(a)(i) State the law of diminishing returns [2 marks} (ii) Explain the main cause of diminishing returns in agricultural production. [2 marks] (b) A commerc...

Answer Details

(a)(i) Law of diminishing returns. It states that as successive (equal) units of a variable input (such as fertiliser or labour) are added to a fixed input (such as a fixed piece of land), the extra (marginal) output first rises, then reaches a maximum, and thereafter declines. In other words, beyond a certain point each additional unit of the variable input yields a progressively smaller addition to total output.

(ii) Main cause of diminishing returns. It arises because one factor of production (the land) is fixed while the other factor is varied. As more of the variable input is crowded onto the same fixed area, each extra unit has proportionately less of the fixed factor to work with, so its productivity falls. The fixed factor becomes over-utilised (for example the soil nutrients, space, moisture and light per plant become inadequate), and eventually the marginal product declines.

(b) Depreciation of the combine harvester.

Cost price in 1990 = N100,000.00; resale price in 2000 = N30,000.00; useful life = 2000 \(-\) 1990 = 10 years.

(i) Salvage value = the resale (scrap) value at disposal = N30,000.00.

(ii) Total depreciation = cost price \(-\) salvage value

\[ = N100{,}000 - N30{,}000 = N70{,}000.00 \]

(iii) Annual depreciation (straight-line method) = total depreciation \(\div\) number of years

\[ = \frac{N70{,}000}{10} = N7{,}000.00 \text{ per year} \]

(c) Seven problems of agricultural extension services in West Africa:

1. Inadequate funding of extension programmes by government.
2. Shortage of well-trained and qualified extension personnel.
3. Poor transport and communication facilities, making rural areas hard to reach.
4. High farmer-to-extension-agent ratio, so agents are overworked and cannot reach all farmers.
5. High level of illiteracy among farmers, which hinders the adoption of new techniques.
6. Poor linkage between research institutes, extension agents and farmers, so improved technologies do not reach the farm.
7. Inadequate teaching aids, demonstration materials and improved inputs for extension work.