Neco 2019 Economics Question 3

Practice essay / theory question 3 from the 2019 Neco Economics examination. This question covers Elasticity, Price elasticity of demand, Total revenue, Tax incidence .

Neco 2019 Economics Essay / Theory

Topics: Elasticity Price elasticity of demand Total revenue Tax incidence

Question 3 NECO • 2019 • ECONOMICS • essay

The table below shows the quantity demanded of a commodity at different prices in a competitive market. | Price (₦) | Quantity Demanded (units) | |-----------|---------------------------| | 200 | 500 | | 150 | 800 | | 100 | 1300 | Using this information, answer the following questions.

Question Parts

( a )

Calculate the price elasticity of demand between the price of ₦200 and ₦150 using the midpoint (arc) method. Show all steps.

( b )

Interpret the elasticity coefficient obtained in part (a). State what it implies for total revenue when the price falls from ₦200 to ₦150.

( c )

The government imposes a specific tax of ₦20 per unit on this commodity. Discuss how the tax burden will be shared between consumers and producers, using the elasticity result from part (a).

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About This Question

This is Neco 2019 Economics Question 3. It is one of the essay questions from the 2019 Neco Economics examination.

The question covers Elasticity, Price elasticity of demand, Total revenue, Tax incidence .

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