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NABTEB ECONOMICS SOLUTIONS
(Answer Number 1 or 2 & Any Other FOUR Questions)
A market is defined as a physical or virtual place where buyers and sellers come together to exchange goods, services, or resources. It is a platform where the forces of demand and supply interact to determine prices and quantities of goods and services exchanged.
(i) Large number of buyers and sellers: In a perfectly competitive market, there are numerous buyers and sellers, none of whom have a significant market share. No individual buyer or seller has the power to influence the market price. Each buyer and seller is a price taker, meaning they accept the prevailing market price.
(ii) Homogeneous products: The goods or services sold in a perfectly competitive market are identical or very similar. This means that buyers perceive no difference in quality, features, or branding between the products offered by different sellers. This feature ensures that buyers make purchasing decisions solely based on price.
(iii) Free entry and exit: In a perfectly competitive market, there are no barriers to entry or exit for new firms. New businesses can easily enter the market if they believe they can make a profit, and existing firms can exit the market if they are unable to compete. This feature promotes competition and prevents long-term economic profits.
(iv) Perfect information: Buyers and sellers in a perfectly competitive market have access to complete and accurate information about prices, quality, availability, and other relevant factors. This information symmetry allows buyers and sellers to make informed decisions and react to changes in market conditions effectively.
(v) Perfect factor mobility: Factors of production, such as labor and capital, can move freely between different firms or industries without any cost or restrictions. This feature ensures that resources can be allocated efficiently to maximize productivity and minimize costs.
(vi) Price determination through market forces: In a perfectly competitive market, prices are determined solely by the forces of demand and supply. The interaction of buyers and sellers in the market leads to an equilibrium price and quantity, where demand equals supply. This equilibrium price is the market-clearing price.
Subsistence farming: Subsistence farming is a traditional agricultural practice in which farmers cultivate crops and rear livestock primarily to meet the needs of their own families or local communities. In Nigeria, subsistence farming is widespread, especially in rural areas. Farmers typically use traditional farming methods and limited resources, such as hand tools and animal power. The focus is on producing enough food to sustain their households rather than generating surplus for commercial purposes. Subsistence farming plays a crucial role in ensuring food security at the local level.
Plantation agriculture: Plantation agriculture involves large-scale cultivation of cash crops, such as cocoa, rubber, oil palm, and cotton, for commercial purposes. It is characterized by the concentration of land, labor, and capital in a single crop production system. In Nigeria, plantation agriculture is commonly associated with crops like oil palm and cocoa. These plantations are typically owned and operated by large companies or individuals who invest in specialized equipment, irrigation systems, and labor to maximize yields and profits.
Cooperative farming: Cooperative farming refers to a system in which farmers pool their resources, land, and labor to collectively cultivate and manage agricultural activities. In Nigeria, cooperative farming can take various forms, such as cooperative societies or farmer cooperatives. Farmers join together to overcome individual constraints, share costs, and access resources collectively. Cooperative farming enables small-scale farmers to leverage economies of scale, access credit facilities, acquire modern inputs, and market their produce collectively.
Mechanized agriculture: Mechanized agriculture involves the use of machinery and advanced technologies to enhance agricultural production. It replaces or augments human labor with machinery for tasks such as land preparation, planting, irrigation, harvesting, and processing. Mechanized agriculture in Nigeria typically involves the use of tractors, combine harvesters, irrigation systems, and other modern equipment. It aims to increase productivity, efficiency, and output by reducing labor requirements and increasing the scale of operations. Mechanized agriculture is often associated with commercial farming enterprises, large-scale production, and integration into global supply chains.
The effects of high of high dependency ratio in Nigeria includes:
(i) Economic burden: A high dependency ratio places a significant economic burden on the working-age population. With a larger proportion of dependents to support, including children and the elderly, there is a strain on resources for basic needs such as food, healthcare, and education. This can lead to reduced savings, lower investment rates, and limited opportunities for economic growth.
(ii) Pressure on social services: The high dependency ratio places increased pressure on social services, particularly in sectors such as healthcare, education, and social welfare. The demand for healthcare services rises due to the larger number of dependents, requiring more medical facilities, personnel, and resources. Similarly, the education system faces challenges in accommodating a higher number of school-aged children, resulting in the need for more schools, teachers, and educational resources.
