Post Utme Caleb University 2025 Economics Question 16

Practice objective / multiple choice question 16 from the 2025 Post Utme Caleb University Economics examination.

Post Utme Caleb University 2025 Economics Objective / Multiple Choice
Question 16 POST_UTME_CALEB_UNIVERSITY • 2025 • ECONOMICS • objective

The government of Nigeria has introduced a new policy to increase agricultural production. The policy includes providing subsidies to farmers, improving irrigation systems, and increa\sing the use of fertilizers. However, some critics argue that the policy will lead to an increase in food prices, which will negatively affect the poor. U\sing the concept of supply and demand, explain why the critics' argument may be valid.

Answer Options

A. The policy will lead to an increase in food prices because the demand for food is inelastic, meaning that people will continue to buy food even if the price increases.
Correct Answer B. The policy will lead to an increase in food prices because the supply of food will increase, but the demand for food will not increase proportionally.
C. The policy will lead to an increase in food prices because the government's subsidies will increase the \cost of production, which will be passed on to consumers.
D. The policy will lead to an increase in food prices because the policy will lead to a decrease in the supply of food, which will cause prices to rise.
Correct Answer
B
Correct Option:
The policy will lead to an increase in food prices because the supply of food will increase, but the demand for food will not increase proportionally.

About This Question

This is Post Utme Caleb University 2025 Economics Question 16. It is one of the objective questions from the 2025 Post Utme Caleb University Economics examination.

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