ONLINE EXAMINATION ANSWER SHEET

Matriculation Number: …2022/MBA/21/014…

Programme: …FTMBA….
Course Title: …ECONOMIC ENVIRONMENT OF GLOBAL BUSINESS.....
Course Code: …… MBA103…
Date: …21 JANUARY 2023….
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 DECLARATION OF INTEGRITY FORM

I …NWOSU ISOCHUKWU MICHAEL…. being an MBA student of Lagos Business

School, Pan-Atlantic University with matriculation number 2022/MBA/21/014…. and
qualified under the rules to write the examination in respect of… ECONOMIC
ENVIRONMENT OF GLOBAL BUSINESS…, do at this moment, on my honour solemnly
affirm;
1. That I am eligible to write the examination mentioned above, having regards to
the required attendance.

2. That in writing the examination, I took every reasonable step to ensure that there
was maximum “privacy”, even though I took the examination away from the
campus.

3. That the paper I am submitting as my answer script is the product of my effort

with no help, assistance or support from any other source.

4. I am conscious of my obligations to observe the values of integrity that LBS

espouses.

Name signature of the student: _ISOCHUKWU MICHAEL NWOSU__

Dated: __21 JANUARY 2023__

ANSWERS

QUESTION 1: Explanation of Figure 1

The Diagram shows the interaction between demand and supply.

- Line Do is the Demand Line.

- Line So is the Supply line.

- Point A is the point where Demand meets Supply (the point of equilibrium).

- The Demand line is downward sloping while the supply line is upward moving.
This means that when the Price increases, the willingness to supply increases
while the demand reduces where the price increases and vice versa.

- At point A, the quantity supplied is equal to the quantity Demanded, leading to

an equilibrium. Any other price level, there is a disequilibrium.
 - In summary, the graph shows that at a price of 8,500, the supply of rice is be 1.23
Metric Tons.

QUESTION 2: Explain the changes that has taken place in Figure 2 because of CBN
policy change in the FOREX market.

Figure 2:

ANSWER TO QUESTION 2:

- Discussion in Question 1 above adopted where relevant.

- Line Do is the demand, pre-announcement /restriction..

- Line D1 is the demand, post- announcement /restriction.

- Line So is the supply Pre-announcement / restriction.

- Line S1 is the supply post-announcement / restriction.

 - The movement from point A to point B is change in quantity demanded pre-
announcement/restriction and this is (a reduction) caused by the increase in
price.

- The movement from point C to point D is change in quantity demanded post-

restriction.

QUESTION 3: EXPLAIN POINT A, THE MOVEMENT FROM POINT A TO POINT B

AND THE MOVEMENT FROM POINT A TO POINT C.

- Point A is the point of equilibrium prior to the announcement of the ban on

FOREX, the price was N8,500 and the demand was 1.23 Million Metric Tonnes.

- The Movement from Point A to Point B: Shows that the demand (Do) for rice
decreased to 23,192 when the price rose to N22,000. This shows the change in
quantity demanded pre-announcement/restriction and this is (a reduction)
caused by the increase in price.

- The Movement from Point A to Point C: Shows the new demand and supply
movement (owing to the recent Ban/Restriction). The effect being that, following
the ban, the price of Rice moved from NGN 8,500 to NGN 22,000 and the supply
increased from 1.23M. The movement from point C to point D is change in
quantity demanded owing the new restrictions and difficulty of accessing FOREX.

QUESTION 4: Explain the factor that caused the movement from point A to point B

The movement can be explained by the increase in price from N8,500 to 22,000 which
led to the resultant decrease in demand to 23,192.

QUESTION 5: Explain the factor responsible for the movement from point A to point C

The movement from point A to C can be explained by the increase in Foreign Exchange
cost, import tariff increment of 70% and general inflation.
QUESTION 6: List without explaining the factors responsible for the demand for rice in
Nigeria.

A. Population.

B. Accumulated Wealth.

C. Disposable Income & Poverty Level.

D. The consumer’s expectations.

E. Tastes and preferences.

F. Season/Celebration periods.

The price may not be worth mentioning as a determinant since the demand increased
despite the increase in Price.

QUESTION 7: List without explaining the major factors responsible for the supply of
rice in Nigeria.

A. The Current Russia-Ukraine War (Energy).

B. Availability of Infrastructure (like Transportation)

C. Insecurity Level.

D. Employment Rate.

E. Exchange Rate.

F. Availability of funding.

G. Climate and Weather conditions.

H. Inflation Rate.

I. Technology and Innovation.

J. Government Policy.

K. Investments.

QUESTION 8: From the graph in Figure 2 and the information that Republic of Benin
with a population of 10.8 and 11.7 million people in 2016 and 2017 respectively,
recorded an increase in rice imports from Thailand, from 805,765mt in 2015 to
1,647,387mt in 2017. Has the CBN policy been effective?
From the scenario, the ban of June 2015, (CBN) shows a theoretically sound motive of the
government (to encourage local production). The result however led to a hike of Rice
price from N8,500 – 22,000 per 50kg bag explained by inflation, scarcity and the hike in
exchange rate. The case scenario then showed that Nigeria’s recorded Rice Imports from
Thailand dropped from 1,230,000 MT to 23,192 thousand tonnes by the end of 2017.
However smuggling may be inferred from the statistics of Nigeria’s sister (Republic of
Benin where only 5% consume imported rice) having its import of Thailand Rice
increased from 805,765mt in 2015 to 1,647,387mt in 2017.
In summary, though there is a reputable motive behind the policy, it has not been
effective due to the aforementioned facts.

QUESTION 9: Calculate the elasticity of demand for rice from the information given
in Figure 2.

The basic equation is Qdx = f(px). To find the elasticity, we will need to determine the
percentage change in quantity and the percentage change in price. These results will be
divided against each other.

Elasticity of demand = (% change in quantity demanded) / (% change in price)

= ((Q2 – Q1)/Q1)/((P2-P1)/P1)
From the facts of the case:
Q1 = 1,230,000.00
Q2 = 23,192.00
P1 = NGN 8,500
P2 = NGN 22000
Change in quantity = (23,192 – 1,230,000)/1,230,000 = -0.98114 = -98.11%
Change in Price = (22000 – 8,500)/8500 = 1.588235 = 158.82%
Elasticity = -98.11/158.82 = - 62%
The Elasticity therefore is 62%

QUESTION 10: Explain why you think the government approach is working or not
working. Provide a reasonable solution to rice importation problem based on the
concept demand, supply and equilibrium dynamics.
From the figure 2, it seems that the policy has not been very effective since the overall
aim was to improve local production and (in turn) reduce cost of foods. However, the
reverse was the case.
The crucial issues however point towards corruption, infrastructural empowerment and
smuggling. The best thing for government to do in the circumstance is to facilitate local
production through the provision of basic infrastructure and amenities (especially water,
power and transportation). This will facilitate the local businesses to grow.
Of recent, the statistics shows that local production of rise has continued to grow and as
at 2022 the quantity of milled rice produced in Nigeria was estimated at 5.4 million
metric tons (far above that being imported prior to the ban) 1.
Furthermore, Nigeria has been ranked as the largest producer of rice in West Africa and
Lagos recently launched its Imota Rice Mill estimated to tripple the current production
capacity.
We are making progress and more effort should be put towards empowerment.

1
https://www.statista.com/statistics/1134510/production-of-milled-rice-in-nigeria/