Waec Model Questions Vol1 2024 Government Question 32

Practice objective / multiple choice question 32 from the 2024 Waec Model Questions Vol1 Government examination.

Waec Model Questions Vol1 2024 Government Objective / Multiple Choice Hard Difficulty
Question 32 WAEC_MODEL_QUESTIONS_VOL1 • 2024 • GOVERNMENT • objective

Nigeria is considering imposing a 10 % ad valorem tariff on imported passenger cars. The world price of a typical car is US$20,000. The price elasticity of demand for cars in Nigeria is -1.5, and the price elasticity of supply is 0.5. Assume the market is initially perfectly competitive and that the tariff is fully passed on to consumers (i.e., the domestic price rises by the amount of the tariff). Before the tariff, 10,000 cars were imported annually. Calculate: a) the new domestic price of a car after the tariff, b) the percentage change in quantity demanded, c) the tariff revenue collected per car, d) the total dead‑weight loss (DWL) to the economy per year, using the formula DWL = ½ × |ΔP| × |ΔQ|, where ΔP is the price increase and ΔQ is the change in quantity (in units).

Answer Options

Correct Answer A. a) $22,000; b) -15%; c) $2,000 per car; d) $1,500,000
B. a) $21,000; b) -10%; c) $1,500 per car; d) $1,200,000
C. a) $20,000; b) 0%; c) $0 per car; d) $0
D. a) $22,500; b) -20%; c) $2,500 per car; d) $1,800,000
Correct Answer
A
Correct Option:
a) $22,000; b) -15%; c) $2,000 per car; d) $1,500,000

About This Question

This is Waec Model Questions Vol1 2024 Government Question 32. It is one of the objective questions from the 2024 Waec Model Questions Vol1 Government examination.

Difficulty level: Hard .

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