2023 NECO Economics (Essay & OBJ) Answers [1st August]
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NECO JUNE/JULY 2023 FREE ECONOMICS (ECONS) QUESTION AND ANSWER ROOM
 
Tuesday, 1st August 2023
Economics (Objective & Essay)
10:00am – 1:00pm

2023 NECO ECONOMICS THEORY (ESSAY) ANSWERS:

(1)

(2)


OR

 

OR

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(3a)
(i) Change in demand: This is a complete shift of the demand curve forward or backward. An increase in demand induces a shift of the demand curve to the right, while a decrease in demand will cause a shift of the entire demand curve to the left. Therefore, a change in any of the other factors ,except price, that influence demand will cause a shift of the demand curve to a new position.


(ii) Change in quantity demanded: This is any movement along the same demand curve, whether downwards or upwards. A downward movement along the demand curve signifies an increase in the quantity demanded when the price is reduced, while upward movement signifies a decrease in the quantity demanded when the price is raised. This is illustrated below. From the diagram, when the price increase to p2, there is - contraction in quantity demanded to Q1. When the price falls to P1, the quantity demanded increase to Q2. Price is the only factor that brings that change in the quantity demanded while other factors are held constant.

(3b)
(PICK ANY FIVE)
(i) Price of the Product: There is an inverse (negative) relationship between the price of a product and the amount of that product consumers are willing and able to buy. Consumers want to buy more of a product at a low price and less of a product at a high price. This inverse relationship between price and the amount consumers are willing and able to buy is often referred to as The Law of Demand.

(ii) The Consumer's Income: A change in consumers' income directly impacts their purchasing power. If there is an increase in disposable income, people can afford to buy more goods and services at each price level, leading to an increase in demand for most normal goods. On the other hand, if income decreases, the demand for these goods is likely to decline.

(iii) Substitute goods: The demand for a product can be influenced by the availability and pricing of substitute goods. A substitute is a product that can replace another for a similar purpose. If the price of a product's substitute decreases, consumers may switch to the cheaper alternative, leading to a decrease in demand for the original product.

(iv) The Tastes and Preferences of Consumers: Changes in consumer preferences can significantly affect demand. If a product becomes more fashionable, desirable, or gains positive reputation among consumers, demand will likely increase. Conversely, if consumer tastes shift away from a product, demand for it may decrease.

(v) Change in population size: An increase in the population of a particular area or country can lead to an increase in demand for various goods and services, assuming the other factors remain constant. More people means more potential consumers, resulting in higher overall demand.

(vi) Complementary goods: Complementary goods are products that are used together. Changes in the demand for one product can affect the demand for its complementary good. For example, if the demand for smartphones increases, the demand for smartphone accessories like cases or screen protectors is likely to rise as well.

(vii) Advertising and marketing: Effective advertising and marketing campaigns can influence consumer behavior and create a higher demand for a product. Clever and persuasive marketing can increase consumer awareness, perception, and interest in the product, leading to an increase in demand.

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(4a)
(PICK ANY ONE)
An entrepreneur is a person who organizes and manages a business undertaking, assuming the risk with the goal of achieving profit and success.

OR

An entrepreneur refers to the owner of the business, who bears the risk of the business, provides, organizes and coordinates the other factors of production for the sake of profit.

(4b)
(PICK ANY FIVE)
(i) Innovation and Creativity: Entrepreneurs are often at the forefront of innovation and creativity. They come up with new ideas, products, and services that meet the changing needs and demands of consumers. This constant innovation drives business growth and helps companies stay competitive in the market.

(ii) Job Creation: As entrepreneurs establish and expand their businesses, they create job opportunities for the workforce. New ventures require skilled and unskilled labor, leading to reduced unemployment rates and a positive impact on the economy.

(iii) Economic Growth: Entrepreneurial ventures contribute to economic growth by increasing productivity and efficiency in various industries. They introduce new technologies, production methods, and business practices that boost overall economic output.

