ECONOMICS OBJ
1-10: DCCBDCADBE
11-20: BCADCEEEBE
21-30: BBDDCACDED
31-40: BCDEEABBAD
41-50: EEDECCEDEA
51-60: DADEDABADB

NECO 2024 ECONOMICS THEORY ANSWERS

SECTION A: ANSWER ONE(1) QUESTION ONLY

(1a)
Total number of students = 400 + 200 + 180 + 300 + 250 = 1330

Percentage for 2000: (400/1330) x 100 = 30.1%

Percentage for 2001: (200/1330) x 100 = 15.0%

Percentage for 2002: (180/1330) x 100 = 13.5%

Percentage for 2003: (300/1330) x 100 = 22.6%

Percentage for 2004: (250/1330) x 100 = 18.8%

(1b)
Diagram

(1c)
Similarity:
-Both bar charts and histograms are used to display data visually, making it easier to understand and compare.

Differences:
(i) A bar chart is used to compare categorical data across different groups, while a histogram is used to display the distribution of continuous data.

(ii) In a bar chart, the bars are spaced equally apart, whereas in a histogram, the bars are adjacent to each other, with no gaps in between.

(2ai)
Marginal Propensity to Consume (MPC):

MPC = Change in Consumption / Change in Income
= ₦1,200 / ₦10,000 (₦60,000 – ₦50,000)
= 0.12 or 12%

(2aii)
Marginal Propensity to Save (MPS):

MPS = Change in Saving / Change in Income
= (₦10,000 – ₦1,200) / ₦10,000
= ₦8,800 / ₦10,000
= 0.88 or 88%

(2b)
Multiplier:

Multiplier = 1 / (1 – MPC)
= 1 / (1 – 0.12)
= 1 / 0.88
= 1.136

(2c)
(i) Income: As income increases, consumption tends to increase.
(ii) Price: Changes in prices of goods and services affect consumption decisions.
(iii) Interest Rate: Changes in interest rates influence borrowing and consumption.
(iv) Consumer Preferences: Personal tastes, preferences, and attitudes towards saving and spending.

SECTION B: ANSWER FOUR(4) QUESTIONS ONLY

(3)
(i) Marginal Cost:
Marginal cost is the additional cost of producing one more unit of a good or service. It is the change in total cost divided by the change in quantity produced. Marginal cost helps firms decide whether to produce more or less of a product. A low marginal cost may encourage a firm to increase production.

(ii) Wants:
Wants are desires or demands for goods and services that provide satisfaction or utility. They are unlimited and infinite, with new wants emerging as old ones are satisfied. Wants are different from needs, which are basic requirements for survival. People’s wants can change over time, and they often prioritize their wants based on importance. Firms try to satisfy people’s wants through their products or services.

(iii) Scarcity:
Scarcity is the fundamental economic problem of unlimited wants and limited resources. Resources are insufficient to satisfy all wants and needs, leading to rationing and choice. Scarcity affects individuals, businesses, and societies, forcing them to make choices. As a result, scarcity leads to innovation and efficiency in resource allocation.

(iv) Choice:
Choice is selecting one option over another due to scarcity. It involves trade-offs and opportunity costs. Consumers and producers make choices based on their preferences and resources. Choices can be influenced by factors like price, quality, and availability. Making choices wisely is essential in achieving goals and maximizing satisfaction.

(v) Opportunity Cost:

Opportunity cost is the value of the next best alternative forgone when choosing an option. It is the cost of choosing one option over another, representing the benefit that could have been obtained if resources were used differently. Opportunity cost helps individuals and firms evaluate their decisions. By considering opportunity costs, decision-makers can optimize their choices and minimize regrets.

(4)
(i) What to Produce: What goods and services should be produced to meet the needs and wants of society? This problem arises because resources are limited, and society cannot produce everything that people want. The decision on what to produce affects the allocation of resources and the well-being of citizens. By choosing to produce essential goods and services, society can ensure basic needs are met.

