Question 45
NECO
•
2025
•
ECONOMICS
•
objective
The market for a good is described by the demand equation \(Q_d = 500 - 2P\) and the supply equation \(Q_s = 3P - 150\), where \(P\) is the price before tax (in naira) and \(Q\) is quantity.\n(a) A specific tax of \(\text{₦}50\) per unit is imposed on sellers. Determine the new consumer price, producer price, the quantity traded, the tax burden on consumers and producers, and the dead‑weight loss.\n(b) The government wishes to raise exactly \(\text{₦}10{,}000\) in tax revenue. Assuming the same demand and supply functions, find the required tax per unit and the resulting dead‑weight loss.
Answer Options
A.
Part (a): Consumer price = 150 naira, Producer price = 120 naira, Quantity = 170 units, Consumer burden = 20 naira/unit, Producer burden = 30 naira/unit, DWL = 1,400 naira. Part (b): Required tax ≈ 58.0 naira per unit, resulting DWL ≈ 2,050 naira.
B.
Part (a): Consumer price = 165 naira, Producer price = 105 naira, Quantity = 185 units, Consumer burden = 25 naira/unit, Producer burden = 25 naira/unit, DWL = 1,600 naira. Part (b): Required tax ≈ 62.5 naira per unit, resulting DWL ≈ 2,300 naira.
Correct Answer
C.
Part (a): Consumer price = 160 naira, Producer price = 110 naira, Quantity = 180 units, Consumer burden = 30 naira/unit, Producer burden = 20 naira/unit, DWL = 1,500 naira. Part (b): Required tax ≈ 59.2 naira per unit, resulting DWL ≈ 2,103 naira.
D.
Part (a): Consumer price = 155 naira, Producer price = 115 naira, Quantity = 175 units, Consumer burden = 35 naira/unit, Producer burden = 15 naira/unit, DWL = 1,250 naira. Part (b): Required tax ≈ 55.0 naira per unit, resulting DWL ≈ 1,800 naira.
Correct Answer
C
Correct Option:
Part (a): Consumer price = 160 naira, Producer price = 110 naira, Quantity = 180 units, Consumer burden = 30 naira/unit, Producer burden = 20 naira/unit, DWL = 1,500 naira. Part (b): Required tax ≈ 59.2 naira per unit, resulting DWL ≈ 2,103 naira.
About This Question
This is
Neco
2025
Economics
Question 45.
It is one of the
objective
questions from the
2025
Neco
Economics
examination.
Difficulty level:
Medium
.