Neco Model Questions Vol1 2017 Economics Question 3

Practice essay / theory question 3 from the 2017 Neco Model Questions Vol1 Economics examination. This question covers Elasticity .

Neco Model Questions Vol1 2017 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • essay

The table below shows the quantity demanded of a locally produced mobile phone model at different price levels. | Price (₦) | Quantity Demanded (units) | |-----------|---------------------------| | 15,000 | 8,000 | | 20,000 | 6,500 | | 25,000 | 5,200 | | 30,000 | 4,300 | Using this information, answer the following questions:

Question Parts

( a )

Calculate the price elasticity of demand between the price points ₦20,000 and ₦25,000 using the midpoint (arc) method. State whether demand is elastic, inelastic or unit‑elastic in this range.

( b )

Based on the elasticity calculated in part (a), explain how total revenue will change if the price is increased from ₦20,000 to ₦25,000.

( c )

The government imposes a specific tax of ₦5,000 per unit on this phone. Discuss the likely impact on (i) the equilibrium price paid by consumers, (ii) the equilibrium quantity sold, and (iii) how the tax burden is shared between consumers and producers.

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About This Question

This is Neco Model Questions Vol1 2017 Economics Question 3. It is one of the essay questions from the 2017 Neco Model Questions Vol1 Economics examination.

The question covers Elasticity .

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