(iv) Risk-taking and Investment: Entrepreneurs are willing to take calculated risks, invest their resources, and withstand uncertainty to bring their ideas to fruition. This willingness to take risks is essential for driving business growth, as it allows for the exploration of new markets and the development of innovative products and services.

(v) Market Competition: Entrepreneurs foster healthy market competition by introducing new products and services, challenging established businesses to improve and innovate. This competitive environment leads to higher quality goods and services, better customer satisfaction, and overall market growth.

(vi) Wealth Creation: Successful entrepreneurs can generate substantial wealth not only for themselves but also for their employees, investors, and other stakeholders. This wealth creation contributes to the development of a thriving economy.

(vii) Community Development: Entrepreneurs often invest in local communities, supporting various social initiatives and philanthropic causes. Their contributions to community development, such as funding educational programs or supporting local charities, have a positive impact on society as a whole.

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(5a)
Specialization refers to the process in which individuals, firms, or countries focus their production efforts on a narrow range of goods or services in which they have a comparative advantage.

(5b)
ADVANTAGES OF DIVISION OF LABOUR:
(PICK ANY THREE)
(i) Increased Efficiency: When workers specialize in specific tasks, they become more skilled and experienced, leading to increased efficiency. This efficiency results from the workers' ability to focus on their specific roles, leading to faster production and reduced wastage of time and resources.

(ii) Higher Productivity: Division of labor leads to higher productivity because workers become proficient at their specialized tasks. As they continuously perform the same task, they develop expertise, reduce errors, and complete tasks more quickly, resulting in greater output.

(iii) Economies of Scale: Specialization allows firms to achieve economies of scale. By producing a higher volume of a specific product, firms can take advantage of cost efficiencies, such as bulk purchasing of materials and improved production processes, leading to lower average costs per unit.

(iv) Innovation and Technological Advancement: When workers specialize, they have the opportunity to focus on specific aspects of production, leading to potential innovations and improvements in their specialized areas. This can lead to technological advancements and overall progress in the industry.

(v) Time Savings: Division of labor reduces the time spent on switching between tasks, as workers concentrate on their particular roles. This results in faster production processes and shorter lead times for delivering goods and services to the market.

DISADVANTAGES OF DIVISION OF LABOUR:
(i) Monotony and Job Dissatisfaction: Performing the same specialized task repeatedly can lead to monotony and job dissatisfaction among workers. This lack of variety may reduce motivation and creativity, resulting in decreased job satisfaction and potential burnout.

(ii) Dependency on Specialized Skills: Workers in a highly specialized division of labor may become dependent on their specific skills. If demand for their specialized product declines, they might face difficulties transitioning to other roles, potentially leading to unemployment or retraining challenges.

(iii) Labor Market Fluctuations: In economies heavily reliant on a few specialized industries, labor market fluctuations can have severe consequences. Downturns in these sectors can lead to significant job losses and economic instability.

(iv) Training and Skill Development Costs: Training workers to become highly specialized can be time-consuming and expensive. Firms must invest in employee training and development to ensure workers can perform their tasks efficiently, which can be a significant cost for some businesses.

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(6a)
Economic integration refers to the process of unifying different economies through the removal of trade barriers, the creation of common markets, and the coordination of economic policies among participating countries or regions. The goal of economic integration is to promote the free flow of goods, services, capital, and labor, leading to increased economic cooperation and interdependence among the member countries or regions.

(6b)
(PICK ANY FIVE)
(i) Increased Trade: Economic integration facilitates the removal of trade barriers, such as tariffs and quotas, among member countries. This leads to increased trade opportunities as companies gain access to larger markets without facing significant restrictions. As a result, trade volumes tend to rise, benefiting both exporters and importers.

(ii) Economies of Scale: Integration enables companies to expand their operations and reach a larger customer base, leading to economies of scale. Larger-scale production often leads to lower average costs per unit, which can result in more competitive prices for consumers.

(iii) Enhanced Foreign Investment: Economic integration makes member countries more attractive to foreign investors. A larger integrated market provides a stable and predictable environment for investment, encouraging both domestic and foreign investors to allocate capital across borders.

