Waec Model Questions Vol1 2017 Economics Question 2

The government of a Nigerian state has introduced a price ceiling on a staple food (cassava flour). The following data show the quantity demanded (Qd) and quantity supplied (Qs) at various price levels (price per kilogram in ₦): | Price (₦) | Qd (thousand kg) | Qs (thousand kg) | |-----------|------------------|------------------| | 100 | 80 | 20 | | 120 | 70 | 35 | | 140 | 55 | 50 | | 160 | 40 | 65 | | 180 | 25 | 80 | Answer the following: a) Determine the market equilibrium price and quantity (use linear interpolation between the relevant points). b) If the government fixes a price ceiling at ₦130 per kilogram, calculate the resulting shortage. c) Using the linear demand curve, compute the consumer surplus that consumers obtain when the price ceiling is in effect (assume only the quantity that is actually supplied is purchased). d) Briefly discuss two likely long‑run consequences of maintaining the price ceiling at ₦130.