Neco Model Questions Vol1 2023 Economics Question 38

Practice objective / multiple choice question 38 from the 2023 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2023 Economics Objective / Multiple Choice Hard Difficulty
Question 38 NECO_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • objective

The government imposes a price floor of ₦120 per bag of maize. At this price the quantity supplied is 8,000 bags and the quantity demanded is 5,000 bags. If the competitive equilibrium price would be ₦100 with quantity 7,000 bags, calculate (a) the surplus, (b) total revenue to producers, (c) total expenditure by consumers, and (d) the dead‑weight loss caused by the price floor (in naira). Assume linear supply and demand curves.

Answer Options

A. Surplus = 4,000 bags; Producer revenue = ₦1,200,000; Consumer expenditure = ₦800,000; Dead‑weight loss = ₦100,000
B. Surplus = 3,500 bags; Producer revenue = ₦1,050,000; Consumer expenditure = ₦650,000; Dead‑weight loss = ₦90,000
C. Surplus = 2,000 bags; Producer revenue = ₦800,000; Consumer expenditure = ₦500,000; Dead‑weight loss = ₦50,000
Correct Answer D. Surplus = 3,000 bags; Producer revenue = ₦960,000; Consumer expenditure = ₦600,000; Dead‑weight loss = ₦75,000
Correct Answer
D
Correct Option:
Surplus = 3,000 bags; Producer revenue = ₦960,000; Consumer expenditure = ₦600,000; Dead‑weight loss = ₦75,000

About This Question

This is Neco Model Questions Vol1 2023 Economics Question 38. It is one of the objective questions from the 2023 Neco Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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