(iv) Specialization and Comparative Advantage: Integrated economies can focus on their areas of comparative advantage. Countries can specialize in producing goods and services that they are most efficient at, leading to increased efficiency and improved allocation of resources.

(v) Job Creation and Labour Mobility: Economic integration can create job opportunities by stimulating economic growth and encouraging investment. Additionally, labor mobility may increase as workers are more likely to move to regions with better job prospects, reducing unemployment rates and increasing labor market flexibility.

(vi) Enhanced Competition: Integration fosters competition among companies from different countries. Increased competition drives businesses to become more efficient, innovative, and consumer-focused to maintain their competitive edge. Ultimately, consumers benefit from a wider range of choices and better-quality products at competitive prices.

(vii) Political Cooperation and Stability: Economic integration can promote political cooperation and stability among member countries. Through economic ties, countries may find it mutually beneficial to work together on other issues, leading to improved diplomatic relations and reduced likelihood of conflicts.

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(7a)
Economic Growth is the increase in the real output of the country in a particular span of time. It has to do with the expansion (growth) of the economy. Economic Development on the other hand has to do with the positive changes that result in the enrichment of living standards and the advancement of technology.

(7b)
(PICK ANY FIVE)
(i) Low Per Capita Income: Developing economies are characterized by relatively low per capita income levels. This means that, on average, individuals in these countries have lower incomes compared to those in developed economies.

(ii) High Population Growth: Developing economies often experience high population growth rates. Birth rates tend to be higher, resulting in a younger population and a larger labor force.

(iii) Dependency on Agriculture: Many developing economies rely heavily on agriculture as a significant sector of their economy. Agriculture often employs a large portion of the population and contributes significantly to the country's GDP.

(iv) Limited Industrialization: Developing economies generally have limited industrialization compared to developed economies. They may be dependent on importing manufactured goods, which can impact their trade balances.

(v) Income Inequality: Developing economies frequently exhibit high levels of income inequality. There is often a significant disparity between the rich and the poor, leading to social and economic challenges.

(vi) Underdeveloped Infrastructure: Developing economies often lack adequate infrastructure, such as transportation, communication, and energy systems. Insufficient infrastructure can hinder economic growth and development.

(vii) Limited Access to Education and Healthcare: Education and healthcare are essential components of economic development. Developing economies may face challenges in providing universal access to quality education and healthcare services.

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(8a)
Consumer Surplus: Consumer surplus is a concept in economics that measures the difference between what consumers are willing to pay for a good or service and what they actually pay. It represents the additional value or benefit that consumers receive from purchasing a product at a price lower than their maximum willingness to pay. Graphically, consumer surplus is represented as the area below the demand curve and above the market price. It reflects the economic welfare and satisfaction gained by consumers due to favorable prices in the market.

(8b)
Balance of Payment Deficit: The balance of payments (BoP) is a record of all transactions between a country and the rest of the world over a specific period. A balance of payment deficit occurs when a country's imports exceed its exports during a given period, resulting in a negative balance in the current account. In other words, it indicates that the country is spending more on foreign goods, services, and investments than it is earning from its exports and foreign investments. A sustained deficit in the balance of payments can lead to a decrease in foreign exchange reserves and may pose challenges to the country's economic stability.

(8c)
Terms of Trade: Terms of trade refers to the ratio at which a country can trade its exports for imports. It represents the price of a country's exports relative to the price of its imports. When a country's terms of trade improve, it means that it can buy more imports with a given quantity of exports, indicating a favorable trade situation. Conversely, a decline in the terms of trade indicates that a country needs to export more to purchase the same quantity of imports, which can be unfavorable for its trade balance.

(8d)
Elasticity of Demand: Elasticity of demand measures the responsiveness of the quantity demanded of a good or service to changes in its price. It is a critical concept in economics to understand how sensitive consumer demand is to price fluctuations. The elasticity of demand can be elastic, inelastic, or unitary, depending on the percentage change in quantity demanded relative to the percentage change in price. When demand is elastic, a small change in price leads to a proportionately larger change in quantity demanded. In contrast, demand is inelastic when a change in price causes a relatively smaller change in quantity demanded.

