Neco Model Questions Vol1 2018 Economics Question 2

Practice essay / theory question 2 from the 2018 Neco Model Questions Vol1 Economics examination. This question covers Demand, Supply, Market Equilibrium, Income Effect, Tax Incidence .

Neco Model Questions Vol1 2018 Economics Essay / Theory
Topics: Demand Supply Market Equilibrium Income Effect Tax Incidence
Question 2 NECO_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • essay

The market for a locally produced textile in Nigeria is described by the following linear equations (quantities in thousands of units, price in ₦ per unit): Quantity demanded: Qd = 200 – 2P Quantity supplied: Qs = 20 + 3P

Question Parts

( a )
Determine the equilibrium price and quantity. Show all steps.
( b )
Suppose consumers’ income rises, shifting the demand curve rightward so that at each price the quantity demanded increases by 20 %. Write the new demand equation, find the new equilibrium price and quantity, and calculate the percentage change in price and quantity relative to the original equilibrium.
( c )
The government imposes a specific tax of ₦10 per unit on producers. Assuming the tax is fully borne by producers, adjust the supply equation, find the new equilibrium price paid by consumers and the price received by producers, and comment on the likely effect on the quantity traded.

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About This Question

This is Neco Model Questions Vol1 2018 Economics Question 2. It is one of the essay questions from the 2018 Neco Model Questions Vol1 Economics examination.

The question covers Demand, Supply, Market Equilibrium, Income Effect, Tax Incidence .

View More Neco Model Questions Vol1 2018 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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