Neco 2019 Economics Question 2

Practice essay / theory question 2 from the 2019 Neco Economics examination. This question covers Demand, Supply, Market Equilibrium, Tax Incidence .

Neco 2019 Economics Essay / Theory
Topics: Demand Supply Market Equilibrium Tax Incidence
Question 2 NECO • 2019 • ECONOMICS • essay

The market for bottled water in a city is described by the following linear equations: - Demand: Qd = 500 – 5P - Supply: Qs = 100 + 3P where Q is quantity in thousands of litres per month and P is price in ₦ per litre. The government introduces a specific tax of ₦20 per litre on producers. Answer the following:

Question Parts

( a )
Determine the equilibrium price and quantity before the tax is imposed.
( b )
Write the new supply equation after the tax and calculate the new equilibrium price paid by consumers, the price received by producers, and the equilibrium quantity.
( c )
Compute the total tax revenue earned by the government. Based on the changes in price, discuss which group (consumers or producers) bears a larger share of the tax burden.

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About This Question

This is Neco 2019 Economics Question 2. It is one of the essay questions from the 2019 Neco Economics examination.

The question covers Demand, Supply, Market Equilibrium, Tax Incidence .

View More Neco 2019 Economics Questions More Neco Practice Questions Back to Questions

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