NECO EconomicsPast Questions & Explanations

Practice 100+ NECO Economics questions from the SuperPrep question bank. Every question comes with a full explanation so you learn the method, not just the answer.

1. 1.

   Economics is primarily concerned with the study of how people

   1. A.accumulate wealth
   2. B.allocate scarce resources to satisfy unlimited wants
   3. C.produce goods only
   4. D.manage businesses

   Show explanation

   Economics studies how individuals and societies use limited resources to satisfy their unlimited wants.
2. 2.

   The basic economic problem facing every society is

   1. A.inflation
   2. B.unemployment
   3. C.scarcity
   4. D.taxation

   Show explanation

   Resources are limited while human wants are unlimited. This problem is known as scarcity.
3. 3.

   Opportunity cost is best defined as

   1. A.the money spent on a good
   2. B.the value of the next best alternative forgone
   3. C.the cost of production
   4. D.the total cost of a project

   Show explanation

   Opportunity cost is what must be sacrificed when a choice is made among alternatives.
4. 4.

   A scale of preference refers to

   1. A.a list of goods arranged according to importance
   2. B.the price of goods
   3. C.a market survey
   4. D.a government budget

   Show explanation

   A scale of preference ranks wants in order of priority so that limited resources can be used effectively.
5. 5.

   Which of the following is an example of a free good?

   1. A.Petrol
   2. B.Electricity
   3. C.Air
   4. D.Bread

   Show explanation

   A free good is available in abundance and does not require payment. Air is a common example.
6. 6.

   The need to choose among competing wants arises because

   1. A.resources are unlimited
   2. B.wants are limited
   3. C.resources are scarce
   4. D.goods are free

   Show explanation

   Since resources are scarce, individuals and societies must make choices about their use.
7. 7.

   Which of the following is NOT a factor of production?

   1. A.Land
   2. B.Labour
   3. C.Capital
   4. D.Money

   Show explanation

   The main factors of production are land, labour, capital, and entrepreneurship. Money itself is not a factor of production.
8. 8.

   The reward paid to labour is known as

   1. A.rent
   2. B.interest
   3. C.wages
   4. D.profit

   Show explanation

   Labour receives wages or salaries as compensation for work done.
9. 9.

   The reward for the use of land is

   1. A.profit
   2. B.rent
   3. C.interest
   4. D.wages

   Show explanation

   Land earns rent because it is a natural resource used in production.
10. 10.

    The reward earned by an entrepreneur for bearing risks is

    1. A.rent
    2. B.wages
    3. C.interest
    4. D.profit

    Show explanation

    Entrepreneurs organize production and bear risks; their reward is profit.

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11. 11.

    A Production Possibility Curve (PPC) illustrates

    1. A.consumer demand
    2. B.alternative combinations of goods that can be produced with available resources
    3. C.government expenditure
    4. D.market prices

    Show explanation

    The PPC shows the maximum combinations of two goods that can be produced with given resources and technology.
12. 12.

    A point inside the Production Possibility Curve indicates

    1. A.efficient use of resources
    2. B.unattainable production
    3. C.underutilization of resources
    4. D.economic growth

    Show explanation

    A point inside the PPC means some resources are idle or not being fully utilized.
13. 13.

    Which economic question addresses resource allocation?

    1. A.What to produce?
    2. B.Why to produce?
    3. C.Who owns resources?
    4. D.Where to produce?

    Show explanation

    Every economy must decide what goods and services to produce from limited resources.
14. 14.

    When a student chooses to study instead of watching a movie, the opportunity cost is

    1. A.the tuition fee
    2. B.the cost of textbooks
    3. C.the movie forgone
    4. D.the examination fee

    Show explanation

    The opportunity cost is the next best alternative sacrificed, which is watching the movie.
15. 15.

    Capital as a factor of production refers to

    1. A.money in the bank
    2. B.tools, machinery, and equipment used in production
    3. C.natural resources
    4. D.entrepreneurial ability

    Show explanation

    In economics, capital means man-made assets used to produce other goods and services.
16. 16.

    A society can reduce the problem of scarcity by

    1. A.eliminating all wants
    2. B.increasing the availability of resources
    3. C.stopping production
    4. D.avoiding trade

    Show explanation

    Although scarcity cannot be completely eliminated, increasing resources and productivity can reduce its effects.
17. 17.

    Which of the following best illustrates economic choice?

    1. A.Using unlimited resources
    2. B.Selecting one alternative among several competing wants
    3. C.Producing without cost
    4. D.Consuming all available goods

    Show explanation

    Economic choice occurs when a person selects one option and gives up others because resources are limited.
18. 18.

    The concept of scarcity implies that

    1. A.human wants are limited
    2. B.all goods are expensive
    3. C.resources are insufficient to satisfy all wants
    4. D.production is impossible

    Show explanation

    Scarcity exists because available resources cannot satisfy all human wants at the same time.
19. 19.

    If an economy moves from a point inside its PPC to a point on the PPC, it indicates

    1. A.economic decline
    2. B.better utilization of resources
    3. C.population reduction
    4. D.resource wastage

    Show explanation

    Moving to a point on the PPC shows that resources are being used more efficiently.
20. 20.

    An entrepreneur differs from other factors of production because the entrepreneur

    1. A.provides natural resources
    2. B.supplies physical effort only
    3. C.organizes production and bears risk
    4. D.owns all capital goods

    Show explanation

    The entrepreneur coordinates the other factors of production, makes business decisions, and bears the risks involved.