Neco 2025 Economics Question 37

Practice objective / multiple choice question 37 from the 2025 Neco Economics examination.

Neco 2025 Economics Objective / Multiple Choice Medium Difficulty
Question 37 NECO • 2025 • ECONOMICS • objective

A perfectly competitive market for good X has a linear demand curve \( P = 200 - 4Q \) and a perfectly elastic supply at a price of \( \text{₦}80 \) per unit. The government imposes a specific tax of \( \text{₦}20 \) per unit on producers.\n\n(i) Determine the new equilibrium price paid by consumers and the equilibrium quantity.\n(ii) Calculate the price elasticity of demand at this new equilibrium.\n(iii) State whether the total revenue earned by producers increases, decreases, or remains unchanged after the tax.

Answer Options

A. Consumers pay \\(\\text{₦}90\\), quantity \\(30\\); elasticity \\( -0.5 \\); producer revenue increases
B. Consumers pay \\(\\text{₦}120\\), quantity \\(15\\); elasticity \\( 0 \\); producer revenue unchanged
C. Consumers pay \\(\\text{₦}110\\), quantity \\(20\\); elasticity \\( -2 \\); producer revenue decreases
Correct Answer D. Consumers pay \(\text{₦}100\), quantity \(25\); elasticity \( -1 \); producer revenue decreases
Correct Answer
D
Correct Option:
Consumers pay \(\text{₦}100\), quantity \(25\); elasticity \( -1 \); producer revenue decreases

About This Question

This is Neco 2025 Economics Question 37. It is one of the objective questions from the 2025 Neco Economics examination.

Difficulty level: Medium .

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