Neco 2025 Economics Question 3

Practice essay / theory question 3 from the 2025 Neco Economics examination. This question covers Elasticity .

Neco 2025 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO • 2025 • ECONOMICS • essay

The government is considering increasing the price of electricity for households. The price elasticity of demand for electricity is -0.4. The current average monthly consumption per household is 250 kWh at a price of ₦15 per kWh. The government plans to raise the price to ₦18 per kWh. Assuming other factors remain unchanged:

Question Parts

( a )

Calculate the expected percentage change in the quantity demanded of electricity.

( b )

Determine the new average monthly consumption per household (in kWh).

( c )

Compute the change in total monthly expenditure on electricity for a typical household and comment on the likely effect on government revenue if the tax is collected on the price increase.

( d )

Discuss two broader economic impacts of the price increase on households and on the economy as a whole.

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About This Question

This is Neco 2025 Economics Question 3. It is one of the essay questions from the 2025 Neco Economics examination.

The question covers Elasticity .

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