Gce Model Questions Vol1 2017 Economics Question 46

Practice objective / multiple choice question 46 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Hard Difficulty
Question 46 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

The wheat market is initially in equilibrium at a price of \(\text{₦}120\) per ton and a quantity of \(150{,}000\) tons. The government introduces a price floor of \(\text{₦}150\) per ton. At this floor, the quantity supplied rises to \(200{,}000\) tons and the quantity demanded falls to \(120{,}000\) tons, with the government purchasing the surplus. Assuming linear demand and supply curves, calculate (a) the total cost to the government of buying the surplus, and (b) the dead‑weight loss created by the price floor.

Answer Options

Correct Answer A. Government cost = ₦12,000,000; dead‑weight loss = ₦1,200,000
B. Government cost = ₦9,600,000; dead‑weight loss = ₦1,000,000
C. Government cost = ₦14,400,000; dead‑weight loss = ₦1,500,000
D. Government cost = ₦12,000,000; dead‑weight loss = ₦2,400,000
Correct Answer
A
Correct Option:
Government cost = ₦12,000,000; dead‑weight loss = ₦1,200,000

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 46. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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