Gce Model Questions Vol1 2018 Economics Question 36
Practice objective / multiple choice question 36 from the 2018 Gce Model Questions Vol1 Economics examination.
The market for a good is described by the demand equation \(Q_d = 120 - 2P\) and the supply equation \(Q_s = -20 + 3P\), where \(P\) is the price (in Naira) and \(Q\) the quantity. The government is considering imposing a specific tax of \(t\) Naira per unit on producers. The dead‑weight loss (DWL) from the tax is given by \(\text{DWL}= \tfrac12 t (Q_0 - Q_t)\), where \(Q_0\) is the equilibrium quantity without tax and \(Q_t\) the equilibrium quantity after the tax. The government wants the DWL not to exceed 30 Naira. What is the maximum tax \(t\) (to two decimal places) that satisfies this condition?
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About This Question
This is Gce Model Questions Vol1 2018 Economics Question 36. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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