Waec Model Questions Vol1 2020 Economics Question 3

Practice essay / theory question 3 from the 2020 Waec Model Questions Vol1 Economics examination. This question covers Elasticity, Taxation, Revenue .

Waec Model Questions Vol1 2020 Economics Essay / Theory
Topics: Elasticity Taxation Revenue
Question 3 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • essay

The government is considering increasing the excise duty on cigarettes from ₦50 per pack to ₦70 per pack. The price elasticity of demand for cigarettes in Nigeria is estimated to be -0.5. The average weekly consumption per smoker is 2 packs and the total number of smokers is 5 million.

Question Parts

( a )
Calculate the expected percentage change in the quantity demanded of cigarettes as a result of the tax increase.
( b )
Estimate the new total weekly consumption of cigarettes (in packs) after the tax increase.
( c )
Assuming the tax revenue per pack is equal to the excise duty, compute the change in total weekly tax revenue for the government.
( d )
Discuss two possible economic consequences of the tax increase on the market for cigarettes, considering both consumer welfare and government revenue.

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About This Question

This is Waec Model Questions Vol1 2020 Economics Question 3. It is one of the essay questions from the 2020 Waec Model Questions Vol1 Economics examination.

The question covers Elasticity, Taxation, Revenue .

View More Waec Model Questions Vol1 2020 Economics Questions More Waec Model Questions Vol1 Practice Questions Back to Questions

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