Correct Option: D. Higher price of lace material in Nigeria Explanation of the Correct Answer: When the sale of lace materials is prohibited in Nigeria, several economic principles come into play that lead to an increase in the price of lace materials. Here’s a step-by-step breakdown of why option D is correct:

1. Understanding Supply and Demand:
2. The price of any good, including lace materials, is determined by the interaction of supply and demand in the market. When demand for a product remains constant but supply is restricted, prices tend to rise.
3. Impact of Prohibition:
4. By prohibiting the sale of lace materials, the government effectively reduces the supply available in the market. This means that fewer lace materials are available for consumers to purchase.
5. Demand Remains Constant:
6. Assuming that the demand for lace materials does not change (people still want to buy lace), the reduction in supply leads to a situation where there are more buyers than available products. This imbalance creates upward pressure on prices.
7. Market Dynamics:
8. In a free market, when the supply of a good decreases while demand remains the same, sellers can charge higher prices because consumers are willing to pay more to obtain the limited quantity available. This is a classic case of the law of supply and demand.
9. Consumer Behavior:
10. Consumers may perceive lace materials as more valuable when they are scarce. This perception can further drive up prices as buyers compete for the limited supply.

Why the Other Options are Incorrect:

• Option A: Increase supply of lace material in Nigeria:
• This option is incorrect because prohibiting the sale of lace materials directly reduces the supply available in the market. A prohibition does not encourage production or availability; rather, it restricts it.
• Option B: Production of better quality lace abroad:
• While it is possible that producers in other countries might respond to the prohibition by improving quality, this option does not directly relate to the immediate effect of the prohibition on prices within Nigeria. The focus of the question is on the domestic market, where the prohibition leads to higher prices due to reduced supply.
• Option C: Lower price of lace material in Nigeria:
• This option is also incorrect. A lower price would typically occur if there were an increase in supply or a decrease in demand. However, since the prohibition reduces supply, prices are expected to rise, not fall.

Summary of Key Points:

• Prohibiting the sale of lace materials reduces the supply available in the market.
• With demand remaining constant, the reduced supply leads to higher prices due to the law of supply and demand.
• Consumers may perceive the remaining lace materials as more valuable, further driving up prices.
• The other options either misinterpret the effects of prohibition or focus on unrelated aspects of production and quality.

This thorough understanding of market dynamics will help you grasp the implications of supply restrictions in economics, particularly in relation to pricing mechanisms.