(8e)
Budget Surplus: A budget surplus occurs when a government's total revenue (taxes, fees, etc.) exceeds its total expenditures (government spending). In other words, the government is taking in more money than it is spending during a specific period. A budget surplus allows the government to reduce its debt, save, or invest in various projects and programs. It is generally considered a positive fiscal outcome, as it can lead to more stable economic conditions and improved financial health for the government.

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(9a)
Money system is a modern method of exchange and trade where a universally accepted medium of exchange is used to facilitate transactions. Money can take various forms, such as coins, banknotes, and digital currencies. In a money system, individuals do not have to possess the exact goods or services they wish to exchange; instead, they use money as an intermediary to buy and sell goods and services.
On the other hand, the barter system is a traditional method of exchange where goods and services are directly exchanged for other goods and services without the involvement of money. In a barter system, individuals must have something that the other party desires to trade. For example, a farmer with wheat may exchange it with a shoemaker for a pair of shoes.

(9b)
(PICK ANY FIVE)
(i) Double Coincidence of Wants: Barter requires both parties to possess goods or services that the other desires. Finding suitable trading partners with the right commodities can be time-consuming and challenging.

(ii) Lack of a Common Measure of Value: In a barter system, there is no common measure of value, making it difficult to establish fair exchange rates between different goods and services.

(iii) Limited Scope of Trade: Barter systems limit the range and volume of trade since not all goods can be easily divided and exchanged. This limitation can hinder economic growth and specialization.

(iv) Indivisibility of Goods: Some goods are indivisible and cannot be split into smaller units for exchange, making certain transactions impossible or inefficient.

(v) Storage and Perishability: Barter goods may be challenging to store, and some goods are perishable, which can lead to waste and inefficiency.

(vi) Difficulty in Accumulating Wealth: Accumulating wealth or savings in a barter system is challenging because value is tied to tangible goods rather than a universally accepted medium of exchange.

(vii) Inefficiency and Time-Consuming: Barter transactions can be inefficient and time-consuming compared to money-based exchanges, which can hinder economic activities and growth.

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(10a)
Mechanized farming refers to the use of machinery and advanced technologies in agricultural practices to increase efficiency and productivity. Common examples of machinery used in mechanized farming include tractors, harvesters, irrigation systems, and various implements for planting, plowing, and fertilizing.

(10b)
(PICK ANY FIVE)
(i) Employment Generation: Agriculture is a significant source of employment in Nigeria, providing livelihoods for a substantial portion of the population, especially in rural areas. It absorbs labor in farming, processing, marketing, and distribution, thus reducing unemployment and poverty.

(ii) Foreign Exchange Earnings: Agriculture is a major contributor to Nigeria's foreign exchange earnings. Exporting agricultural products such as cocoa, oilseeds, and cashew nuts helps the country earn foreign currency, which is crucial for importing essential goods and supporting economic growth.

(iii) Food Security: Agriculture plays a vital role in ensuring food security for Nigeria's growing population. By producing a diverse range of food crops, livestock, and fisheries products, the country can meet the nutritional needs of its people and reduce dependency on food imports.

(iv) Rural Development: As agriculture predominantly operates in rural areas, its development contributes to rural transformation and development. Improved infrastructure, such as roads and irrigation facilities, can stimulate economic activities in these regions and enhance the overall standard of living.

(v) Industrialization and Value Addition: A strong agricultural sector can support the growth of agro-based industries. Processing and value addition to agricultural products create opportunities for value chains and agro-industrial development, leading to increased economic diversification.

(vi) Government Revenue Generation: Agriculture contributes to government revenue through taxation on agricultural products, exports, and value-added activities in the sector. This revenue can be reinvested in infrastructure and social programs, benefiting the overall economy.

(vii) Economic Stability and Diversification: A vibrant agricultural sector can contribute to economic stability, particularly in the face of fluctuations in oil prices (Nigeria's primary export). Diversification into agriculture helps reduce the country's reliance on a single commodity and enhances economic resilience.

