Neco 2017 Economics Question 18

Practice objective / multiple choice question 18 from the 2017 Neco Economics examination.

Neco 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 18 NECO • 2017 • ECONOMICS • objective

The market for a good is described by the linear demand curve \(P = 500 - 2Q\) and the linear supply curve \(P = 100 + Q\), where \(P\) is price in ₦ and \(Q\) is quantity. The government imposes a specific tax of \(₦50\) per unit on producers.\n(a) Find the equilibrium price and quantity before the tax.\n(b) Find the new consumer price, producer price (after tax), and quantity after the tax.\n(c) Compute the tax revenue and the dead‑weight loss caused by the tax.\n(d) What proportion of the tax burden falls on consumers?

Answer Options

A. Before tax: P≈₦230.00, Q≈140.00. After tax: consumer price≈₦260.00, producer price≈₦210.00, Q≈120.00. Tax revenue≈₦6,000.00. DWL≈₦400.00. Consumers bear about 70% of the tax.
B. Before tax: P≈₦240.00, Q≈120.00. After tax: consumer price≈₦270.00, producer price≈₦220.00, Q≈115.00. Tax revenue≈₦5,750.00. DWL≈₦450.00. Consumers bear about 65% of the tax.
Correct Answer C. Before tax: P≈₦233.33, Q≈133.33. After tax: consumer price≈₦266.67, producer price≈₦216.67, Q≈116.67. Tax revenue≈₦5,833.33. DWL≈₦416.67. Consumers bear about 66.7% of the tax.
D. Before tax: P≈₦250.00, Q≈125.00. After tax: consumer price≈₦275.00, producer price≈₦225.00, Q≈110.00. Tax revenue≈₦5,500.00. DWL≈₦500.00. Consumers bear about 60% of the tax.
Correct Answer
C
Correct Option:
Before tax: P≈₦233.33, Q≈133.33. After tax: consumer price≈₦266.67, producer price≈₦216.67, Q≈116.67. Tax revenue≈₦5,833.33. DWL≈₦416.67. Consumers bear about 66.7% of the tax.

About This Question

This is Neco 2017 Economics Question 18. It is one of the objective questions from the 2017 Neco Economics examination.

Difficulty level: Medium .

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