Question

**Suppose the tenant-landlord relationship involves
sharing of costs (e.g. application of fertilizer at different
times). Show (using graphs) that sharecropping might be efficient
in this case. (Hint: split both the cost curve and output
curve).**

Answer #1

Compared to fixed rent contract sharecropping is ineffective since less than optimal labor is supplied. But if inputs are shared then marginal cost are lower and we get more labor effort supplied as compared to the case without input sharing.

Yes it is true that this may not lead us back to the exact
original equilibrium as in fixed rent case but just that there is
possibility that it might be so **that
sharecropping might be efficient in this case.**

If inputs are shared, MC is lower. Labor supply also increases. Where L falls will be ambiguous, somewhere in between the efficient output level and above sharecropping output level.

Olivia likes to eat both apples and bananas. At the grocery
store, each apple costs $0.20 and each banana cost $0.25. Olivia’s
utility function for apples and bananas is given by U(A, B) = 6
(AB)1/2 . If Olivia has $4 to spend on apples and bananas, how many
of each should she buy to maximize her satisfaction?
Use the tangency condition to find the
optimal amount of A to relative to B .
MUA/PA = MUB/PB
Now plug this...

Total utility can be objectively measured in numbers that
indicate usefulness or benefit to the consumer.
____ 2. Consumers should purchase quantities of a good to the
point where MU > P.
____ 3. Voluntary exchange requires that there must be mutual
gain.
____ 4. Points along a budget line represent the maximum
combinations of two commodities that a consumer can afford.
____ 5. The budget line represents a consumer's preferences
for a commodity.
____ 6. A change in consumer...

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