Neco Model Questions Vol1 2022 Economics Question 3

Practice essay / theory question 3 from the 2022 Neco Model Questions Vol1 Economics examination. This question covers Elasticity .

Neco Model Questions Vol1 2022 Economics Essay / Theory
Topic: Elasticity
Question 3 NECO_MODEL_QUESTIONS_VOL1 • 2022 • ECONOMICS • essay

A small electronics retailer observes that the quantity demanded for a particular model of smartphone is related to its price by the demand function Q = 200 - 5P, where Q is quantity demanded per month and P is price in naira.

Question Parts

( a )
Define price elasticity of demand and state the formula used to compute it.
( b )
Calculate the price elasticity of demand for this smartphone when the price is ₦20. Show all steps and indicate whether demand is elastic, inelastic or unit‑elastic at that price.
( c )
If the retailer raises the price by 10 % from ₦20, predict the likely percentage change in total revenue and explain the reasoning using the elasticity result obtained in part (b).
( d )
Identify two possible factors that could shift the demand curve for this smartphone and discuss qualitatively how each factor would affect the price elasticity of demand.

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About This Question

This is Neco Model Questions Vol1 2022 Economics Question 3. It is one of the essay questions from the 2022 Neco Model Questions Vol1 Economics examination.

The question covers Elasticity .

View More Neco Model Questions Vol1 2022 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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