Neco 2023 Economics Question 2

Practice essay / theory question 2 from the 2023 Neco Economics examination. This question covers Demand, Supply, Equilibrium, Tax incidence, Elasticity .

Neco 2023 Economics Essay / Theory
Topics: Demand Supply Equilibrium Tax incidence Elasticity
Question 2 NECO • 2023 • ECONOMICS • essay

The market for bottled drinking water in Lagos has been observed over six months. The table shows the average monthly price (₦ per litre) together with the corresponding quantity demanded and quantity supplied (in thousands of litres).

Question Parts

( a )
From the data given, estimate the equilibrium price and equilibrium quantity (in thousands of litres) that would exist if the market were perfectly competitive. Show the method you use.
( b )
The government introduces a specific tax of ₦20 per litre on bottled water. Explain qualitatively how this tax will affect (i) the price paid by consumers and (ii) the price received by producers. Indicate the direction of the shift in the supply curve and the likely change in equilibrium quantity.
( c )
If the price of a close substitute – soft drink – falls, describe the expected impact on the demand for bottled water and the resulting equilibrium in the bottled‑water market.
( d )
Using the midpoint method, calculate the price elasticity of demand between the price points ₦30 and ₦40. Use the quantities demanded from the table.

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About This Question

This is Neco 2023 Economics Question 2. It is one of the essay questions from the 2023 Neco Economics examination.

The question covers Demand, Supply, Equilibrium, Tax incidence, Elasticity .

View More Neco 2023 Economics Questions More Neco Practice Questions Back to Questions

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