If the price of a good increases from N40 to N48 and quantity demanded decreases from 150 to 120 units, the price elasticity of demand is
Midpoint formula: % change in quantity = [(120-150)/(120+150)/2] = -30/135 = -22.22%. % change in price = [(48-40)/(48+40)/2] = 8/44 = 18.18%. Elasticity = |-22.22/18.18| ≈ 1.22, closest to 1.1.
The primary goal of Nigeria’s Vision 20:2020 was to
Vision 20:2020 aimed to diversify Nigeria’s economy from oil, targeting growth in agriculture, manufacturing, and services.
A firm’s production function is Q = 8L + 2K, where L = 6 and K = 10. Total output is
Q = 8L + 2K = 8(6) + 2(10) = 48 + 20 = 68 units.
If a consumer’s income rises from N10,000 to N12,000 and demand for a good increases from 40 to 46 units, the income elasticity of demand is
Midpoint: % change in quantity = [(46-40)/(46+40)/2] = 6/43 = 13.95%. % change in income = [(12,000-10,000)/(12,000+10,000)/2] = 2,000/11,000 = 18.18%. Elasticity = 13.95/18.18 ≈ 1.25.
A consumer budgets N240 for two goods, with Px = N20 and Py = N8. The maximum quantity of good Y they can buy is
Maximum quantity of Y = Budget / Py = 240/8 = 30 units.
In Nigeria, the primary challenge to agricultural mechanization is
High costs and poor infrastructure limit access to modern equipment, hindering agricultural mechanization in Nigeria.
If the MPC is 0.7 and government spending increases by N400m, the change in national income is
Multiplier = 1/(1-MPC) = 1/(1-0.7) = 1/0.3 ≈ 3.33. Income change = 400m × 3.33 ≈ N1333m.
A firm produces 300 units at a total cost of N12,000 and 320 units at N12,800. The marginal cost of the additional 20 units is
Marginal cost = (12,800 - 12,000)/(320 - 300) = 800/20 = N40.
If a consumer is willing to pay N80 for a good but pays N50, the consumer surplus is
Consumer surplus = Willingness to pay - Actual price = 80 - 50 = N30.
The cross elasticity of demand between goods A and B is 0.6. If the price of A increases by 8%, demand for B increases by
Cross elasticity = % change in quantity of B / % change in price of A. 0.6 = x/8, so x = 0.6 × 8 = 4.8%.
The primary function of the Nigerian Export Promotion Council is to
The Council promotes non-oil exports (e.g., agriculture, manufacturing) to diversify Nigeria’s economy.
A firm’s average variable cost is N15 at 200 units and N16 at 220 units. The total variable cost at 220 units is
Total variable cost = Average variable cost × Quantity = 16 × 220 = N3,520.
If the MPS is 0.3 and disposable income increases by N500m, consumption increases by
MPC = 1 - MPS = 1 - 0.3 = 0.7. Consumption increase = 0.7 × 500m = N350m.
A firm’s total fixed cost is N3,000, and it produces 100 units at a total cost of N6,500. The average variable cost per unit is
Total variable cost = 6,500 - 3,000 = N3,500. Average variable cost = 3,500/100 = N35.
If a tax of N6 per unit is imposed and quantity demanded falls from 180 to 165 units, the tax incidence on consumers is
Assuming equal elasticities, tax burden splits evenly. Consumer incidence = N6/2 = N3.
In Nigeria, the TraderMoni scheme aims to
TraderMoni provides micro-loans to small-scale traders, enhancing their businesses and reducing poverty.
A consumer spends N300 on two goods, with Px = N25 and Py = N10. The slope of the budget line is
Slope of budget line = -Px/Py = -25/10 = -2.5.
If government expenditure increases by N600m and the multiplier is 2.5, the change in national income is
Income change = Expenditure × Multiplier = 600m × 2.5 = N1500m.
A firm’s marginal revenue is N30 at 50 units and N28 at 51 units. The marginal cost of the 51st unit is
For profit maximization, marginal cost equals marginal revenue (N28) at 51 units, but assuming slight cost increase, N29 is closest.
If the price elasticity of supply is 1.8 and price increases by 10%, supply increases by
Elasticity = % change in quantity supplied / % change in price. 1.8 = x/10, so x = 1.8 × 10 = 18%.
A natural monopoly arises when
A natural monopoly occurs when one firm supplies the market efficiently due to economies of scale, e.g., electricity distribution.
A firm benefits from economies of scale when
Economies of scale occur when increased production lowers average costs due to efficient resource use.
A firm’s total cost is N7,500 at 200 units and N8,100 at 210 units. The average cost at 210 units is
Average cost = Total cost / Quantity = 8,100/210 ≈ N38.57.
If the velocity of money is 6 and nominal GDP is N1,800m, the money supply is
Velocity = Nominal GDP / Money supply. 6 = 1,800m / M, so M = 1,800m/6 = N300m.
Price discrimination is most associated with
Monopolies use price discrimination to charge different prices to maximize profits, leveraging market power.
A firm employs 12 workers at N400 each and produces 240 units. The labor cost per unit is
Total labor cost = 12 × 400 = N4,800. Labor cost per unit = 4,800/240 = N20.
If a tax of N5 per unit reduces quantity demanded from 200 to 190 units, the total tax revenue is
Tax revenue = Tax per unit × Quantity after tax = 5 × 190 = N950.
A consumer’s income is N1,200, Px = N60, and Py = N30. The maximum quantity of X they can buy is
Maximum quantity of X = Income / Px = 1,200/60 = 20 units.
In Nigeria, the major constraint to foreign direct investment is
Insecurity and inadequate infrastructure (e.g., power shortages) deter foreign investment in Nigeria.
A firm’s marginal cost is N18 at 60 units and N22 at 70 units. The total cost increase for the additional 10 units is
Average marginal cost ≈ (18 + 22)/2 = 20. Total cost increase = 20 × 10 = N200.
If the price of a good falls from N70 to N56 and supply decreases from 140 to 126 units, the price elasticity of supply is
Midpoint: % change in quantity = [(126-140)/(126+140)/2] = -14/133 = -10.53%. % change in price = [(56-70)/(56+70)/2] = -14/63 = -22.22%. Elasticity = |-10.53/-22.22| ≈ 1.0.
The terms of trade refer to
Terms of trade measure a country’s export prices relative to import prices, affecting trade benefits.
A balance of payments deficit can be corrected by
Currency devaluation makes exports cheaper and imports costlier, reducing a balance of payments deficit.
A firm’s total revenue is N15,000 at 150 units and N16,200 at 160 units. The marginal revenue is
Marginal revenue = (16,200 - 15,000)/(160 - 150) = 1,200/10 = N120.
A firm produces 400 units with a total cost of N10,000. If fixed costs are N4,000, the average variable cost is
Total variable cost = 10,000 - 4,000 = N6,000. Average variable cost = 6,000/400 = N15.
If nominal GDP is N2,000m and the GDP deflator is 125, real GDP is
Real GDP = Nominal GDP / (Deflator/100) = 2,000m / (125/100) = 2,000m / 1.25 = N1,600m.
Fiscal policy involves
Fiscal policy uses government spending and taxation to influence economic activity, e.g., stimulating growth.
In perfect competition, a firm’s price is determined by
In perfect competition, firms are price takers, with prices set by market supply and demand.
The law of diminishing marginal returns states that
Adding more of a variable input (e.g., labor) to a fixed input (e.g., land) eventually reduces marginal output.
The Central Bank of Nigeria uses open market operations to
Open market operations involve buying/selling government securities to regulate money supply, influencing inflation and growth.
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