waec model questions vol1 2017 economics | Essay

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Question 1 View Details
A farmer in a rural Nigerian community has 2 hectares of land that can be used either for a cash crop (cotton) or a food crop (maize). The farmer can earn ₦150,000 per hectare from cotton and ₦90,000 per hectare from maize. The farmer decides to plant cotton on both hectares. Answer the following:
Question Parts
(a)
Define opportunity cost in the context of micro‑economics.
(b)
Calculate the opportunity cost of the farmer’s decision in monetary terms.
(c)
Explain how the concept of opportunity cost influences the allocation of resources in a mixed economy such as Nigeria.
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Question 2 View Details
The government of a Nigerian state has introduced a price ceiling on a staple food (cassava flour). The following data show the quantity demanded (Qd) and quantity supplied (Qs) at various price levels (price per kilogram in ₦): | Price (₦) | Qd (thousand kg) | Qs (thousand kg) | |-----------|------------------|------------------| | 100 | 80 | 20 | | 120 | 70 | 35 | | 140 | 55 | 50 | | 160 | 40 | 65 | | 180 | 25 | 80 | Answer the following: a) Determine the market equilibrium price and quantity (use linear interpolation between the relevant points). b) If the government fixes a price ceiling at ₦130 per kilogram, calculate the resulting shortage. c) Using the linear demand curve, compute the consumer surplus that consumers obtain when the price ceiling is in effect (assume only the quantity that is actually supplied is purchased). d) Briefly discuss two likely long‑run consequences of maintaining the price ceiling at ₦130.
Question Parts
(a)
Find the equilibrium price and quantity.
(b)
Calculate the shortage that arises at the ceiling price of ₦130.
(c)
Compute the consumer surplus under the price ceiling.
(d)
Discuss two probable long‑run effects of the price ceiling.
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Question 3 View Details
The table below shows the quantity demanded of a commodity at various prices. | Price (₦) | Quantity demanded (units) | |-----------|---------------------------| | 200 | 500 | | 150 | 650 | | 100 | 900 | Using the information provided, answer the following questions.
Question Parts
(a)
Calculate the price elasticity of demand between the price of ₦200 and ₦150 using the midpoint (arc) method.
(b)
Interpret the elasticity coefficient obtained in part (a) and explain what it implies for the consumer’s responsiveness to price changes.
(c)
Assuming the price falls from ₦200 to ₦150, determine whether total revenue will increase, decrease or remain unchanged, and justify your answer using the concept of elasticity.
(d)
Discuss two factors that could cause the price elasticity of demand for this commodity to be higher (more elastic) than the value you calculated.
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Question 4 View Details
A firm produces output using labour (L) and capital (K). The table below shows the marginal product of labour (MPL) and marginal product of capital (MPK) for different input combinations. | L (units) | K (units) | MPL (output per additional labour) | MPK (output per additional capital) | |-----------|-----------|-------------------------------------|--------------------------------------| | 1 | 2 | 120 | 80 | | 2 | 2 | 100 | 80 | | 3 | 2 | 80 | 80 | | 4 | 2 | 60 | 80 | The wage rate (cost of one unit of labour) is ₦50 and the rental rate of capital is ₦40 per unit. Answer the following questions.
Question Parts
(a)
Calculate the marginal rate of technical substitution (MRTS) of labour for capital at the input combination (L = 2, K = 2).
(b)
Explain the concept of diminishing marginal returns and illustrate it with reference to the MPL values in the table.
(c)
Given the input prices, determine which input (labour or capital) is relatively cheaper per unit of marginal product at (L = 2, K = 2) and recommend how the firm should adjust its input mix to minimise cost while maintaining the same level of output.
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Question 5 View Details
A small manufacturing firm produces a single product. The firm recorded the following total costs at two different output levels: - When output was 200 units, total cost was ₦300,000. - When output was 500 units, total cost was ₦420,000. The selling price of the product is fixed at ₦800 per unit. Using the information above, answer the following questions:
Question Parts
(a)
Determine the firm's fixed cost and variable cost per unit.
(b)
Calculate the break‑even output (the quantity at which total revenue equals total cost).
(c)
If the variable cost per unit rises by 20 %, determine the new break‑even output.
(d)
Assuming the firm produces 800 units, compute its profit (or loss) and comment on the implication for the firm’s short‑run decision.
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Question 6 View Details
Consider the market for a locally produced electronic gadget. The market is characterised by many firms that sell slightly differentiated products. The demand faced by an individual firm is given by: P = 200 – 0.5Q where P is the price (₦) and Q is the quantity supplied by that firm. The firm’s total cost function is: TC = 20,000 + 40Q Answer the following:
Question Parts
(a)
Identify the market structure that best describes this industry and give two defining characteristics of that structure.
(b)
Derive the profit‑maximising output and price for the firm.
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Question 7 View Details
The table below shows the main macro‑economic aggregates for Country X for the year 2022 (all values are in ₦ billions).\n\n- Consumption (C) = 12,000\n- Investment (I) = 3,500\n- Government expenditure (G) = 4,200\n- Exports (X) = 2,800\n- Imports (M) = 3,100\n- Net factor income from abroad (NFIA) = –150\n- Indirect taxes less subsidies = 800\n- Depreciation (capital consumption allowance) = 1,200\n\nUsing the data above, answer the following questions.
Question Parts
(a)
Calculate the Gross Domestic Product (GDP) at market prices using the expenditure approach.
() State the formula used.
() Show the calculation and give the numerical answer.
() Briefly explain why indirect taxes are not added again in this approach.
(b)
Using the same data, compute the Net National Product (NNP) at factor cost.
() Calculate GNP.
() From GNP obtain NNP at factor cost and give the final figure.
() State two limitations of using NNP as an indicator of economic welfare.
(c)
The government is considering revising the national accounts to include informal‑sector activities estimated at ₦2,500 bn. Discuss how the inclusion of the informal sector would affect the computed national‑income figures and the likely policy implications.
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Question 8 View Details
The Central Bank of Nigeria (CBN) is reviewing its monetary‑policy stance. The current reserve‑requirement ratio is 10 %, the discount rate is 6 % per annum, and the CBN has announced an open‑market purchase of ₦5,000 bn of Treasury bills.
Question Parts
(a)
Calculate the theoretical maximum increase in the money supply that could result from the open‑market purchase, assuming banks hold no excess reserves and lend out all required reserves.
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