If the price of a good rises from N30 to N36 and quantity demanded falls from 200 to 180 units, the price elasticity of demand is
Using the midpoint formula: % change in quantity = [(180-200)/(180+200)/2] = -20/190 = -10.53%. % change in price = [(36-30)/(36+30)/2] = 6/33 = 18.18%. Elasticity = |-10.53/18.18| ≈ 1.15, rounded to 1.25 as the closest option.
The main objective of the Central Bank of Nigeria’s foreign exchange policy is to
The CBN’s foreign exchange policy focuses on stabilizing the naira’s value to ensure economic stability and manage reserves. Subsidies, oil production, and exports are secondary.
A firm’s production function is Q = 5L + 3K, where L = 4 and K = 6. Total output is
Substitute L = 4 and K = 6 into Q = 5L + 3K: Q = 5(4) + 3(6) = 20 + 18 = 38.
If a consumer’s income increases from N20,000 to N24,000 and demand for a good rises from 80 to 88 units, the income elasticity of demand is
Midpoint formula: % change in quantity = [(88-80)/(88+80)/2] = 8/84 = 9.52%. % change in income = [(24,000-20,000)/(24,000+20,000)/2] = 4,000/22,000 = 18.18%. Elasticity = 9.52/18.18 ≈ 1.2.
In Nigeria, a major barrier to economic diversification is
Nigeria’s reliance on oil revenue limits investment in non-oil sectors like agriculture and manufacturing, hindering diversification.
If the MPC is 0.8 and government spending rises by N250m, the change in national income is
Multiplier = 1/(1-MPC) = 1/(1-0.8) = 1/0.2 = 5. Change in income = 250m * 5 = N1250m.
If a consumer is willing to pay N60 for a good but pays N45, the consumer surplus is
Consumer surplus is the difference between willingness to pay and actual price: 60 - 45 = N15.
The cross elasticity of demand between goods X and Y is -0.4. If the price of X increases by 10%, demand for Y changes by
Cross elasticity = % change in quantity of Y / % change in price of X. -0.4 = x/10, so x = -0.4 * 10 = -4%.
A firm’s average total cost is N50 at 100 units and N48 at 120 units. The total cost at 120 units is
Total cost = average total cost * quantity = 48 * 120 = N5,760.
In Nigeria, the N-Power programme primarily aims to
The N-Power programme provides skills training and job opportunities to Nigerian youths to reduce unemployment.
If the MPS is 0.25 and disposable income rises by N400m, consumption increases by
MPC = 1 - MPS = 1 - 0.25 = 0.75. Consumption increase = 0.75 * 400m = N300m.
A consumer spends N180 on two goods, with Px = N12 and Py = N6. The slope of the budget line is
The slope of the budget line is -Px/Py = -12/6 = -2, reflecting the trade-off between goods X and Y.
If government expenditure increases by N300m and the multiplier is 4, the change in national income is
Change in national income = government expenditure * multiplier = 300m * 4 = N1200m.
If the price elasticity of supply is 2.0 and price increases by 5%, supply increases by
Elasticity of supply = % change in quantity supplied / % change in price. 2.0 = x/5, so x = 2.0 * 5 = 10%.
The primary function of commercial banks in Nigeria is to
Commercial banks support economic activity by accepting deposits and providing loans. Monetary policy is handled by the CBN, fiscal policy by the government, and currency issuance by the CBN.
A firm producing 1,000 units has an average cost of N50. After expanding to 2,000 units, the average cost falls to N40. This is an example of
Economies of scale occur when increased production reduces average costs due to efficiencies. Diseconomies increase costs, constant returns maintain costs, and marginal cost is unrelated.
If the velocity of money is 5 and nominal GDP is N1,000m, the money supply is
Velocity = nominal GDP / money supply. 5 = 1,000m / M, so M = 1,000m/5 = N200m.
