NECO Economics Questions & Answers 2024

ECONOMICS
01-10: DBCBDCABCE
11-20: BAADBEEEBE
21-30: BBDDCAADED
31-40: CCAEEACBAD
41-50: EEDACCEEEA
51-60: DABEDABADB

COMPLETED

(3)
(i) Marginal cost: Marginal cost is the additional cost incurred when producing one more unit of a good or service. It is calculated by dividing the change in total cost by the change in quantity produced. Understanding marginal cost is important for businesses to make decisions about production levels and pricing strategies.

(ii) Wants: Wants refer to the desires or preferences that individuals have for goods and services. Human wants are unlimited, meaning that people always have more desires than they can fulfill. Wants are an important concept in economics because they drive consumption and influence the allocation of resources.

(iii) Scarcity: Scarcity is the fundamental economic problem of having unlimited wants and needs in a world of limited resources. Because resources are limited, individuals, businesses, and governments must make choices about how to allocate these resources in order to satisfy their needs and wants. Scarcity necessitates the need for economic decision-making.

(iv) Choice: Choice refers to the act of selecting among alternatives or options. In economics, individuals, businesses, and governments must make choices about how to allocate scarce resources to best satisfy their wants and needs. Choices involve trade-offs, as selecting one option often means forgoing another. Rational decision-making involves weighing the costs and benefits of different choices.

(v) Opportunity cost: Opportunity cost is the value of the next best alternative forgone when a decision is made. It represents the benefits that could have been gained by choosing an alternative course of action. Understanding opportunity cost is important for decision-making, as it helps individuals and businesses evaluate the trade-offs involved in different choices.

(4)
(PICK ANY FOUR)
(i) What to produce: This problem relates to the decision about which goods and services should be produced to best satisfy the wants and needs of the society. It involves determining the mix of goods and services that will maximize utility and welfare for the population.

(ii) How to produce: This problem refers to deciding on the most efficient methods of production to minimize costs and use resources effectively. It involves choosing between different production techniques, technologies, and resource allocations to produce goods and services in the most cost-effective way.

(iii) For whom to produce: This problem concerns the distribution of goods and services among the members of society. It involves deciding how to allocate the produced resources and goods among individuals or groups based on factors such as income, wealth, and needs.

(iv) How much to produce: This problem relates to determining the optimal quantity of goods and services to produce in order to meet demand without oversupplying the market or creating shortages. It involves balancing supply and demand to ensure efficient resource allocation.

(v) How to promote economic growth: This problem focuses on strategies for increasing the overall production and wealth of society over time. It involves decisions about investing in new technologies, infrastructure, education, and other factors that can stimulate economic growth and development.

(vi) How to address externalities: This problem involves dealing with the external costs or benefits that result from economic activities but are not reflected in market prices. Externalities can have positive or negative impacts on society, and addressing them requires policies and regulations to internalize these external costs or benefits.

(5a)
Utility is a term used in economics to represent the satisfaction or benefit that consumers derive from consuming goods and services. It is a measure of the level of happiness or well-being that individuals receive from the consumption of a particular product or service.

(5b)
(PICK ANY THREE)
(i) Form utility: This type of utility is created by changing the form or shape of a product to make it more useful to consumers. For example, processing raw materials into finished goods adds form utility.
(ii) Place utility: Place utility is created by making goods and services available at convenient locations for consumers. The closer a product is to where consumers are, the higher the place utility.
(iii) Time utility: Time utility is created by providing goods and services at the time when consumers need them. For example, offering seasonal products during the appropriate time of year.
(iv) Possession utility: Possession utility is created by making it easy for consumers to acquire and own goods and services. This can include offering financing options or easy payment terms.
(v) Information utility: Information utility is created by providing consumers with information about products and services to help them make informed purchasing decisions. This can include product reviews, specifications, or comparisons.
(vi) Service utility: Service utility is created by providing additional services along with the product to enhance customer satisfaction. This can include warranties, customer support, installation services, and maintenance services.

(5c)
(PICK ANY TWO)
(i) Total utility is the total satisfaction or benefit obtained from consuming all units of a good or service, WHILE marginal utility is the additional satisfaction gained from consuming one additional unit.
(ii) Total utility is calculated by summing up the utility derived from consuming all units of a good, WHILE marginal utility is calculated by determining the change in total utility when consuming one additional unit.
(iii) Total utility can increase, decrease, or remain constant as more units of a good are consumed, WHILE marginal utility typically decreases as more units are consumed due to the law of diminishing marginal utility.
(iv) Total utility focuses on the overall satisfaction derived from consuming all units of a good, WHILE marginal utility focuses on the incremental satisfaction gained from consuming each additional unit.
(v) Total utility helps in assessing the overall satisfaction derived from consuming a certain quantity of a good, WHILE marginal utility helps in determining the optimal quantity to consume by comparing the additional satisfaction to the additional cost.
(vi) Total utility is derived from the sum of marginal utilities of all units consumed, WHILE marginal utility contributes to the total satisfaction obtained from consuming multiple units of a good.

