waec model questions vol1 2022 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 its implication for the allocation of resources in an economy.
(b)
Using a simple example, illustrate the concept of opportunity cost.
(c)
Discuss how the price mechanism helps to solve the problem of scarcity in a market economy.
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Question 2 View Details
The market for rice in a developing country can be represented by the linear demand function Qd = 8,000 – 20P and the initial supply function Qs = 2,000 + 10P, where Q is quantity in bags per month and P is price in Naira per bag.
Question Parts
(a)
Determine the initial equilibrium price and quantity before any external changes.
(b)
A bumper harvest reduces production costs, shifting the supply curve rightward so that the new supply function becomes Qs' = 3,000 + 10P. Calculate the new equilibrium price and quantity.
(c)
The government then imposes a price ceiling of ₦150 per bag, which is below the equilibrium price found in part (b). Determine the quantity demanded and quantity supplied at this ceiling and state the resulting shortage.
(d)
To alleviate the shortage, the government gives producers a per‑bag subsidy of ₦20. The subsidy effectively shifts the supply curve to Qs'' = 3,200 + 10P. Re‑calculate the quantity supplied at the ceiling price of ₦150, the new shortage, and briefly discuss how the subsidy affects consumer and producer welfare.
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Question 3 View Details
A local retailer sells a type of hand‑woven bag. The following data were recorded for two price points:
Question Parts
(a)
When the price was reduced from ₦200 to ₦180, the quantity sold rose from 5,000 units to 5,600 units. Calculate the price elasticity of demand (using the midpoint method) for this price change.
(b)
Interpret the elasticity value obtained in part (a). State whether demand is elastic, inelastic or unit‑elastic over this range.
(c)
If the retailer now considers raising the price by 5 % from the current price of ₦180, predict the likely effect on total revenue. Justify your answer using the elasticity concept.
(d)
Based on your analysis, recommend a short‑term pricing strategy for the retailer that would maximise revenue.
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Question 4 View Details
A small manufacturing firm produces wooden stools. The data below show the short‑run output (Q), total product (TP) of labour, variable cost (VC) and the market price of a stool (P = ₦15). Fixed cost (FC) is ₦20.
Question Parts
(a)
Using the data, compute the marginal product of labour (MP) and average product of labour (AP) for each additional unit of labour employed (from Q = 1 to Q = 6).
(b)
Identify the output level at which diminishing marginal returns first set in, and explain how you reached that conclusion.
(c)
Calculate the marginal cost (MC) for each output level (from Q = 1 to Q = 6).
(d)
Assuming the firm is a price‑taker, determine the profit‑maximising output. Show the comparison of marginal cost with marginal revenue (MR = price) and justify your choice.
(e)
Suggest one practical change in the production technique that could shift the marginal product curve upward, and briefly explain how it would affect profit‑maximising output.
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Question 5 View Details
A small manufacturing firm produces a single product. Its fixed cost is N500. The variable cost (VC) of producing Q units is given by VC = 5Q + 0.02Q². The firm sells each unit at a constant market price of N30 per unit.
Question Parts
(a)
Derive the expressions for marginal cost (MC) and marginal revenue (MR).
(b)
Using the expressions obtained in (a), determine the output level at which the firm’s profit is maximised. Show all steps of your reasoning.
(c)
Calculate the maximum profit the firm can earn at the output level found in (b).
(d)
The government introduces a specific tax of N20 per unit produced. Explain how this tax affects the profit‑maximising output and briefly state the new profit‑maximising output level.
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Question 6 View Details
The market for cassava in a Nigerian state exhibits the following characteristics: (i) 150 small‑scale farmers each supply an identical quantity of cassava; (ii) the prevailing market price is N50 per kilogram; (iii) if a farmer tries to sell at N55 per kilogram, buyers immediately purchase from other farmers; (iv) there are no significant barriers to entry or exit; (v) the average total cost (ATC) per kilogram for a typical farmer is N45 and marginal cost (MC) is constant at N45.
Question Parts
(a)
Identify the market structure that best describes this cassava market and justify your answer with at least three relevant characteristics.
(b)
Using the cost information provided, explain how the market price is determined in the short run and state the likely economic profit per kilogram for a typical farmer.
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Question 7 View Details
The following data relate to the economic activity of a developing country for the year ended 31 December 2022:
Question Parts
(a)
Using the income approach, calculate the Gross Domestic Product (GDP) for the year. The data are: (i) Total wages and salaries paid to employees: ₦ 2,500,000,000; (ii) Gross operating surplus (profits) of corporations: ₦ 1,200,000,000; (iii) Mixed income of unincorporated enterprises: ₦ 800,000,000; (iv) Taxes less subsidies on production and imports: ₦ 300,000,000.
(b)
Given that net factor income from abroad for the same period is –₦ 150,000,000, compute the Gross National Income (GNI).
(c)
The informal sector is estimated to contribute about 25 % of total output but is not fully captured in the above data. Discuss why GNI may be a more appropriate indicator of national welfare than GDP in this economy, and suggest one policy measure that could improve the reliability of national income estimates.
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Question 8 View Details
The Central Bank of Nigeria (CBN) is reviewing monetary conditions. The following information is current as of June 2022:
Question Parts
(a)
The required reserve ratio for commercial banks is 15 %. Total reserves held by the banking system amount to ₦ 180 billion, while the public holds cash of ₦ 120 billion. Calculate:
() Total deposits (in billions of naira).
() Money supply (M1) in billions of naira.
() Money multiplier (to two decimal places).
(b)
Suppose the CBN raises the required reserve ratio to 20 % while keeping total reserves unchanged. Re‑calculate the total deposits, the money supply (M1) and the money multiplier under the new ratio.
(c)
Analyse the likely impact of the increase in the reserve ratio on inflation and interest rates in the Nigerian economy, linking your discussion to the changes in money supply and multiplier you have computed.
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