Waec Model Questions Vol1 2018 Economics Question 19

Practice objective / multiple choice question 19 from the 2018 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2018 Economics Objective / Multiple Choice Hard Difficulty
Question 19 WAEC_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

Country Y exports coffee and imports machinery. The world price of coffee is $200 per kg and the demand for coffee (exports) is given by P = 500 - 0.1Q, where Q is the quantity exported in thousand kilograms. The government imposes an export tax of $20 per kg on coffee. The country imports 400 units of machinery at a price of $150 per unit. The government is also considering a 10 % tariff on machinery imports. Calculate (a) the effective price received by coffee exporters after the tax, (b) the quantity of coffee exported, (c) the total revenue from the export tax, (d) the tariff revenue from machinery imports, and (e) the new trade balance (export revenue minus import expenditure) after both policies are applied.

Answer Options

A. Effective price = $180/kg; Export quantity = 3,200,000 kg; Export‑tax revenue = $64,000,000; Tariff revenue = $7,500; New trade balance = $572,500,000 (a reduction of $27,500,000 from the original)
B. Effective price = $180/kg; Export quantity = 3,000,000 kg; Export‑tax revenue = $60,000,000; Tariff revenue = $5,000; New trade balance = $570,000,000 (a reduction of $30,000,000 from the original)
Correct Answer C. Effective price = $180/kg; Export quantity = 3,200,000 kg; Export‑tax revenue = $64,000,000; Tariff revenue = $6,000; New trade balance = $575,934,000 (a reduction of $24,006,000 from the original)
D. Effective price = $190/kg; Export quantity = 3,200,000 kg; Export‑tax revenue = $64,000,000; Tariff revenue = $6,000; New trade balance = $580,000,000 (a reduction of $20,000,000 from the original)
Correct Answer
C
Correct Option:
Effective price = $180/kg; Export quantity = 3,200,000 kg; Export‑tax revenue = $64,000,000; Tariff revenue = $6,000; New trade balance = $575,934,000 (a reduction of $24,006,000 from the original)

About This Question

This is Waec Model Questions Vol1 2018 Economics Question 19. It is one of the objective questions from the 2018 Waec Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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