Gce Model Questions Vol1 2023 Economics Question 45
Practice objective / multiple choice question 45 from the 2023 Gce Model Questions Vol1 Economics examination.
The market for a good is described by demand \(Q_d = 120 - 2P\) and supply \(Q_s = -20 + P\), where \(P\) is the price paid by consumers (including any tax). The government imposes a specific tax \(t\) per unit that is paid by producers, shifting the supply curve upward by \(t\).\n\n(a) Derive the expression for tax revenue \(R(t)\) as a function of \(t\).\n(b) Find the tax rate \(t\) that maximises revenue and compute the maximum revenue.\n(c) Using the revenue‑maximising tax, calculate the dead‑weight loss (DWL) as a fraction of the maximum revenue.
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About This Question
This is Gce Model Questions Vol1 2023 Economics Question 45. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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