waec model questions vol1 2021 economics | Essay

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Question 1 View Details
A small community has only 500 litres of water available per day for domestic use. The community must decide how to allocate the water between two activities: (i) drinking and cooking, and (ii) irrigation of a communal garden.
Question Parts
(a)
Define scarcity and explain why it is a fundamental economic problem, using the water situation as an illustration.
(b)
Identify two opportunity costs that arise if the community decides to allocate part of the water to the garden instead of domestic use.
(c)
Discuss how understanding opportunity cost can help the community make an efficient allocation decision.
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Question 2 View Details
The market for wheat in a rural region is described by the following linear demand and supply equations: Qd = 1200 – 4P and Qs = 200 + 2P , where Q is quantity in tonnes and P is price in Naira per tonne.
Question Parts
(a)
Calculate the equilibrium price and quantity before any government intervention.
(b)
The government imposes a specific tax of N200 per tonne on wheat producers. Show how the supply curve shifts and determine the new equilibrium price paid by consumers, the price received by producers, and the new equilibrium quantity.
(c)
Compute the dead‑weight loss (DWL) resulting from the tax.
(d)
Briefly evaluate one advantage and one disadvantage of using a tax to correct a market externality in the wheat market.
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Question 3 View Details
A small manufacturing firm produces hand‑crafted wooden chairs. The following information is available for a recent period. - Initial price per chair: ₦20,000 - Quantity sold at the initial price: 500 chairs - After a market‑wide price increase, the price rose to ₦22,000 and quantity sold fell to 460 chairs. Using this data, answer the questions that follow.
Question Parts
(a)
Calculate the price elasticity of demand (PED) using the midpoint (arc) method. Show all steps of your calculation.
(b)
Based on the calculated elasticity, state whether demand is elastic, inelastic or unit‑elastic and explain what this implies for the firm’s total revenue when price changes.
(c)
The government is considering imposing a specific tax of ₦2,000 per chair on the firm. Assuming the tax is fully passed on to consumers, estimate the new price, the expected percentage change in quantity demanded using the previously calculated elasticity, and discuss the likely impact on the firm’s total revenue and on the distribution of the tax burden between consumers and the firm.
(d)
Suggest two pricing strategies the firm could adopt in response to the elasticity of its product, justifying each strategy with reference to the elasticity concept.
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Question 4 View Details
A farm produces maize using labor as the only variable input while land is fixed at 10 hectares. The table below shows the quantity of labor employed (workers) and the corresponding total output of maize (tons) observed over a season. | Labor (workers) | Output (tons) | |-----------------|---------------| | 1 | 2 | | 2 | 5 | | 3 | 9 | | 4 | 12 | | 5 | 14 | | 6 | 15 | Answer the following questions.
Question Parts
(a)
Compute the marginal product of labor (MPL) and the average product of labor (APL) for each additional worker from the second worker onward. Show your calculations in a table.
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Question 5 View Details
A small manufacturing firm produces a single product. Its total cost (TC) function is TC = 200 + 5Q + 0.02Q², where Q is output in units. The market demand for the product is represented by the inverse demand curve P = 120 – 0.5Q. The firm is a price‑taker and therefore its total revenue (TR) is TR = P·Q. Answer the following:
Question Parts
(a)
Derive the expressions for marginal cost (MC) and marginal revenue (MR).
(b)
Determine the output level that maximises profit and state the corresponding price.
(c)
Calculate the maximum profit the firm can earn.
(d)
The government introduces a specific tax of ₦10 per unit produced. Explain how the profit‑maximising output changes and recompute the new profit level.
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Question 6 View Details
The market for a homogeneous agricultural product is perfectly competitive. The market demand curve is Qd = 500 – 2P and the market supply curve is Qs = 3P – 60, where Q is quantity in tonnes and P is price per tonne (₦). Answer the following:
Question Parts
(a)
Determine the equilibrium price and quantity.
(b)
Calculate the consumer surplus and producer surplus at the equilibrium.
(c)
The government introduces a price floor of ₦150 per tonne. State whether the floor is binding, compute the resulting surplus or shortage, and determine the dead‑weight loss, if any.
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Question 7 View Details
The table below shows selected macro‑economic data for Country X for the year 2022 (all values in ₦ billions).\n\n- Consumption (C): 1,200\n- Investment (I): 300\n- Government expenditure (G): 500\n- Exports (X): 250\n- Imports (M): 350\n- Net factor income from abroad (NFIA): -20 (net outflow)\n- Depreciation (D): 150\n\nUsing this information, answer the following questions.
Question Parts
(a)
Define Gross Domestic Product (GDP) at market price and Gross National Product (GNP) at factor cost. Explain the conceptual difference between the two measures.
(b)
Using the data provided, calculate the Net National Product (NNP) at factor cost for Country X.
(c)
Based on the NNP you have obtained, discuss one policy implication for a developing economy that aims to raise the standard of living of its citizens.
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Question 8 View Details
The Central Bank of Country Y carries out an open‑market operation in which it sells government securities worth ₦200 billion to commercial banks. The statutory reserve ratio is 10 % and there are no excess reserves in the banking system at the time of the operation.
Question Parts
(a)
Explain the three primary functions of money and describe the principal role of the Central Bank in the monetary system.
(b)
Calculate the theoretical maximum reduction in the money supply that could result from the open‑market sale described above, using the appropriate money multiplier.
(c)
Discuss two practical limitations that may prevent the actual change in the money supply from reaching the theoretical maximum calculated in part (b).
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