Neco Model Questions Vol1 2022 Economics Question 48

Practice objective / multiple choice question 48 from the 2022 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2022 Economics Objective / Multiple Choice Hard Difficulty
Question 48 NECO_MODEL_QUESTIONS_VOL1 • 2022 • ECONOMICS • objective

The government introduces a per‑kilogram subsidy of \(\₦30\) to wheat producers. Before the subsidy, the market supply function is \(Q_s = 20P - 400\) and the demand function is \(Q_d = 8000 - 10P\), where \(P\) is the price (in \(\₦\) per kg) and \(Q\) is quantity in kilograms. Determine (a) the new equilibrium price paid by consumers, (b) the equilibrium quantity, (c) the total fiscal cost of the subsidy, and (d) the dead‑weight loss arising from the subsidy.

Answer Options

A. Consumer price = \\₦270 per kg; Quantity = 5400 kg; Fiscal cost = \\₦162000; Deadweight loss = \\₦4000
B. Consumer price = \\₦260 per kg; Quantity = 5600 kg; Fiscal cost = \\₦168000; Deadweight loss = \\₦3500
Correct Answer C. Consumer price = \₦260 per kg; Quantity = 5400 kg; Fiscal cost = \₦162000; Deadweight loss = \₦3000
D. Consumer price = \\₦250 per kg; Quantity = 5300 kg; Fiscal cost = \\₦132500; Deadweight loss = \\₦2500
Correct Answer
C
Correct Option:
Consumer price = \₦260 per kg; Quantity = 5400 kg; Fiscal cost = \₦162000; Deadweight loss = \₦3000

About This Question

This is Neco Model Questions Vol1 2022 Economics Question 48. It is one of the objective questions from the 2022 Neco Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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