2024 NECO Economics Questions and Answers: Free Expo Now Available

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2024 NECO Economics Questions and Answers: Free Expo Now Available

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NECO Economics Theory (Essay) Answers

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QUESTION 1

Table of Contents

Question 1

(a) Calculate the percentage of students that offered Economics from year 2000-2004.

To calculate the percentage of students for each year, we need to find the total number of students over the years and then find the percentage of each year’s students with respect to this total.

Total number of students from 2000-2004: 400+200+180+300+250=1330400 + 200 + 180 + 300 + 250 = 1330400+200+180+300+250=1330

(b) Draw a pie chart using the information in Table 2.1.

To draw a pie chart, represent each percentage calculated above as a slice of the pie chart.

2000: 30.08%
2001: 15.04%
2002: 13.53%
2003: 22.56%
2004: 18.80%

Each slice of the pie chart corresponds to these percentages.

(c) Give one similarity and two differences between a bar chart and a histogram.

Similarity:

Both bar charts and histograms are used to display data visually using bars.

Differences:

Representation of Data:
- Bar Chart: Represents categorical data with bars separated by spaces to show different categories.
- Histogram: Represents continuous data where bars are adjacent to show the distribution of data over a range.
Usage:
- Bar Chart: Used to compare different categories.
- Histogram: Used to show the frequency distribution of data.

Question 2

If the monthly income of Mr. Godwin increases from ₦50,000 to ₦60,000 and as a result, he increases his consumption level by ₦1,200.00; calculate the following:

(c) Mention four factors that determine the level of consumption of an individual.

Income Level: Higher income generally leads to higher consumption.
Wealth: The wealth of an individual influences their ability to consume goods and services.
Interest Rates: Lower interest rates can encourage borrowing and spending, while higher rates may discourage it.
Consumer Confidence: If individuals feel confident about their financial future, they are more likely to spend.

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Question 3: Write short notes on the following:

(i) Marginal cost (4 marks)

Marginal cost is the additional cost incurred in the production of one more unit of a good or service. It is calculated by taking the change in total cost when output is increased by one unit. Mathematically, it can be represented as: MC=ΔTCΔQ\text{MC} = \frac{\Delta TC}{\Delta Q}MC=ΔQΔTC where ΔTC\Delta TCΔTC is the change in total cost and ΔQ\Delta QΔQ is the change in quantity produced.

(ii) Wants (4 marks)

Wants are desires for goods and services that people wish to have, regardless of whether they can afford them. Unlike needs, which are essential for survival, wants are not necessary for survival but improve the quality of life. Examples include luxury cars, smartphones, and vacations.

(iii) Scarcity (4 marks)

Scarcity refers to the basic economic problem that arises because resources are limited while human wants are unlimited. Due to scarcity, individuals and societies must make choices about how to allocate their limited resources to satisfy their needs and wants, leading to the necessity of making trade-offs.

(iv) Choice (4 marks)

Choice is the act of selecting among alternatives due to the scarcity of resources. Since resources are limited and cannot satisfy all human wants, individuals and societies must prioritize and choose which needs and wants to fulfill. This decision-making process is fundamental in economics.

(v) Opportunity cost (4 marks)

Opportunity cost is the value of the next best alternative that is forgone when a decision is made to pursue a particular action. It represents the benefits that could have been received by taking an alternative action. Opportunity cost is a key concept in economics because it helps to assess the relative cost of decisions.

Question 4: Explain four basic economic problems of a society. (20 marks)

What to produce: Societies must decide which goods and services to produce based on their needs and wants. This involves determining the types and quantities of products to allocate limited resources effectively.
How to produce: Societies need to decide the methods of production. This involves choosing the appropriate combination of labor, capital, and technology to produce goods and services efficiently.
For whom to produce: This question deals with the distribution of goods and services. Societies must determine how to distribute the output among their members, which involves decisions about equity and fairness.
Economic growth: Societies must address how to achieve economic growth and ensure that resources are used sustainably. This involves planning for long-term development and managing resources to improve the standard of living over time.

Question 5:

(a) Define the term utility. (4 marks)

Utility is the satisfaction or pleasure that individuals derive from consuming goods and services. It is a measure of the happiness or benefit gained from the consumption of goods and services.

(b) Explain three types of utility. (12 marks)

Form Utility: This utility is created by converting raw materials into finished products that are more useful. For example, turning cotton into clothes.
Place Utility: This utility is created by transporting goods from one location to another where they are needed. For example, moving agricultural products from farms to urban markets.
Time Utility: This utility is created by making goods and services available when they are needed. For example, storing seasonal goods and making them available throughout the year.

(c) Give two differences between total and marginal utility. (4 marks)

Definition:
- Total Utility (TU) is the total satisfaction received from consuming a certain quantity of goods or services.
- Marginal Utility (MU) is the additional satisfaction received from consuming one more unit of a good or service.
Calculation:
- Total Utility is calculated by summing up the utility derived from each unit of consumption.
- Marginal Utility is calculated by the change in total utility when consumption increases by one unit.

Question 6:

(a) What is public finance? (5 marks)

Public finance is the study of how governments raise and spend money. It involves the analysis of government revenue (taxes, fees, and other sources) and government expenditure (spending on public goods and services). Public finance also examines the impact of these activities on the economy.

(b) Explain five objectives of fiscal policy. (15 marks)

Economic Stability: Fiscal policy aims to maintain stable economic growth, avoiding significant fluctuations in the economy.
Full Employment: One of the key objectives is to achieve and maintain high levels of employment by stimulating economic activity.
Price Stability: Fiscal policy seeks to control inflation and stabilize prices to ensure a predictable economic environment.
Economic Growth: Promoting sustainable economic growth is a major objective, often achieved through investments in infrastructure, education, and technology.
Equitable Distribution of Income: Fiscal policy aims to reduce income inequality by using progressive taxation and public spending on social services.

