Advancing desertification in Northern Nigeria significantly reduces the availability of fertile agricultural land, leading to a structural decline in crop production. Which of the following best describes the economic impact of this environmental degradation on the food market?
- A leftward shift of the supply curve, leading to higher equilibrium prices and reduced quantity traded.Answer
- BA movement down along the existing supply curve, resulting in lower market prices.
- CAn increase in consumer surplus resulting from the contraction of agricultural market output.
- DA rightward shift of the demand curve caused directly by the drop in farm output.
Answer
A leftward shift of the supply curve, leading to higher equilibrium prices and reduced quantity traded.
Environmental degradation like desertification degrades arable land quality and availability in Northern Nigeria. In microeconomics, a reduction in productive capacity acts as a negative supply shock, shifting the entire supply curve to the left. As a result, the market reaches a new equilibrium characterized by higher food prices and lower output.
Step-by-Step Solution
Key Concept
Impact of Environmental Degradation on Market Supply and Resource Allocation
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