Waec Model Questions Vol1 2019 Economics Question 41
Practice objective / multiple choice question 41 from the 2019 Waec Model Questions Vol1 Economics examination.
The government wants to raise exactly ₦100 million in tax revenue from a specific tax (t Naira per unit) on a commodity. The initial market equilibrium price is ₦100 and quantity is 2,000,000 units. The price elasticity of demand is -0.5 and the price elasticity of supply is 0.8 (both measured at the initial equilibrium). Assuming a linear approximation, the percentage change in quantity equals εd·(ΔPc/P0) = εs·(ΔPp/P0), where ΔPc is the change in price paid by consumers and ΔPp is the change in price received by producers (ΔPc - ΔPp = t). What should be the specific tax per unit (rounded to the nearest Naira) to achieve the revenue target?
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About This Question
This is Waec Model Questions Vol1 2019 Economics Question 41. It is one of the objective questions from the 2019 Waec Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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