Waec Model Questions Vol1 2021 Economics Question 3

Practice objective / multiple choice question 3 from the 2021 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 3 WAEC_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

The market for a good is described by the demand function \(Q_d = 500 - 5P\) and the supply function \(Q_s = 3P - 20\), where \(Q\) is quantity (in units) and \(P\) is price (in Naira). The government imposes a specific tax of ₦10 per unit on sellers.\n\n(a) Determine the original equilibrium price and quantity.\n(b) Compute the price elasticity of demand at the original equilibrium.\n(c) After the tax, what price do consumers pay, what price do producers receive, and what percentage of the tax burden falls on consumers? Express the burden percentage to one decimal place.

Answer Options

A. Consumers pay ₦66.00, producers receive ₦56.00, consumers bear 10 % of the tax
B. Consumers pay ₦70.00, producers receive ₦60.00, consumers bear 50 % of the tax
Correct Answer C. Consumers pay ₦68.75, producers receive ₦58.75, consumers bear 37.5 % of the tax
D. Consumers pay ₦65.00, producers receive ₦55.00, consumers bear 0 % of the tax
Correct Answer
C
Correct Option:
Consumers pay ₦68.75, producers receive ₦58.75, consumers bear 37.5 % of the tax

About This Question

This is Waec Model Questions Vol1 2021 Economics Question 3. It is one of the objective questions from the 2021 Waec Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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