Question 50
NECO
•
2025
•
AGRICULTURAL_SCIENCE
•
objective
The market for yam is described by the linear demand equation \(Q_{d}=120-2P\) (where \(Q\) is in thousand tonnes and \(P\) in \(\text{₦}\) per tonne) and the supply equation \(Q_{s}=4P-20\). The government is considering a per‑tonne tax of \(\text{₦}10\) on producers.\n\n(a) Find the equilibrium price and quantity before the tax.\n(b) After the tax, determine the price received by producers (net of tax) and the price paid by consumers.\n(c) Compute the change in consumer surplus, producer surplus and the total tax revenue.\n(d) Calculate the dead‑weight loss caused by the tax.
Answer Options
A.
Equilibrium before tax: P≈₦20.00, Q≈80.00 thousand tonnes. After tax: producers receive ₦18, consumers pay ₦28, Q=65 thousand tonnes. Consumer surplus falls by ₦420 000, producer surplus falls by ₦210 000; tax revenue = ₦650 000. Dead‑weight loss ≈ ₦55 000.
Correct Answer
B.
Equilibrium before tax: P≈₦23.33, Q≈73.33 thousand tonnes. After tax: producers receive ₦20, consumers pay ₦30, Q=60 thousand tonnes. Consumer surplus falls by ₦444 000, producer surplus falls by ₦222 000; tax revenue = ₦600 000. Dead‑weight loss ≈ ₦66 000.
C.
Equilibrium before tax: P≈₦23.33, Q≈73.33 thousand tonnes. After tax: producers receive ₦19, consumers pay ₦29, Q=62 thousand tonnes. Consumer surplus falls by ₦440 000, producer surplus falls by ₦215 000; tax revenue = ₦620 000. Dead‑weight loss ≈ ₦60 000.
D.
Equilibrium before tax: P≈₦25.00, Q≈70.00 thousand tonnes. After tax: producers receive ₦22, consumers pay ₦32, Q=58 thousand tonnes. Consumer surplus falls by ₦460 000, producer surplus falls by ₦230 000; tax revenue = ₦580 000. Dead‑weight loss ≈ ₦70 000.
Correct Answer
B
Correct Option:
Equilibrium before tax: P≈₦23.33, Q≈73.33 thousand tonnes. After tax: producers receive ₦20, consumers pay ₦30, Q=60 thousand tonnes. Consumer surplus falls by ₦444 000, producer surplus falls by ₦222 000; tax revenue = ₦600 000. Dead‑weight loss ≈ ₦66 000.
About This Question
This is
Neco
2025
Agricultural Science
Question 50.
It is one of the
objective
questions from the
2025
Neco
Agricultural Science
examination.
Difficulty level:
Hard
.