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(11a)
A de facto population census refers to a count of individuals based on their actual physical presence in a particular geographic area at the time of the census. It includes both usual residents and temporary visitors, such as tourists and migrants, who are present within the area during the census period. In a de facto census, individuals are counted where they are found, regardless of their usual place of residence.
Meanwhile, A de jure population census involves counting individuals based on their legal or usual place of residence, regardless of whether they are physically present in the area during the census period. It includes all individuals who have a permanent or usual residence within the geographical boundaries, regardless of whether they are temporarily absent at the time of the census.

(11b)
(PICK ANY FIVE)
(i) Undercounting and Overcounting: Census operations may face challenges in accurately counting the entire population. Undercounting occurs when some individuals are missed, leading to an incomplete representation of the population. Conversely, overcounting may happen due to duplicate entries or counting people who are not usual residents.

(ii) Inaccurate Data: Incorrect data collection or data entry can lead to inaccurate census results. Errors may arise from mistakes made by enumerators, respondents providing incorrect information, or technological issues.

(iii) Hard-to-Reach Populations: Certain segments of the population, such as homeless individuals, remote rural communities, or undocumented migrants, may be difficult to enumerate due to their mobility, geographical isolation, or mistrust of census authorities.

(iv) Language and Cultural Barriers: Language and cultural barriers can pose challenges during census enumeration, particularly in multicultural and diverse societies. Miscommunication may lead to incomplete or inaccurate data.

(v) Limited Resources: Inadequate financial and logistical resources can hinder census operations. Insufficient funding may limit the number of enumerators, the quality of training, and the reach of data collection efforts.

(vi) Political Interference: Political interference may influence census operations, leading to biased or manipulated data to serve specific agendas. Accurate and impartial data collection may be compromised in such cases.

(vii) Security Concerns: In regions experiencing conflicts or civil unrest, census operations can be challenging or unsafe. Security concerns may hinder enumerators from accessing certain areas, affecting data collection in these regions.

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(12a)
A co-operative society is a type of organization formed by individuals with shared socio-economic objectives, who voluntarily come together to pool their resources and efforts for mutual benefit. The primary aim of a co-operative society is to improve the economic and social well-being of its members through cooperative efforts and collective decision-making.

(12b)
(i) Equity Capital: Equity capital refers to funds raised by a company by issuing shares to investors. Shareholders become partial owners of the company and may receive dividends as a return on their investment. Equity financing does not involve debt and allows businesses to raise capital without incurring interest payments.

(ii) Debt Financing: Debt financing involves borrowing money from various sources, such as banks, financial institutions, or private lenders, with an agreement to repay the borrowed amount along with interest over a specified period. Common forms of debt financing include bank loans, bonds, and commercial paper.

(iii) Venture Capital: Venture capital is a form of private equity investment typically provided to startups and small businesses with high growth potential. Venture capitalists invest in exchange for an ownership stake in the company and often provide mentorship and support in addition to capital.

(iv) Angel Investors: Angel investors are individuals who invest their personal funds in startups or early-stage companies. They often provide capital and expertise to help the business grow. Unlike venture capitalists, angel investors invest their own money and are typically involved in smaller funding rounds.

(v) Crowdfunding: Crowdfunding involves raising funds from a large number of individuals through online platforms. Entrepreneurs showcase their business ideas or projects, and interested individuals contribute small amounts of money in exchange for rewards or equity.

(vi) Bank Overdraft and Lines of Credit: Businesses can obtain bank overdraft facilities or lines of credit, which provide them with a flexible borrowing arrangement. These credit facilities allow businesses to access funds when needed, up to a pre-approved credit limit.

(vii) Trade Credit: Trade credit is an arrangement where suppliers allow businesses to purchase goods and services on credit, paying for them at a later date. This short-term credit can help businesses manage their cash flow and working capital requirements.


2023 NECO ECONOMICS (OBJECTIVE) ANSWERS:

1-10: EDBEDCCDAE
11-20: CAADCCEBEA
21-30: BCCCDBAECA
31-40: DCEAADDBDC
41-50: CEEDEBDCBC
51-60: CDDEECDEEC

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