Gce Model Questions Vol1 2025 Economics Question 6

Practice essay / theory question 6 from the 2025 Gce Model Questions Vol1 Economics examination. This question covers Market Structures .

Gce Model Questions Vol1 2025 Economics Essay / Theory
Topic: Market Structures
Question 6 GCE_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • essay

The government is contemplating the introduction of a price ceiling of ₦150 on a staple food item that is currently sold in a perfectly competitive market. The market equilibrium price is ₦180 and the equilibrium quantity is 10,000 units per month. The price elasticity of demand for the product is –0.6 and the price elasticity of supply is 0.8.

Question Parts

( a )
Explain, with reference to the characteristics of perfect competition, how the market would adjust to the imposed price ceiling in the short run.
( b )
Calculate the expected percentage change in quantity demanded and quantity supplied resulting from the price ceiling. Then find the new quantities demanded and supplied.
( c )
Evaluate the likely welfare effects of the price ceiling, commenting on consumer surplus, producer surplus and dead‑weight loss, using the quantities you have calculated.
( d )
Suggest one alternative policy instrument that could achieve the same consumer benefit without creating a dead‑weight loss, and justify your suggestion.

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About This Question

This is Gce Model Questions Vol1 2025 Economics Question 6. It is one of the essay questions from the 2025 Gce Model Questions Vol1 Economics examination.

The question covers Market Structures .

View More Gce Model Questions Vol1 2025 Economics Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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