Neco 2020 Economics Question 3

Practice essay / theory question 3 from the 2020 Neco Economics examination. This question covers Elasticity .

Neco 2020 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO • 2020 • ECONOMICS • essay

The table below shows the price (in Naira) and the corresponding quantity demanded (in units) of a particular commodity over two consecutive periods. | Period | Price (₦) | Quantity Demanded (units) | |--------|-----------|---------------------------| | 1 | 200 | 500 | | 2 | 250 | 400 | Using the information provided, answer the following questions:

Question Parts

( a )

Calculate the price elasticity of demand between Period 1 and Period 2 using the midpoint (arc) method.

( b )

Interpret the magnitude of the elasticity you obtained. State whether demand is elastic, inelastic or unit‑elastic and explain what this implies for total revenue when price rises from ₦200 to ₦250.

( c )

Discuss at least three factors that could cause the demand for this commodity to be elastic.

( d )

Based on your calculation and interpretation, advise a firm that sells this commodity on how it should respond to a cost‑push increase that would force it to raise its price from ₦200 to ₦250.

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About This Question

This is Neco 2020 Economics Question 3. It is one of the essay questions from the 2020 Neco Economics examination.

The question covers Elasticity .

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