Neco Model Questions Vol1 2021 Economics Question 18
Practice objective / multiple choice question 18 from the 2021 Neco Model Questions Vol1 Economics examination.
A government wishes to raise \(\text{₦}2{,}000\) (in thousand Naira) by imposing a specific tax \(t\) per unit on a good. The market without tax has demand \(Q_d = 500 - 2P\) and supply \(Q_s = 3P - 150\), where \(P\) is the price inclusive of tax. After the tax, the equilibrium quantity is \(Q\) and revenue is \(t\times Q = 2{,}000\).\n\n(a) Determine the tax rate \(t\) (in Naira per unit) that will raise exactly \(\text{₦}2{,}000\).\n(b) Using the formula \(\text{DWL}=\frac{1}{2}\,t\,(Q_0-Q)\), where \(Q_0\) is the equilibrium quantity without tax, compute the dead‑weight loss in million Naira, rounded to two decimal places.
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About This Question
This is Neco Model Questions Vol1 2021 Economics Question 18. It is one of the objective questions from the 2021 Neco Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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