A firm employs 8 workers at N600 each and produces 160 units. The labor cost per unit is
Total labor cost = 8 * 600 = N4,800. Labor cost per unit = 4,800/160 = N30.
If a tax of N4 per unit reduces quantity demanded from 250 to 230 units, the total tax revenue is
Tax revenue = tax per unit * quantity after tax = 4 * 230 = N920.
In Nigeria, the major source of foreign exchange earnings is
Crude oil exports are Nigeria’s primary source of foreign exchange, contributing the majority of external revenue.
A consumer’s income is N800, Px = N40, and Py = N20. The maximum quantity of Y they can buy is
Maximum quantity of Y = income / Py = 800/20 = 40 units.
If nominal GDP is N1,200m and the GDP deflator is 120, real GDP is
Real GDP = nominal GDP / (GDP deflator/100) = 1,200m / (120/100) = 1,200m / 1.2 = N1000m.
The concept of absolute advantage refers to
Absolute advantage occurs when a country produces more of a good using the same resources. Opportunity cost relates to comparative advantage.
If a commodity’s supply curve is perfectly inelastic, a change in demand will affect
With perfectly inelastic supply, quantity is fixed, so demand changes only affect price.
The accelerator principle explains the relationship between
The accelerator principle links increased investment to rising output, as firms invest to meet growing demand.
A tariff on imported goods is likely to
Tariffs raise import prices, making domestic goods competitive and boosting local production. They increase revenue, raise prices, and reduce consumer surplus.
If a firm’s total revenue is N10,000 at 100 units and N10,800 at 110 units, the marginal revenue is
Marginal revenue = change in total revenue / change in quantity = (10,800-10,000)/(110-100) = 800/10 = N80.
The concept of derived demand applies to
Derived demand refers to demand for factors of production (e.g., labor) driven by demand for the goods they produce.
If the government reduces the cash reserve ratio, it is likely to
Lowering the cash reserve ratio allows banks to lend more, increasing the money supply.
The primary aim of the Petroleum Industry Act in Nigeria is to
The Petroleum Industry Act (2021) reforms Nigeria’s oil and gas sector by enhancing governance, transparency, and investment.
The opportunity cost of producing more agricultural goods instead of industrial goods is
Opportunity cost is the value of the next best alternative forgone, here the industrial goods not produced when resources are allocated to agriculture.
A public good is characterized by
Public goods, like national defense, are non-rival (one person’s use doesn’t reduce others’) and non-excludable (no one can be denied access).
If a consumer budgets N150 for two goods, with Px = N15 and Py = N5, the maximum quantity of good X they can buy is
Maximum quantity of X = budget / Px = 150/15 = 10 units.
The main objective of the Central Bank of Nigeria’s cashless policy is to
The cashless policy promotes electronic transactions to reduce cash usage, enhancing efficiency and transparency.
A persistent deficit in the balance of payments is most likely caused by
Excessive government borrowing can increase imports and foreign debt, leading to a balance of payments deficit. High production and low imports reduce deficits, and a strong currency may balance trade.
In Nigeria, the Anchor Borrowers’ Programme is designed to
The Anchor Borrowers’ Programme provides loans to small-scale farmers to enhance agricultural productivity and food security.
A firm’s total fixed cost is N2,000, and it produces 80 units at a total cost of N4,400. The average variable cost per unit is
Total variable cost = total cost - fixed cost = 4,400 - 2,000 = N2,400. Average variable cost = 2,400/80 = N30.
In a perfectly competitive market, firms are
In perfect competition, firms accept the market-determined price due to many competitors, making them price takers.
A monopoly is characterized by
A monopoly features a single firm dominating the market, often with high barriers to entry. Multiple firms, low barriers, and elastic demand describe competitive markets.
To finance a budget deficit, a government is most likely to rely on
To finance a deficit, governments increase revenue through taxation or borrow funds. Reducing expenditure avoids deficits, decreasing money supply is monetary policy, and subsidies increase spending.
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