Neco Model Questions Vol1 2018 Economics Question 39

Practice objective / multiple choice question 39 from the 2018 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2018 Economics Objective / Multiple Choice Medium Difficulty
Question 39 NECO_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

A product is currently sold at \(\text{₦}120\) per unit and 800 units are sold each month. The price is increased by 12 %. The price elasticity of demand at the original price is \(E_d = -1.8\).\n(a) Estimate the new quantity demanded using the point‑elasticity approximation.\n(b) Compute the total revenue before and after the price change (rounded to the nearest \(\text{₦}\)).\n(c) State whether total revenue has increased or decreased.

Answer Options

A. Quantity ≈ 560 units; revenue rises to ₦75,200 (increase)
Correct Answer B. Quantity ≈ 627 units; revenue falls to ₦84,300 (decrease)
C. Quantity ≈ 720 units; revenue falls to ₦96,800 (decrease)
D. Quantity ≈ 680 units; revenue falls to ₦91,200 (decrease)
Correct Answer
B
Correct Option:
Quantity ≈ 627 units; revenue falls to ₦84,300 (decrease)

About This Question

This is Neco Model Questions Vol1 2018 Economics Question 39. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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