Neco 2022 Economics Question 6

Practice essay / theory question 6 from the 2022 Neco Economics examination. This question covers Market Structures .

Neco 2022 Economics Essay / Theory

Topic: Market Structures

Question 6 NECO • 2022 • ECONOMICS • essay

The market for a certain agricultural commodity is described by the inverse demand function P = 200 - 0.5Q, where P is the price per tonne (in Naira) and Q is the quantity demanded (in tonnes). The market supply is perfectly elastic at a price of ₦80 per tonne, reflecting a large number of small producers with constant marginal cost of ₦80.

Question Parts

( a )

Determine the equilibrium price and quantity in this market. Explain briefly why the market is classified as perfectly competitive.

( b )

Calculate the price elasticity of demand at the equilibrium quantity and interpret the result.

( c )

Suppose the government imposes a per‑tonne tax of ₦20 on producers. Assuming the supply remains perfectly elastic at the pre‑tax marginal cost, determine the new equilibrium price paid by consumers, the price received by producers, and compute the dead‑weight loss (DWL) caused by the tax. Show all steps.

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About This Question

This is Neco 2022 Economics Question 6. It is one of the essay questions from the 2022 Neco Economics examination.

The question covers Market Structures .

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