Question 7:

(a) Define price legislation. (4 marks)

Price legislation refers to the laws and regulations enacted by the government to control or influence the prices of goods and services. This can include setting maximum or minimum prices, price ceilings, and price floors to prevent excessive inflation or deflation.

(b) Explain four objectives of price control policy. (16 marks)

Prevent Inflation: By capping prices, price control policies aim to prevent excessive inflation and maintain the purchasing power of consumers.
Protect Consumers: Price controls can prevent businesses from exploiting consumers by charging excessively high prices for essential goods and services.
Ensure Fair Competition: Price controls can help ensure fair competition by preventing monopolies and oligopolies from setting prices at artificially high levels.
Stabilize the Economy: Price controls can be used to stabilize the economy during periods of economic instability, such as during a recession or an economic crisis.

Question 8:

(a) What is a financial institution? (5 marks)

A financial institution is an establishment that conducts financial transactions such as investments, loans, and deposits. Examples include banks, credit unions, insurance companies, and investment firms. These institutions play a crucial role in the functioning of the financial system by facilitating the flow of money within the economy.

(b) Explain the following:

(i) Money market (5 marks)

The money market is a segment of the financial market where short-term borrowing and lending of funds occur. It deals with highly liquid and short-term financial instruments such as Treasury bills, commercial paper, and certificates of deposit. The money market is crucial for maintaining liquidity in the financial system.

(ii) Insurance companies (5 marks)

Insurance companies provide financial protection against various risks in exchange for premium payments. They offer products such as life insurance, health insurance, property insurance, and liability insurance. These companies help individuals and businesses manage risk and mitigate financial losses from unforeseen events.

(iii) Capital market (5 marks)

The capital market is a segment of the financial market where long-term debt and equity securities are traded. It includes the stock market and bond market. The capital market helps in raising capital for businesses and governments and provides investment opportunities for individuals and institutional investors.

Question 9:

(a) With the aid of a diagram, explain the burden of indirect tax on commodities whose demand is perfectly inelastic and elastic respectively. (12 marks)

Perfectly Inelastic Demand: In the case of perfectly inelastic demand, the quantity demanded does not change with a change in price. The entire burden of an indirect tax falls on the consumer because they will pay the higher price regardless of the tax.

Diagram: [Insert Diagram Here]

Perfectly Elastic Demand: In the case of perfectly elastic demand, the quantity demanded changes infinitely with any change in price. The entire burden of an indirect tax falls on the producer because the consumer will not pay a higher price, and the producer must absorb the tax to maintain sales.

Diagram: [Insert Diagram Here]

(b) Discuss four reasons why government imposes taxes. (8 marks)

Revenue Generation: Taxes are a primary source of revenue for the government, used to fund public goods and services such as education, healthcare, and infrastructure.
Redistribution of Income: Taxes help in redistributing income from the wealthy to the less fortunate, reducing income inequality through progressive taxation and social welfare programs.
Economic Stability: Taxes can be used as a tool for economic stability by controlling inflation and deflation through fiscal policy measures.
Behavioral Influence: Taxes can influence behavior by discouraging harmful activities (e.g., smoking through high tobacco taxes) and encouraging beneficial activities (e.g., tax breaks for renewable energy investments).

Question 10:

(a) What is human capital development? (5 marks)

Human capital development refers to the process of improving the skills, knowledge, and abilities of individuals through education, training, and health care. It enhances productivity and economic growth by investing in the workforce.

(b) Discuss five characteristics of human capital. (15 marks)

Education: The level of formal education attained by individuals contributes to their ability to perform complex tasks and adapt to new technologies.
Skills: Skills acquired through training and experience increase the efficiency and effectiveness of workers.
Health: Good health enables individuals to work productively and reduces absenteeism.
Experience: Experience gained over time improves job performance and decision-making abilities.
Innovation: The ability to innovate and come up with new ideas or solutions enhances the competitiveness and growth of an economy.

Question 11:

(a) Define economic growth. (4 marks)

Economic growth is the increase in the production of goods and services in an economy over a period of time. It is measured by the growth rate of real Gross Domestic Product (GDP) and is an indicator of the economic health and prosperity of a country.

(b) Expatriate on four conditions necessary for rapid economic development. (16 marks)

Investment in Infrastructure: Developing transportation, communication, and energy infrastructure facilitates economic activities and boosts productivity.
Education and Training: Investing in education and vocational training enhances the skills and productivity of the workforce, leading to higher economic growth.
Political Stability: A stable political environment attracts investment, promotes business confidence, and ensures the smooth functioning of economic activities.
Technological Advancement: Adoption and innovation of new technologies increase efficiency, reduce costs, and drive economic growth.

Question 12: Mention and explain five features of a perfectly competitive market. (20 marks)

Many Buyers and Sellers: A perfectly competitive market has a large number of buyers and sellers, ensuring that no single participant can influence the market price.
Homogeneous Products: The products offered by different sellers are identical or very similar, making them perfect substitutes for each other.
Free Entry and Exit: Firms can freely enter or exit the market without significant barriers, ensuring that profits are normalized in the long run.
Perfect Information: All participants have complete and accurate information about prices, products, and market conditions, leading to informed decision-making.
Price Takers: Individual buyers and sellers accept the market price as given because their own transactions are too small to affect the market price.

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QUESTION 3

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QUESTION 4

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