(ii) How to Produce: How should goods and services be produced to maximize efficiency and minimize waste? This problem involves choosing the best technology, resources, and production methods. Efficient production helps reduce costs and increase output, leading to economic growth and development. By adopting innovative production techniques, societies can improve productivity and competitiveness.

(iii) For Whom to Produce: Who should receive the goods and services produced? This problem involves deciding how to distribute resources and goods to meet the needs and wants of different individuals and groups in society. The distribution of goods and services affects social welfare and equality, with fair distribution promoting social justice. By ensuring equal access to essential goods and services, societies can reduce poverty and inequality.

(iv) How to Allocate Scarce Resources: How should society allocate its limited resources to produce goods and services? This problem involves making choices about how to use resources in the most efficient way possible to meet the needs and wants of society. Resource allocation affects economic growth, stability, and overall well-being. By allocating resources efficiently, societies can maximize output and improve living standards.

(5a)
Utility refers to the satisfaction or pleasure that a consumer derives from consuming a good or service.

(5b)
(i) Form utility: This type of utility is created by changing the form or appearance of a product, such as cutting and polishing diamonds to increase their value. Form utility can also be created through product design, packaging, and branding. For example, a company like Apple creates form utility by designing sleek and user-friendly products.

(ii) Place utility: This type of utility is created by making a product available at a convenient location, such as a store near a consumer’s home. Place utility can also be created through online shopping platforms that offer home delivery or in-store pickup. For instance, companies like Amazon and Walmart offer place utility by allowing customers to order products online and pick them up at their convenience.

(iii) Time utility: This type of utility is created by making a product available at a convenient time, such as delivering groceries to a consumer’s doorstep. Time utility can also be created through services like same-day delivery, next-day delivery, or 24/7 access to products or services. For example, companies like Domino’s Pizza and GrubHub create time utility by delivering food to customers quickly.

(5c)
(i) Total utility is the total satisfaction or pleasure derived from consuming a certain quantity of a good or service, while marginal utility is the additional satisfaction or pleasure derived from consuming one more unit of the same good or service.

(ii) Total utility increases as consumption increases, but at a decreasing rate, while marginal utility decreases as consumption increases.

(6a)
Public finance is the study of how governments raise funds through taxes and other means, and how they allocate these funds to provide public goods and services while managing expenditures.

(6b)
(i) Economic Growth: To promote economic growth by increasing aggregate demand, encouraging investment, and creating jobs. This can be achieved through government spending, tax cuts, and investment in infrastructure and human capital.

(ii) Stabilization: To stabilize the economy by smoothing out fluctuations in income, output, and employment, and maintaining economic stability. This can be achieved through automatic stabilizers like unemployment insurance and progressive taxation, as well as discretionary fiscal policy measures.

(iii) Redistribution of Income: To reduce income inequality by redistributing income from the rich to the poor through progressive taxation and social welfare programs. This can be achieved through policies like progressive taxation, social security benefits, and minimum wage laws.

(iv) Price Stability: To control inflation and maintain price stability by reducing demand, increasing supply, and managing expectations. This can be achieved through monetary policy, price controls, and supply-side policies that improve productivity and efficiency.

(v) Fiscal Sustainability: To ensure long-term sustainability of public finances by maintaining a stable debt-to-GDP ratio, reducing debt, and building fiscal buffers. This can be achieved through prudent fiscal management, structural reforms, and building fiscal institutions that promote transparency and accountability.

NECO ECONOMICS

NUMBER FOUR

(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.
NECO ECONOMICS

NUMBER FIVE

(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.
NECO ECONOMICS

NUMBER SIX

(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.
NECO ECONOMICS

NUMBER SEVEN

(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.
NECO ECONOMICS

NUMBER EIGHT

(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.
NECO ECONOMICS

NUMBER TEN

(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.
NECO ECONOMICS

NUMBER ELEVEN

(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.
NECO ECONOMICS

NUMBER TWELVE

(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.