Neco 2021 Economics Question 3

Practice essay / theory question 3 from the 2021 Neco Economics examination. This question covers Elasticity .

Neco 2021 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO • 2021 • ECONOMICS • essay

The price of wheat in a local market increased from \u20a4200 per kilogram to \u20a4250 per kilogram over one year. During the same period the quantity of wheat purchased by households fell from 5,000 kg to 4,000 kg.

Question Parts

( a )

Calculate the price elasticity of demand for wheat using the midpoint (arc) method.

( b )

Classify the elasticity obtained and explain what it implies for total revenue when price changes.

( c )

The government is considering imposing a price ceiling of \u20a4220 per kilogram on wheat. Using the elasticity concept, advise whether this policy is likely to increase total revenue for wheat sellers and justify your answer.

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About This Question

This is Neco 2021 Economics Question 3. It is one of the essay questions from the 2021 Neco Economics examination.

The question covers Elasticity .

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