NECO Economics Theory Past Questions and Answers

1a) Calculations for Population Growth Rate

(i) The population growth rate in 2000: (85−105105)×100%=−19.05%\left( \frac{85 – 105}{105} \right) \times 100\% = -19.05\%(10585−105​)×100%=−19.05%

(ii) The population growth rate in 2001: (65−8585)×100%=−23.53%\left( \frac{65 – 85}{85} \right) \times 100\% = -23.53\%(8565−85​)×100%=−23.53%

(iii) The population growth rate in 2002: (70−6565)×100%=7.69%\left( \frac{70 – 65}{65} \right) \times 100\% = 7.69\%(6570−65​)×100%=7.69%

(1b) Calculations for Percentage of Working Population:

(i) The percentage of the working population in 1999: (45105)×100%=42.86%\left( \frac{45}{105} \right) \times 100\% = 42.86\%(10545​)×100%=42.86%

(ii) The percentage of the working population in 2000: (2585)×100%=29.41%\left( \frac{25}{85} \right) \times 100\% = 29.41\%(8525​)×100%=29.41%

(1c) Importance of Working Population:

(i) Economic growth: A working population contributes to economic growth by producing goods and services and paying taxes, which fund infrastructure and public services.

(ii) Reduced dependency ratio: A larger working population lowers the dependency ratio, meaning fewer non-working individuals rely on working individuals, thus reducing economic strain.

(2a) Data Table for Price and Quantity Demanded:

Price (₦)	Quantity Demanded
200	100
80	150

(2b) Elasticity of Demand Calculation:

Percentage change in quantity demanded: 150−100100×100=50%\frac{150 – 100}{100} \times 100 = 50\%100150−100​×100=50%

Percentage change in price: 80−200200×100=−60%\frac{80 – 200}{200} \times 100 = -60\%20080−200​×100=−60%

Elasticity of demand: 50%−60%=−0.83\frac{50\%}{-60\%} = -0.83−60%50%​=−0.83

(2c) Nature and Reasons for Elasticity:

The nature of elasticity in this case is inelastic.

Reasons: (i) The coefficient of price elasticity of demand is less than 1, indicating that the demand for milk is relatively unresponsive to price changes. This suggests that even though there was a significant decrease in price, the increase in quantity demanded was relatively smaller. (ii) Inelastic demand typically occurs for products that are necessities or essential goods. Milk is considered an essential food item, so even when the price decreases, consumers are still likely to purchase it due to its necessity.

(2d) Factors Determining Elasticity of Demand:

(i) The price of the good or service (ii) The income of consumers (iii) The availability of substitute goods or services

(4a) Definition of an Entrepreneur:

An entrepreneur is a person who takes on financial risks to create or grow a business venture, with the aim of making a profit.

(4b) Roles of an Entrepreneur:

(i) Innovation: Entrepreneurs bring new ideas and products to the market, stimulating growth and competitiveness and resulting in increased profits.

(ii) Job creation: Entrepreneurs create new jobs, reducing unemployment and stimulating economic growth.

(iii) Risk-taking: Entrepreneurs are willing to take on financial risks to grow their businesses, leading to increased investment and growth, stimulating the economy.

(iv) Competition: Entrepreneurs stimulate competition in the market, leading to increased efficiency and lower prices for consumers.

(v) Economic development: Entrepreneurs drive economic development, especially in developing countries, by creating new businesses and investing in new technologies.

(5a) Definition of Specialization:

Specialization is the process of focusing on a specific task or skill to become more efficient and productive in that area, often resulting in individuals or organizations concentrating on a narrow range of activities and becoming highly proficient in those tasks.

(5b) Advantages and Disadvantages of Division of Labour:

Advantages: (i) Increased efficiency: Specialization leads to the development of expertise, increasing efficiency and productivity. (ii) Time-saving: Division of labor reduces the need to switch between tasks, saving time and reducing errors. (iii) Specialization leads to innovation: Depth of knowledge and experience in a specific area often leads to new techniques, processes, or ideas.

