Neco Model Questions Vol1 2025 Economics Question 3

Practice essay / theory question 3 from the 2025 Neco Model Questions Vol1 Economics examination. This question covers Elasticity .

Neco Model Questions Vol1 2025 Economics Essay / Theory

Topic: Elasticity

Question 3 NECO_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • essay

A firm sells a product whose market demand is described by the linear equation Q = 500 - 5P, where Q is the quantity demanded per month and P is the price per unit in Naira.

Question Parts

( a )

State the formula for the point price elasticity of demand and explain each component.

( b )

Calculate the price elasticity of demand when the price rises from N40 to N44. Use the derivative method (point elasticity).

( c )

Interpret the magnitude of the elasticity obtained in part (b). State whether demand is elastic, inelastic or unit‑elastic and justify your answer.

( d )

Based on the elasticity result, advise the firm whether it should raise the price from N40 to N44 if its objective is to increase total revenue. Explain the reasoning behind your advice.

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About This Question

This is Neco Model Questions Vol1 2025 Economics Question 3. It is one of the essay questions from the 2025 Neco Model Questions Vol1 Economics examination.

The question covers Elasticity .

View More Neco Model Questions Vol1 2025 Economics Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

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