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NECO SSCE Economics 2007 past questions and answers

This 2007 NECO SSCE Economics set has 40 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2007 set with instant marking.

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Sample NECO SSCE Economics 2007 questions

1. Which feature most clearly distinguishes an oligopolistic market?
  1. A small number of large firms make decisions that affect one another.
  2. Each firm takes the market price as given and sells an identical product.
  3. There is only one seller and entry is completely blocked.
  4. Many sellers offer differentiated products with no barriers to entry.

Answer: A. A small number of large firms make decisions that affect one another.

Because only a few major firms operate, each firm's pricing and output choices can influence its rivals.

2. A major source of market power for a firm in monopolistic competition is its ability to
  1. control the entire supply of an essential raw material.
  2. differentiate its product from those of competing firms.
  3. prevent all other firms from entering the industry.
  4. sell a completely homogeneous product at any price.

Answer: B. differentiate its product from those of competing firms.

Product differentiation gives each firm some customer loyalty and limited control over its own price.

3. For a monopolist to charge different prices for the same service in separate markets, an important condition is that
  1. buyers can freely resell the service between the markets.
  2. the service has zero production cost in every market.
  3. the markets can be kept separate and buyers have different price elasticities of demand.
  4. all buyers have identical incomes and preferences.

Answer: C. the markets can be kept separate and buyers have different price elasticities of demand.

Segmentation prevents resale, while differing demand elasticities make different profit-maximizing prices possible.

4. In long-run equilibrium under perfect competition, a firm normally earns
  1. a permanent supernormal profit because entry is restricted.
  2. a loss equal to its fixed costs.
  3. zero accounting revenue.
  4. normal profit, including the opportunity cost of its resources.

Answer: D. normal profit, including the opportunity cost of its resources.

Entry and exit tend to remove supernormal profit and losses until firms earn normal profit.

5. A competitive firm should generally expand output by one unit when the marginal revenue from that unit is
  1. greater than its marginal cost.
  2. less than its average fixed cost.
  3. equal to its total fixed cost.
  4. less than its average revenue.

Answer: A. greater than its marginal cost.

When marginal revenue exceeds marginal cost, the additional unit adds more to revenue than to cost.

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