Disadvantages: (i) Lack of versatility: Specialization can limit an individual’s ability to perform different tasks, making them less adaptable. (ii) Monotony and job dissatisfaction: Repetitive tasks can lead to boredom, job dissatisfaction, and burnout.

(6a) Definition of Economic Integration:

Economic integration involves removing barriers to trade and investment between different economies to promote closer economic ties and cooperation, creating a single market with common policies and regulations.

(6b) Benefits of Economic Integration:

(i) Increased trade: Eliminating trade barriers expands markets, increases efficiency, and offers consumers greater choice and lower prices. (ii) Enhanced economic growth: Larger markets attract more investment, leading to higher production and economic activity. (iii) Access to larger markets: Businesses, especially SMEs, can grow by accessing larger markets. (iv) Economies of scale: Larger markets allow businesses to increase production volumes, reducing costs and increasing efficiency. (v) Political cooperation: Economic integration fosters closer political ties and reduces conflicts, promoting regional stability and collaboration.

(7a) Difference Between Economic Growth and Economic Development:

Economic growth refers to an increase in the production of goods and services in a country over time, while economic development refers to the improvement in living standards of people in a country over time.

(7b) Characteristics of Developing Economies:

(i) Low per capita income: Average income is low in developing economies. (ii) High poverty rate: A large percentage of the population lives below the poverty line. (iii) High unemployment rate: Many people are unemployed or underemployed. (iv) Low levels of infrastructure: Basic amenities like roads, electricity, and water supply are inadequate. (v) Dependence on the primary sector: A large percentage of the population is engaged in agriculture and other primary activities.

(8a) Definitions:

Consumer Surplus: The difference between what consumers are willing to pay for a good or service and the actual price they pay.

Balance of Payment Deficit: A situation where a country’s imports exceed its exports, indicating more money leaving the country than coming in.

Terms of Trade: The ratio at which a country’s exports are exchanged for its imports, indicating a nation’s economic health.

Elasticity of Demand: A measure of how much the quantity demanded of a good changes when its price changes. If the quantity demanded changes significantly when the price changes, the demand is elastic.

Budget Surplus: Occurs when income, typically via taxes, exceeds government spending within a specific period, usually a fiscal year.

(10a) Definition of Mechanized Farming:

Mechanized farming refers to the use of various equipment and machinery to enhance the efficiency and effectiveness of farming practices, including tractors, harvesters, irrigation systems, drones, and automated feeders.

(10b) Importance of Agriculture in Nigeria:

(i) Employment generation: Agriculture is the largest employer, reducing unemployment. (ii) GDP contribution: Agriculture significantly contributes to Nigeria’s GDP. (iii) Foreign exchange earnings: Agricultural exports earn foreign exchange, balancing trade. (iv) Provision of raw materials: Agriculture provides raw materials for industries, fostering industrial development. (v) Food security: Agriculture ensures food security and reduces dependence on imports.

(12a) Definition of Cooperative Society:

A cooperative society is a voluntary association of individuals united by common economic, social, or cultural needs and aspirations, forming a democratically controlled enterprise.

(12b) Sources of Finance for Small Businesses:

(i) Personal savings: Using personal savings to start a business. (ii) Retained earnings: Reinvesting profit back into the business. (iii) Bank loans: Loans from banks, to be repaid with interest. (iv) Equity finance: Selling a portion of the business to investors. (v) Trade credit: Suppliers offering goods or services on credit, providing short-term financing

Frequently Asked Questions

What is economic growth?

Economic growth refers to an increase in the production of goods and services in a country over time.

What is the elasticity of demand?

Elasticity of demand measures how much the quantity demanded of a good changes when its price changes. If demand changes significantly with price, it is elastic.

What are the benefits of economic integration?

Economic integration increases trade, enhances economic growth, provides access to larger markets, achieves economies of scale, and fosters political cooperation.

Conclusion

This are the answers to your past questions and if you have any question, kindly reach out through the comment section and we would be here to help in the best way we can.