Waec Model Questions Vol1 2020 Economics Question 2

Practice essay / theory question 2 from the 2020 Waec Model Questions Vol1 Economics examination. This question covers Demand and Supply, Elasticity, Tax Incidence, Consumer and Producer Surplus .

Waec Model Questions Vol1 2020 Economics Essay / Theory
Topics: Demand and Supply Elasticity Tax Incidence Consumer and Producer Surplus
Question 2 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • essay

The market for cigarettes in Nigeria is represented by linear demand and supply curves. At the original equilibrium the price of a pack is ₦200 and the quantity sold is 5,000 packs per month. When the price is ₦250, the quantity demanded falls to 4,000 packs. When the price is ₦150, the quantity supplied rises to 3,000 packs. The government then imposes a specific excise tax of ₦50 per pack on cigarettes.

Question Parts

( a )
Derive the equations of the original demand and supply curves.
( b )
Calculate the new equilibrium price paid by consumers, the price received by producers, and the equilibrium quantity after the ₦50 tax is imposed.
( c )
Briefly discuss the impact of the tax on (i) consumer surplus, (ii) producer surplus and (iii) government revenue.

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About This Question

This is Waec Model Questions Vol1 2020 Economics Question 2. It is one of the essay questions from the 2020 Waec Model Questions Vol1 Economics examination.

The question covers Demand and Supply, Elasticity, Tax Incidence, Consumer and Producer Surplus .

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