‑takers.
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Question 7 View Details
The table below shows selected macro‑economic data for Country X for the year 2023 (all values in ₦ billions).
Question Parts
(a)
Calculate the Gross Domestic Product (GDP) of Country X using the expenditure approach.
(b)
Net factor income from abroad (NFIA) for the same year is –₦150 billion. Using this information, determine the Gross National Product (GNP).
(c)
Total factor income (TFI) recorded for 2023 is ₦16,500 billion. Compute the statistical discrepancy and explain briefly what its magnitude indicates about the reliability of the national accounts.
(d)
Discuss two important limitations of using GDP as a measure of the welfare of the people of Country X.
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Question 8 View Details
The Central Bank of Nigeria (CBN) operates with a required reserve ratio of 15 %. At the start of the year, commercial banks hold total reserves of ₦2,500 billion (required plus excess) and total deposits of ₦18,000 billion. The CBN then conducts an open‑market purchase of government securities worth ₦800 billion, paying for them by crediting the reserve accounts of the banks.
Question Parts
(a)
Calculate the amount of required reserves that banks must hold before the open‑market operation.
(b)
Determine the level of excess reserves held by banks before the operation.
(c)
After the open‑market purchase, compute the new total reserves, the required reserves (assuming deposits have not yet changed), and the new excess reserves.
(d)
Assuming banks lend out all excess reserves, calculate the maximum possible increase in the money supply that could result from this operation.
(e)
Explain two reasons why the actual increase in the money supply might be lower than the theoretical maximum calculated in part (d).
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