Gce Model Questions Vol1 2025 Economics Question 3

Practice objective / multiple choice question 3 from the 2025 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2025 Economics Objective / Multiple Choice Medium Difficulty
Question 3 GCE_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • objective

A small open economy imports a good. Domestic demand is \(Q_{d}=800-4P\) and domestic supply is \(Q_{s}=2P-200\), where \(P\) is the price in naira. The world price of the good rises from ₦100 to ₦120.\n\n(i) Compute the quantity imported and the total import expenditure at each world price.\n(ii) Determine the change in consumer surplus resulting from the price increase.

Answer Options

Correct Answer A. Imports fall from 400 units (expenditure ₦40,000) to 280 units (expenditure ₦33,600). Consumer surplus decreases by ₦7,200.
B. Imports fall from 400 units (expenditure ₦40,000) to 260 units (expenditure ₦31,200). Consumer surplus decreases by ₦7,800.
C. Imports fall from 420 units (expenditure ₦42,000) to 300 units (expenditure ₦36,000). Consumer surplus decreases by ₦6,800.
D. Imports fall from 380 units (expenditure ₦38,000) to 260 units (expenditure ₦31,200). Consumer surplus decreases by ₦8,400.
Correct Answer
A
Correct Option:
Imports fall from 400 units (expenditure ₦40,000) to 280 units (expenditure ₦33,600). Consumer surplus decreases by ₦7,200.

About This Question

This is Gce Model Questions Vol1 2025 Economics Question 3. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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