Neco Model Questions Vol1 2021 Economics Question 42

Practice objective / multiple choice question 42 from the 2021 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 42 NECO_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

A per‑unit tax of N50 is imposed on a good whose demand and supply functions are \(Q_d = 1200 - 4P_c\) and \(Q_s = 200 + 2P_p\) respectively, where \(P_c\) is the price paid by consumers and \(P_p\) is the price received by producers.\n\n(a) Find the equilibrium consumer price, producer price and tax revenue.\n(b) If the tax is increased by 50 % (i.e., to N75), determine the new tax revenue and the dead‑weight loss created by the increase. Express monetary values to the nearest Naira.

Answer Options

Correct Answer A. Consumer price N183.33; Producer price N133.33; Initial tax revenue N23,333. New tax revenue N32,500; Dead‑weight loss N417
B. Consumer price N186.67; Producer price N136.67; Initial tax revenue N24,000. New tax revenue N33,000; Dead‑weight loss N450
C. Consumer price N190.00; Producer price N140.00; Initial tax revenue N25,000. New tax revenue N35,000; Dead‑weight loss N500
D. Consumer price N180.00; Producer price N130.00; Initial tax revenue N22,500. New tax revenue N31,250; Dead‑weight loss N380
Correct Answer
A
Correct Option:
Consumer price N183.33; Producer price N133.33; Initial tax revenue N23,333. New tax revenue N32,500; Dead‑weight loss N417

About This Question

This is Neco Model Questions Vol1 2021 Economics Question 42. It is one of the objective questions from the 2021 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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