When weather conditions are highly variable and crop


Following? ?Gibbons,? ?we? ?can? ?represent? ?a? ?standard? ?crop? ?sharing? ?contract? ?algebraically? ?as? ?w? ?=? ?s +? ?by? ?where? ?w? ?equals? ?total? ?compensation,? ?s? ?is? ?the? ?fixed? ?component? ?of? ?compensation,? ?y? ?equals output,? ?and? ?b? ?equals? ?the? ?sharing? ?ratio? ?or? ?percentage? ?of? ?output? ?received? ?by? ?the? ?agent? ?(farmer? ?in this? ?case).? ?Under? ?what? ?conditions,? ?ceteris? ?paribus,? ?would? ?we? ?expect? ?to? ?observe? ?a? ?relatively? ?high value? ?for? ?b? ?(high? ?share? ?of? ?output? ?to? ?farmer)? ?and? ?a? ?relatively? ?low? ?value? ?of? ?s? ?(assured compensation)?

a.? ?When? ?weather? ?conditions? ?are? ?highly? ?variable? ?and? ?crop? ?success? ?therefore? ?highly? ?uncertain. b.? ?When? ?the? ?land? ?is? ?very? ?fertile? ?and? ?productive

c.? ?The? ?farmer? ?has? ?a? ?very? ?strong? ?preference? ?for? ?leisure? ?relative? ?to? ?work

d.? ?The? ?farmer? ?is? ?unusually? ?skilled? ?and? ?willing? ?to? ?assume? ?some? ?risk

e.? ?None? ?of? ?the? ?above

Solution Preview :

Prepared by a verified Expert
Business Management: When weather conditions are highly variable and crop
Reference No:- TGS02477335

Now Priced at $10 (50% Discount)

Recommended (93%)

Rated (4.5/5)