NECO Economics past questions and answers

Checked by the Skolra question team · Last updated 23 October 2026

NECO Economics: 223 objective past questions from 5 papers between 2002 and 2009, each with the answer and an explanation. Newer NECO papers are not in our bank yet. Here are ten.

1. 1.Which of the following is NOT a reason for the absence of an industry in the rural areas?
   1. A
      Availability of raw materials in the area
      Correct
   2. B
      Lack of good road network
   3. C
      Scarcity of skilled manpower
   4. D
      Inadequate capital for investment
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   Answer: A

   Why industries are rare in rural areas: rural areas in Nigeria typically lack the basic conditions that attract a factory or industrial plant — reliable electricity and water, good roads for moving goods, enough capital/investment, and trained workers. These are all genuine reasons industries stay away from rural areas, so inadequate capital, lack of good road network, and scarcity of skilled manpower are all real, textbook reasons for the absence of industry in rural areas.

2. 2.The function muv/muz = py/pz represents
   1. A
      The law of diminishing marginal utility
   2. B
      The condition for consumer's equilibrium (equi-marginal principle)
      Correct
   3. C
      The law of demand
   4. D
      The income effect of a price change
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   Answer: B

   MU_y/MU_z = P_y/P_z is the standard rule for consumer's equilibrium, also called the equi-marginal principle. It can be rearranged to the more familiar form MU_y/P_y = MU_z/P_z, which says: a rational consumer with a fixed income gets the most satisfaction from spending when the marginal utility per naira spent is the same across all goods bought. At that point, there is no way to rearrange spending between good Y and good Z to raise total utility, so the consumer has reached equilibrium.

   Therefore, the equation represents the condition for consumer's equilibrium (the equi-marginal principle).

3. 3.Economic growth can be defined as
   1. A
      a rise in the general price level of goods and services over a period of time
   2. B
      a sustained increase in a country's real national income (output) over a period of time
      Correct
   3. C
      a reduction in the rate of unemployment within an economy
   4. D
      an improvement in the standard of living and general welfare of the citizens
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   Answer: B

   Economic growth is defined as a sustained increase in a country's real national income, output or Gross Domestic Product (GDP) over a given period of time, usually measured annually. It is a quantitative measure — it tells us the economy is producing more goods and services than before, in real terms (that is, after removing the effect of price changes).

4. 4.The difference between bar charts and histograms is that the former
   1. A
      has gaps between the bars while the latter has no gaps between the bars
      Correct
   2. B
      is used for continuous data while the latter is used for discrete data
   3. C
      bars are arranged according to class intervals while the latter are arranged in any order
   4. D
      shows cumulative frequency while the latter shows simple frequency only
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   Answer: A

   Bar charts are used to present discrete (categorical) data, where each bar stands for a separate, unconnected category. Because the categories are distinct, the bars are drawn with gaps between them, and they can be arranged in any order (alphabetically, by size, or however the drawer chooses) since there is no continuous scale joining one category to the next.

5. 5.A production possibility curve shows the
   1. A
      relationship between the price of a good and the quantity demanded of it
   2. B
      minimum cost of producing a single good as output increases
   3. C
      trend of a nation's total output over successive years
   4. D
      various maximum combinations of two goods that an economy can produce with its given resources and technology
      Correct
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   Answer: D

   The production possibility curve (PPC) is a core concept in the scarcity-and-choice topic of the Nigerian economics syllabus. It shows the various maximum combinations of two goods (or two groups of goods) that an economy can produce when it uses all its available resources fully and efficiently, with a given level of technology. Points on the curve itself represent full and efficient use of resources; points inside the curve mean resources are under-used, and points outside are unattainable with current resources.

6. 6.The most generally accepted definition of economics is
   1. A
      the study of how man satisfies his unlimited wants with the scarce resources which have alternative uses
      Correct
   2. B
      the study of how goods and services are produced, priced and consumed in a free market
   3. C
      the study of how man attains material welfare through the use of money and productive resources
   4. D
      the study of wealth, its production, distribution and exchange among members of society
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   Answer: A

   Economics has been defined in several ways over time, but the definition that is most widely accepted by economists today is the scarcity definition, first put forward by Lionel Robbins: economics is the study of how man satisfies his unlimited wants with the scarce resources which have alternative uses.

7. 7.Which of the following is NOT an advantage of localization of industry?
   1. A
      High risk of mass unemployment when the industry experiences a decline
      Correct
   2. B
      Growth of ancillary (subsidiary) industries to serve the main industry
   3. C
      Development of transport and other infrastructural facilities
   4. D
      Availability of specialized and skilled labour in the area
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   Answer: A

   Localization of industry means the concentration of firms in a particular line of production within one geographical area (e.g. textile mills in Kaduna, or cocoa processing in the South-West).

8. 8.Price legislation means
   1. A
      the fixing of different prices for the same commodity in different markets
   2. B
      the free interaction of the forces of demand and supply
   3. C
      the fixing of prices of goods and services by an act of government
      Correct
   4. D
      the determination of price through agreement among sellers in an industry
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   Answer: C

   Price legislation refers to government intervention in the market through law — the state fixes maximum or minimum prices for certain goods and services (for example, a maximum price for rice during a shortage, or a minimum wage/price for farm produce) in order to protect either consumers or producers. This is done by an act of government (law), not by the market itself.

9. 9.A problem of price control is
   1. A
      It reduces consumer demand for the commodity
   2. B
      It leads to the emergence of a black market
      Correct
   3. C
      It eliminates excess demand for the commodity
   4. D
      It increases the quantity producers are willing to supply
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   Answer: B

   Price control usually means government fixing a maximum price (price ceiling) below the free-market equilibrium price, often for essential goods like fuel, rice or rent.

10. 10.Excise duties are taxes levied on
    1. A
       goods exported to other countries
    2. B
       incomes earned by individuals
    3. C
       goods produced within the country
       Correct
    4. D
       goods imported into the country
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    Answer: C

    Excise duty is an indirect tax charged on goods that are manufactured or produced locally, within the country — examples in Nigeria include duties on beer, cigarettes, and soft drinks made by local factories. It is collected from the producer before the goods reach the final consumer.

    So the correct meaning is that excise duties are taxes levied on goods produced within the country.

The questions come from past JAMB, WAEC and NECO papers. We use software to help write the answer options and explanations, and every answer is checked twice before it goes on the site. How we check

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