Waec Model Questions Vol1 2020 Economics Question 26

Practice objective / multiple choice question 26 from the 2020 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2020 Economics Objective / Multiple Choice Hard Difficulty
Question 26 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • objective

A city transport authority operates a bus service. The daily fixed cost is N200,000 and the variable cost is N200 per passenger. The current fare is N1,500 and the average daily ridership is 200 passengers, giving a profit of N60,000. The government now imposes a per‑passenger tax of N50, but offers a subsidy of N30 per passenger if the fare is kept below N1,000. The demand for the service is linear: when the fare rises by 5% (from N1,500 to N1,575) ridership falls by 8% (from 200 to 184). Determine the fare (in whole Naira) that will allow the authority to break even (profit = N60,000). State both possible fare levels and the corresponding passenger numbers.

Answer Options

A. Fare ≈ N70 (with subsidy) with about 5,400 passengers, or Fare ≈ N2,200 (no subsidy) with about 1,150 passengers
Correct Answer B. Fare ≈ N81 (with subsidy) with about 4,838 passengers, or Fare ≈ N2,459 (no subsidy) with about 1,042 passengers
C. Fare ≈ N90 (with subsidy) with about 4,500 passengers, or Fare ≈ N2,600 (no subsidy) with about 950 passengers
D. Fare ≈ N75 (with subsidy) with about 5,200 passengers, or Fare ≈ N2,300 (no subsidy) with about 1,100 passengers
Correct Answer
B
Correct Option:
Fare ≈ N81 (with subsidy) with about 4,838 passengers, or Fare ≈ N2,459 (no subsidy) with about 1,042 passengers

About This Question

This is Waec Model Questions Vol1 2020 Economics Question 26. It is one of the objective questions from the 2020 Waec Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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