(iii) Reduced workforce productivity: With a high dependency ratio, a significant portion of the working-age population may be engaged in caregiving responsibilities and providing support to dependents, thereby reducing overall workforce productivity. This can result in lower levels of economic output and hinder economic development and progress.
(iv) Strain on pension and social security systems: A high dependency ratio places strain on pension and social security systems. As the elderly population grows and the working-age population shrinks in proportion, there is a greater demand for pension benefits and social welfare programs. This puts pressure on the sustainability of these systems and may require adjustments, reforms, or increased funding to meet the needs of a larger dependent population.
(v) Implications for social and demographic structure: A high dependency ratio can influence the social and demographic structure of a country. It may result in a “youth bulge,” where there is a higher proportion of young people in the population, potentially leading to challenges related to youth unemployment, social unrest, and the need for adequate youth empowerment programs. Additionally, the aging population puts strain on healthcare systems and raises concerns about the availability of support systems for the elderly.
Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various price levels within a given period, all other factors being constant. It represents the desire, ability, and willingness of consumers to buy a particular product or service. Demand is influenced by various factors such as price, income, consumer preferences, price of related goods, and market expectations.
(i) Price of maize: The price of maize itself is a significant factor that influences demand. As the price of maize decreases, ceteris paribus (all other things being equal), consumers tend to demand more maize due to its affordability. Conversely, if the price of maize rises, demand may decrease as consumers seek alternative goods or reduce their consumption.
(ii) Income levels: The income of consumers plays a crucial role in determining the demand for maize. As income increases, consumers may have more purchasing power and are likely to demand more maize, especially as it is a staple food in Nigeria. Higher income levels enable consumers to afford more maize and potentially increase their consumption.
(iii) Population growth: The population size of Nigeria directly impacts the demand for maize. With a growing population, there is an increased demand for food, including maize. As the population expands, the demand for maize can rise due to the need to feed more people, especially considering maize’s importance as a dietary staple.
(iv) Consumer preferences and dietary habits: Consumer preferences and dietary habits also influence the demand for maize. If maize is widely regarded as a preferred or culturally significant food item in Nigeria, the demand is likely to be higher. Additionally, changes in dietary patterns and preferences, such as an increased focus on healthier or alternative food choices, can impact the demand for maize.
(v) Government policies and subsidies: Government policies and subsidies can significantly influence the demand for maize in Nigeria. Policies related to agricultural subsidies, trade restrictions, import/export regulations, and price controls can directly impact the availability and affordability of maize. For example, subsidies on maize production or transportation can increase supply and potentially lower prices, leading to increased demand.
A cooperative society is a voluntary association of individuals who come together to achieve common economic, social, and cultural objectives. It is an autonomous organization owned and operated by its members, who actively participate in its activities and share in its benefits.
(i) Ownership: Co-operative societies are owned by people with common interest.
This makes ownership to be restricted as some conditions must be met before one
becomes a member. The conditions are in place to ensure that the cooperative remains in line with the collective interests and objectives of its members. By having specific requirements for ownership, the cooperative fosters a sense of shared responsibility and encourages active participation among its members.
(ii) Formation: Co-operative societies are formed by two or more persons but there is no stipulated maximum number of persons. This flexibility allows for a diverse range of members to come together and establish a cooperative society based on shared interests and goals.
(iii) Objective: The aim and objective of the society is to promote and advance the interest of their members, by rendering services to them. Through the provision of these services, the society aims to support and empower its members, enabling them to achieve their goals and enhance their overall well-being.
(iv) Management: The control and management of the society is vested in an elected committee whose members must be members of the society. This feature ensures that the management decisions and actions are undertaken by individuals who are directly invested in the society’s goals and interests, promoting a sense of responsibility and accountability among the committee members.
(v) Democratic in nature: The activities of co-operative societies are democratic in nature. Each member is entitled to one vote, irrespective of the number of shares held. This democratic principle ensures equal participation and decision-making power among members, fostering a sense of fairness and inclusivity within the cooperative society.