Neco 2022 Economics Question 3

Practice essay / theory question 3 from the 2022 Neco Economics examination. This question covers Elasticity .

Neco 2022 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO • 2022 • ECONOMICS • essay

The market for bottled water in a Nigerian city experiences a price increase due to a new tax. The price per litre rises from \u20a9150 to \u20a9180. In the same period, the quantity demanded falls from 12,000 litres per week to 9,600 litres per week.

Question Parts

( a )

Calculate the price elasticity of demand (PED) using the midpoint method. Show all steps of your calculation.

( b )

Based on the value obtained, classify the elasticity of demand and explain what it implies for total revenue when price rises.

( c )

If the government raises the tax further, advise whether the revenue from the tax is likely to increase or decrease, giving reasoning based on the elasticity calculated.

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About This Question

This is Neco 2022 Economics Question 3. It is one of the essay questions from the 2022 Neco Economics examination.

The question covers Elasticity .

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