(6a)
Public finance is a branch of economics that deals with the revenue, expenditure, and debt of governments at various levels (national, state, and local). It focuses on how governments raise funds through taxation and other means, as well as how they allocate and manage those funds to provide public goods and services, achieve economic stability, and promote social welfare.

(6b)
(PICK ANY FIVE)
(i) Economic Growth: Fiscal policy aims to promote economic growth by implementing measures such as increasing government spending on infrastructure, providing tax incentives for investments, and promoting research and development.
(ii) Price Stability: Fiscal policy seeks to control inflation and maintain price stability by adjusting taxes and government spending to manage aggregate demand in the economy.
(iii) Full Employment: Fiscal policy aims to achieve full employment by stimulating economic activity through government spending and tax policies that encourage job creation.
(iv) Income Distribution: Fiscal policy aims to promote a more equitable distribution of income and wealth by implementing progressive tax policies and social welfare programs that help reduce income inequality.
(v) Resource Allocation: Fiscal policy aims to ensure efficient allocation of resources by directing government spending towards sectors that have positive externalities and contribute to long-term economic growth.
(vi) Macroeconomic Stability: Fiscal policy aims to maintain macroeconomic stability by managing government finances to avoid excessive deficits or surpluses that could lead to economic instability.
(vii) External Balance: Fiscal policy also aims to maintain external balance by managing trade and capital flows to ensure a sustainable balance of payments position and exchange rate stability.

(7a)
Price legislation refers to laws and regulations enacted by the government to control or influence the prices of goods and services in the economy. Price legislation can involve setting price ceilings (maximum prices that sellers can charge) or price floors (minimum prices that buyers must pay) for certain products or industries to protect consumers, promote fair competition, or achieve other policy goals.

(7b)
(i) Consumer Protection: One of the primary objectives of price control policy is to protect consumers from price gouging and unfair pricing practices. Price controls can help ensure that essential goods and services remain affordable and accessible to all segments of the population, especially during times of crisis or economic hardship.
(ii) Inflation Control: Price control policy can be used as a tool to control inflation by preventing excessive price increases in key sectors of the economy. By setting price ceilings or regulating price increases, the government can help prevent runaway inflation and maintain price stability.
(iii) Market Stabilization: Price controls can be implemented to stabilize volatile markets and prevent sharp fluctuations in prices that can disrupt economic activity. By setting price floors or ceilings, the government can provide a buffer against sudden price spikes or crashes, promoting market stability and predictability.
(iv) Income Redistribution: Price control policy can also be used to redistribute income and wealth by ensuring that essential goods and services are affordable to low-income and marginalized groups. By regulating prices for basic necessities such as food, housing, and healthcare, the government can help reduce income inequality and promote social equity.

(8)
(i) Money Market:
The money market is a segment of the financial market where short-term borrowing and lending of funds take place. It deals with instruments such as Treasury bills, commercial papers, certificates of deposit, and short-term loans. Participants in the money market include banks, financial institutions, corporations, and government entities. The main purpose of the money market is to facilitate liquidity management and provide short-term financing options for entities in need of funds.

(ii) Insurance Companies:
Insurance companies are financial institutions that offer various types of insurance policies to individuals and businesses to protect against financial losses or risks. Insurance policies can cover a wide range of areas such as life insurance, health insurance, property insurance, liability insurance, and more. Policyholders pay premiums to the insurance company in exchange for coverage and protection against specified risks. Insurance companies invest the premiums received to generate returns and ensure they have adequate funds to pay out claims when needed.

(iii) Capital Market:
The capital market is a segment of the financial market where long-term debt and equity securities are bought and sold. It includes markets for stocks, bonds, and other long-term investment instruments. The capital market provides a platform for corporations and governments to raise capital for long-term investment projects or operations. Investors participate in the capital market to invest their savings and earn returns on their investments. The capital market plays a vital role in the economy by facilitating capital formation, enabling economic growth, and channeling savings into productive investments.

(10a)
Human capital development refers to the process of investing in and enhancing the knowledge, skills, abilities, and health of individuals to improve their productivity, employability, and overall well-being. It involves education, training, and lifelong learning efforts aimed at developing the capabilities and talents of individuals to contribute effectively to economic growth and social development.

