Neco Model Questions Vol1 2017 Economics Question 2

Practice essay / theory question 2 from the 2017 Neco Model Questions Vol1 Economics examination. This question covers Demand and Supply, Derivation of linear equations, Equilibrium price and quantity, Tax incidence .

Neco Model Questions Vol1 2017 Economics Essay / Theory
Topics: Demand and Supply Derivation of linear equations Equilibrium price and quantity Tax incidence
Question 2 NECO_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • essay

In a local market the following observations were recorded: - When the price of a commodity is ₦200 per unit, the quantity demanded is 500 units and the quantity supplied is 200 units. - When the price rises to ₦300 per unit, the quantity demanded falls to 300 units while the quantity supplied rises to 400 units. Assume that both demand and supply are linear over this range.

Question Parts

( a )
Derive the linear demand equation and the linear supply equation from the data given.
( b )
Using the equations obtained in part (a), calculate the equilibrium price and quantity before any tax is imposed.
( c )
A tax of ₦50 per unit is now imposed on sellers. Determine the new equilibrium price paid by buyers, the equilibrium quantity, and state how the tax burden is shared between buyers and sellers.

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About This Question

This is Neco Model Questions Vol1 2017 Economics Question 2. It is one of the essay questions from the 2017 Neco Model Questions Vol1 Economics examination.

The question covers Demand and Supply, Derivation of linear equations, Equilibrium price and quantity, Tax incidence .

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