waec model questions vol1 2018 economics | Essay

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Question 1 View Details
Answer the following questions on basic economic concepts.
Question Parts
(a)
Define scarcity and explain why it is regarded as the fundamental problem of economics.
(b)
A student decides to attend a private university that costs ₦500,000 per year instead of a public university that costs ₦200,000 per year. The ₦300,000 saved could have been invested in a small business venture. Using the concept of opportunity cost, analyse the student’s decision.
(c)
Discuss the likely effects of imposing a price ceiling on bread at a level below the market‑equilibrium price on consumers, producers and overall market efficiency.
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Question 2 View Details
The market for smartphones in Nigeria is described below.
Question Parts
(a)
Explain qualitatively how a rightward shift of the supply curve (due to a technological improvement) and a rightward shift of the demand curve (due to higher consumer income) would each affect the equilibrium price and quantity if they occurred simultaneously.
(b)
If the supply shift alone would lower the equilibrium price by ₦10,000 and increase quantity by 30,000 units, and the demand shift alone would raise the equilibrium price by ₦15,000 and increase quantity by 20,000 units, estimate the likely net change in equilibrium price and quantity after both shifts occur together. Show the reasoning behind your estimate.
(c)
Discuss two possible policy measures the government could adopt to protect consumers from the adverse effects of rapid price changes in the smartphone market, and evaluate their likely effectiveness.
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Question 3 View Details
A small‑scale bakery in Lagos sells a standard loaf of bread. The following market information was recorded over two consecutive weeks:
Question Parts
(a)
At the beginning of the first week the price of a loaf was ₦250 and the bakery sold 1,200 loaves. At the beginning of the second week the price was increased to ₦300 and sales fell to 950 loaves. Using the midpoint (arc) method, calculate the price elasticity of demand for the bakery’s bread.
(b)
Interpret the magnitude of the elasticity you obtained. State whether demand is elastic, unit‑elastic or inelastic and explain what this implies for the responsiveness of consumers to price changes.
(c)
Based on the elasticity result, predict what will happen to the bakery’s total revenue if it continues to raise the price of bread. Show the calculation for total revenue at the two observed price‑quantity combinations to support your answer.
(d)
The bakery’s variable cost is ₦120 per loaf. Using your elasticity result and the cost information, advise the baker whether a price increase or a price decrease would be more appropriate to improve profitability. Justify your recommendation with reference to both revenue and cost considerations.
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Question 4 View Details
A garment factory produces shirts using labour (L) and capital (K). The short‑run production function is given by Q = 5 L^{0.5} K^{0.5}, where Q is output in dozens of shirts, L is labour‑hours, and K is units of capital equipment.
Question Parts
(a)
Derive the expressions for the marginal product of labour (MPL) and the marginal product of capital (MPK). Then write the formula for the marginal rate of technical substitution (MRTS) of labour for capital.
(b)
The factory has a total cost budget of ₦10,000 for the production period. The wage rate for labour is ₦200 per labour‑hour and the rental cost of a unit of capital is ₦500. Determine the combination of L and K that maximises output subject to the cost constraint.
(c)
Using the optimal values of L and K obtained in part (b), calculate the maximum output (in dozens of shirts) the factory can produce.
(d)
Explain why, even though the firm can increase output by adding more labour while keeping capital constant, the marginal product of labour eventually falls. Relate your explanation to the concept of diminishing marginal returns.
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Question 5 View Details
A small manufacturing firm produces a single product. Its total cost (TC) in Naira for producing Q units per month is given by TC = 0.5Q² + 20Q + 100. The market price per unit is determined by the linear demand function P = 200 – 0.5Q.
Question Parts
(a)
Derive the marginal cost (MC) function and the marginal revenue (MR) function for the firm.
(b)
Determine the output level that maximises the firm’s profit. Show the steps you use.
(c)
Calculate the profit at the output level found in part (b). State whether the firm should continue operating in the short run if its fixed cost is ₦100.
(d)
Assume the government imposes a specific tax of ₦10 per unit produced. Explain how the profit‑maximising output and the resulting profit will change.
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Question 6 View Details
The market for cassava chips in Nigeria is characterised by many small producers. The market demand curve is P = 500 – 2Q, where P is the price in Naira per kilogram and Q is the total quantity demanded (in thousand kilograms). Each firm has a constant marginal cost of ₦100 per kilogram and an average total cost of ₦150 per kilogram when it produces 200 kilograms.
Question Parts
(a)
Identify the market structure and justify your answer using at least three relevant characteristics.
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Question 7 View Details
The following data are for the Nigerian economy for the year 2022.
Question Parts
(a)
Given that Gross Domestic Product (GDP) measured by the expenditure approach is ₦12,000 billion and net factor income from abroad is –₦200 billion, calculate Gross National Product (GNP). Show all working.
(b)
Depreciation (capital consumption allowance) for the year is ₦800 billion. Using your answer from part (a), compute Net National Product (NNP). Show all working.
(c)
Net indirect taxes (indirect taxes minus subsidies) amount to ₦1,500 billion. Using the NNP from part (b), determine Net National Income (NNI). Show your calculation.
(d)
Personal income for the year is ₦9,000 billion and the personal saving rate is 15 %. Calculate total personal saving and comment briefly on its proportion to personal income.
(e)
The government plans to increase its expenditure by ₦500 billion. The marginal propensity to consume (MPC) is 0.8. Using the expenditure multiplier, estimate the change in equilibrium national income and discuss the likely impact on output and employment.
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Question 8 View Details
The following monetary data pertain to Nigeria in 2023.
Question Parts
(a)
The monetary base (MB) is ₦5,000 billion and the reserve‑requirement ratio (RR) is 5 %. Calculate the initial money multiplier and the corresponding money supply (M) before any policy change.
(b)
The central bank raises the reserve‑requirement ratio to 10 % while all other conditions remain unchanged. Compute the new money multiplier and the theoretical maximum money supply, ignoring the open‑market operation.
(c)
Simultaneously, the central bank sells government securities worth ₦2,000 billion to the public. Assuming the public does not change its currency holdings, estimate the net change in the money supply after both the reserve‑requirement increase and the open‑market operation. Show your reasoning.
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