(10b)
(PICK ANY FIVE)
(i) Intangible Asset: Human capital is intangible and cannot be physically touched or measured in the same way as physical assets. It consists of individuals’ knowledge, skills, experience, and abilities that contribute to their productivity and performance.
(ii) Developed through Education and Training: Human capital is developed and nurtured through education, training, and lifelong learning opportunities. Continuous investment in upgrading skills and knowledge is essential to enhancing human capital development.
(iii) Unique to Individuals: Each individual possesses a unique set of human capital characteristics, including their education level, skills, talents, and experiences. This uniqueness contributes to the diversity and richness of human capital in a society.
(iv) Economic Value: Human capital has economic value as it directly influences individuals’ productivity, earning potential, and contribution to economic growth and development. Governments and businesses recognize the importance of investing in human capital to drive innovation and competitiveness.
(v) Long-term Investment: Human capital development is a long-term investment that yields benefits over time. Individuals and societies that prioritize education and skill development reap the rewards of enhanced human capital in the form of higher incomes, better job opportunities, and improved living standards.
(vi) Transferable: Human capital can be transferable across different roles, industries, and sectors. Individuals can apply their knowledge and skills acquired in one context to another, making human capital versatile and adaptable to changing economic conditions.
(vii) Subject to Depreciation: Similar to physical assets, human capital can depreciate over time if not maintained or upgraded. Continuous learning and skill development are necessary to prevent human capital from becoming obsolete in a rapidly changing job market.

(11a)
Economic growth refers to the increase in a country’s production of goods and services over a specific period, typically measured by the rise in Gross Domestic Product (GDP). It signifies an expansion in an economy’s output, income, and overall prosperity, leading to improvements in living standards, job creation, and wealth accumulation. Economic growth is a key indicator of a nation’s economic success and development.

(11b)
(PICK ANY FOUR)
(i) Political Stability: A stable political environment is essential for attracting investments, fostering business confidence, and implementing long-term development policies. Political stability reduces uncertainty and risks for businesses and investors, promoting economic growth.
(ii) Strong Institutions: Well-functioning institutions, including a reliable legal system, transparent governance structures, and effective regulatory agencies, are vital for promoting economic development. Strong institutions uphold the rule of law, protect property rights, and ensure a level playing field for businesses.
(iii) Infrastructure Development: Adequate infrastructure, such as transportation networks, energy systems, communication technologies, and water supply facilities, is critical for supporting economic activities and facilitating trade. Investing in infrastructure enhances productivity, reduces costs, and stimulates economic growth.
(iv) Human Capital Development: Investing in education, healthcare, and skills training is essential for building a skilled and productive workforce. Human capital development enhances innovation, productivity, and competitiveness, leading to economic growth and sustainable development.
(v) Access to Finance: Access to finance, including credit facilities, capital markets, and financial services, is crucial for supporting entrepreneurship, business expansion, and investment in new ventures. A well-functioning financial system mobilizes savings, allocates resources efficiently, and stimulates economic growth.
(vi) Technological Innovation: Embracing technological innovation and research and development activities drive economic growth by increasing productivity, improving efficiency, and fostering competitiveness. Investing in technology and innovation accelerates economic development and opens up new opportunities for growth and diversification.

(12)
(PICK ANY FIVE)
(i) Many Buyers and Sellers: In a perfectly competitive market, there are numerous buyers and sellers, none of whom can influence the market price individually. This condition ensures that no single buyer or seller can control the market and allows for free entry and exit of firms.

(ii) Homogeneous Products: Firms in a perfectly competitive market produce identical or homogeneous products that are perfect substitutes for each other. Consumers perceive no differentiation between the goods or services offered by different sellers in the market.

(iii) Perfect Information: All market participants have access to complete and accurate information regarding prices, quality, and production costs. Perfect information ensures transparency and allows buyers and sellers to make rational decisions based on market conditions.

(iv) Low Barriers to Entry and Exit: Firms can enter or exit the market freely without facing any significant barriers, such as high entry costs or legal restrictions. This condition promotes competition, innovation, and efficiency in resource allocation.

(v) Perfect Mobility of Resources: Resources, including labor, capital, and technology, can move freely between industries or firms within the market. Perfect mobility of resources ensures that factors of production are allocated to their most efficient uses, maximizing overall welfare.

(vi) Profit Maximization: Firms in a perfectly competitive market aim to maximize their profits by producing at the point where marginal cost equals marginal revenue. In the long run, firms earn normal profits, as entry and exit of firms drive economic profits to zero.

(vii) Price Taker: Each firm in a perfectly competitive market is a price taker, meaning it has no control over the market price and must accept the prevailing price determined by market forces of supply and demand. Firms adjust their output levels based on market price to maximize profits.