waec model questions vol1 2023 economics | Essay

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Question 1 View Details
Consider the fundamental concepts of scarcity, choice and opportunity cost in the Nigerian economy.
Question Parts
(a)
Define scarcity and explain why it is regarded as the central problem of economics.
(b)
Define opportunity cost and illustrate the concept with an example of a farmer who must decide between planting maize or cassava.
(c)
Discuss how scarcity and opportunity cost influence the allocation of limited resources in a developing economy such as Nigeria.
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Question 2 View Details
A market for bottled water in a Nigerian city is described as follows. - At a price of ₦150 per bottle, the quantity demanded is 800 bottles per day. - At a price of ₦250 per bottle, the quantity demanded falls to 200 bottles per day. - The market is in equilibrium at a price of ₦200 per bottle with a quantity of 500 bottles per day. - When the price is ₦300 per bottle, producers are willing to supply 600 bottles per day. The government then imposes a specific tax of ₦50 on each bottle sold, payable by producers.
Question Parts
(a)
Derive the linear demand equation for bottled water from the two demand data points given.
(b)
Using the equilibrium point (₦200, 500) and the supply data point at ₦300, derive the linear supply equation before the tax.
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Question 3 View Details
A firm produces a single product whose market demand is represented by the linear demand equation Q = 500 – 5P, where Q is the quantity demanded per month and P is the price in naira per unit.
Question Parts
(a)
Define price elasticity of demand and explain why it is important for a firm’s pricing strategy.
(b)
Using the demand equation, calculate the price elasticity of demand when the price is ₦40. Show all steps of your calculation and state whether demand is elastic, inelastic or unit‑elastic at this price.
(c)
The firm’s marginal cost (MC) is constant at ₦200 per unit. The firm is considering raising its price from ₦40 to ₦45. (i) Estimate the percentage change in quantity demanded using the elasticity calculated in part (b). (ii) Based on your estimate, state the expected change in total revenue and advise whether the firm should raise the price.
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Question 4 View Details
A small manufacturing firm employs labour as its only variable input. The following data show the total product (TP) obtained each month as the number of labour units employed increases.
Question Parts
(a)
Define short‑run and long‑run production functions. Highlight two key differences between them.
(b)
Using the data below, calculate the marginal product (MP) and average product (AP) of labour for each additional unit of labour employed (from the 1st to the 5th unit). Identify the labour input at which diminishing marginal returns set in. Labour (L) : 0 1 2 3 4 5 Total Product (TP) : 0 20 45 66 80 90
(c)
Explain how the computed values illustrate the law of diminishing marginal returns and discuss two implications of this law for the firm’s short‑run cost curves.
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Question 5 View Details
A small manufacturing firm produces widgets. The table below shows the total cost (TC) incurred at different levels of output. | Output (units) | Total Cost (₦) | |----------------|----------------| | 0 | 20,000 | | 100 | 38,000 | | 200 | 54,000 | | 300 | 68,000 | | 400 | 80,000 | | 500 | 90,000 | The market price of a widget is ₦250 per unit.
Question Parts
(a)
Calculate the average total cost (ATC) at each output level (except zero) and comment on the shape of the ATC curve.
(b)
Using the data, estimate the marginal cost (MC) of the 300th unit (i.e., the change in cost when output rises from 200 to 300 units) and discuss how this MC relates to the ATC at that output.
(c)
Determine the output level at which the firm will break even (total revenue equals total cost). Explain the steps and any assumptions you make.
(d)
Based on the above information, discuss whether the firm is likely to be operating in the short‑run or the long‑run and justify your answer with reference to cost concepts.
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Question 6 View Details
Consider the market for a particular agricultural commodity in Nigeria. The market is characterized by many small producers, a homogeneous product, free entry and exit, and price‑taking behaviour. The government has recently introduced a price ceiling of ₦150 per kg, which lies below the market‑clearing equilibrium price.
Question Parts
(a)
Identify the market structure that best describes the situation before the price ceiling and list its four main characteristics.
(b)
Using a standard supply‑and‑demand diagram (describe it verbally), explain the short‑run impact of the price ceiling on (i) equilibrium price and quantity, (ii) consumer surplus, (iii) producer surplus, and state whether a shortage or surplus arises.
(c)
Suppose the government removes the price ceiling and instead offers a subsidy of ₦30 per kg to producers. Explain how this subsidy would affect the supply curve and illustrate the likely new equilibrium price and quantity. Discuss the likely effect on total welfare.
(d)
Compare and contrast the efficiency of the market outcomes under (i) perfect competition with no intervention, (ii) the price ceiling, and (iii) the producer subsidy. Use the concepts of allocative efficiency and Pareto optimality in your discussion.
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Question 7 View Details
The following data relate to the Nigerian economy for the year 2022 (all values are in ₦ billions): - Consumption (C) = 4,500 - Investment (I) = 1,200 - Government expenditure (G) = 1,800 - Exports (X) = 900 - Imports (M) = 1,100 - Net factor income from abroad (NFIA) = 150 - Depreciation (capital consumption allowance) = 800 - Indirect taxes = 600 - Subsidies = 200 Using the above information, answer the following: a) Compute the Gross Domestic Product (GDP) at market price. b) Compute the Gross National Product (GNP) at market price. c) Compute the Net National Product (NNP) at market price. d) Compute the National Income (NI) at factor cost. e) The government is planning to increase exports by ₦300 billion while imports remain unchanged. Discuss qualitatively how this policy would affect each of the aggregates calculated in parts (a)–(d) and the likely impact on aggregate demand and the price level, using the Keynesian framework.
Question Parts
(a)
Compute the Gross Domestic Product (GDP) at market price.
(b)
Compute the Gross National Product (GNP) at market price.
(c)
Compute the Net National Product (NNP) at market price.
(d)
Compute the National Income (NI) at factor cost.
(e)
The government is planning to increase exports by ₦300 billion while imports remain unchanged. Discuss qualitatively how this policy would affect each of the aggregates calculated in parts (a)–(d) and the likely impact on aggregate demand and the price level, using the Keynesian framework.
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Question 8 View Details
The Central Bank of Nigeria (CBN) has the following monetary data for the current quarter (all values are in ₦ billions): - Reserve requirement (required reserve ratio) = 10 %. - Commercial banks are holding excess reserves equal to 2 % of total deposits. - Monetary base (MB) = 500. - The CBN decides to purchase government securities worth 100, crediting the sellers' bank reserves. Answer the following: a) Calculate the theoretical simple money multiplier and the actual money multiplier after accounting for excess reserves. b) Using the actual multiplier, determine the change in the total money supply (M1) that results from the open‑market purchase. c) Discuss two potential short‑run macro‑economic effects of this increase in the money supply on (i) inflation and (ii) interest rates, referring to the liquidity‑preference theory. d) Suppose the CBN later raises the reserve requirement to 12 % while all other conditions remain unchanged. Explain qualitatively how this change would affect the money multiplier and the transmission of monetary policy.
Question Parts
(a)
Calculate the theoretical simple money multiplier and the actual money multiplier after accounting for excess reserves.
(b)
Using the actual multiplier, determine the change in the total money supply (M1) that results from the open‑market purchase.
(c)
Discuss two potential short‑run macro‑economic effects of this increase in the money supply on (i) inflation and (ii) interest rates, referring to the liquidity‑preference theory.
() Effect on inflation.
() Effect on interest rates.
(d)
Suppose the CBN later raises the reserve requirement to 12 % while all other conditions remain unchanged. Explain qualitatively how this change would affect the money multiplier and the transmission of monetary policy.
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