Neco Model Questions Vol1 2023 Economics Question 3

Practice essay / theory question 3 from the 2023 Neco Model Questions Vol1 Economics examination. This question covers Elasticity .

Neco Model Questions Vol1 2023 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • essay

A firm sells a commodity in a perfectly competitive market. The market price falls from ₦200 to ₦150 per unit and, as a result, the quantity demanded rises from 5,000 units to 7,500 units per month.

Question Parts

( a )

Calculate the price elasticity of demand using the midpoint (arc) method.

( b )

Classify the demand as elastic, inelastic or unit‑elastic.

( c )

Give two plausible reasons why the demand for this commodity is elastic in the given situation.

( d )

If the firm wishes to increase its total revenue, should it raise or lower the price? Justify your answer using the elasticity concept.

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About This Question

This is Neco Model Questions Vol1 2023 Economics Question 3. It is one of the essay questions from the 2023 Neco Model Questions Vol1 Economics examination.

The question covers Elasticity .

View More Neco Model Questions Vol1 2023 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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