Neco Model Questions Vol1 2020 Government Question 17
Practice objective / multiple choice question 17 from the 2020 Neco Model Questions Vol1 Government examination.
Country X imposes a \(10\%\) tariff on imported wheat. Before the tariff the country imports \(200{,}000\) tonnes at the world price of \(\₦500\) per tonne. The domestic demand curve is \(Q_D = 400{,}000 - 400P\) and the domestic supply curve is \(Q_S = 200P\), where \(P\) is the price in \(\₦\) per tonne. After the tariff the domestic price rises to the world price plus the tariff. The government also introduces a subsidy equal to \(5\%\) of the post‑tariff domestic price, paid to each tonne produced domestically. Calculate the net fiscal balance (tariff revenue minus subsidy cost) for the government.
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About This Question
This is Neco Model Questions Vol1 2020 Government Question 17. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Government examination.
Difficulty level: Hard .
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