Waec Model Questions Vol1 2023 Economics Question 6

Practice essay / theory question 6 from the 2023 Waec Model Questions Vol1 Economics examination. This question covers Market Structures .

Waec Model Questions Vol1 2023 Economics Essay / Theory
Topic: Market Structures
Question 6 WAEC_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • essay

Consider the market for a particular agricultural commodity in Nigeria. The market is characterized by many small producers, a homogeneous product, free entry and exit, and price‑taking behaviour. The government has recently introduced a price ceiling of ₦150 per kg, which lies below the market‑clearing equilibrium price.

Question Parts

( a )
Identify the market structure that best describes the situation before the price ceiling and list its four main characteristics.
( b )
Using a standard supply‑and‑demand diagram (describe it verbally), explain the short‑run impact of the price ceiling on (i) equilibrium price and quantity, (ii) consumer surplus, (iii) producer surplus, and state whether a shortage or surplus arises.
( c )
Suppose the government removes the price ceiling and instead offers a subsidy of ₦30 per kg to producers. Explain how this subsidy would affect the supply curve and illustrate the likely new equilibrium price and quantity. Discuss the likely effect on total welfare.
( d )
Compare and contrast the efficiency of the market outcomes under (i) perfect competition with no intervention, (ii) the price ceiling, and (iii) the producer subsidy. Use the concepts of allocative efficiency and Pareto optimality in your discussion.

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About This Question

This is Waec Model Questions Vol1 2023 Economics Question 6. It is one of the essay questions from the 2023 Waec Model Questions Vol1 Economics examination.

The question covers Market Structures .

View More Waec Model Questions Vol1 2023 Economics Questions More Waec Model Questions Vol1 Practice Questions Back to Questions

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