Dilip Mookherjee SOLUTIONS TO FINAL EXAMINATION 2007
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چکیده
This is correct if efficiency is defined in terms of labor effort, as the landlord’s share operates like a tax on the returns to a tenant’s effort. However, sharecropping provides insurance to the tenant against fluctuations in crop yield arising from reasons beyond his control, so if this insurance effect is incorporated also in the notion of efficiency then they need not be less efficient than fixed rent contracts (since the latter offers no insurance at all).
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Dilip Mookherjee Solutions to Problem Set
In Year 1, there are only ten factories, which can employ a maximum of 100 workers. Hence most farms will still have all five siblings working there. The total farm income will be $100, so the average product of labor is $20 = 100 5 . The marginal product is 0, since when there are at least three siblings working on the farm, any additional worker does not increase farm income. Consequently two...
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Household i’s utility maximization problem is to maximize min{xi1 λi1 , xi2 λi2 , . . .} subject to Σlpl[xil − ωil] ≤ 0. It is optimal for i to equalize xil λil across all goods (first note it is strictly optimal to equate this ratio across all goods with a positive price, and then adjust the consumption of the free goods so that their ratio is at least as high as for those goods that are expen...
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I am greatly indebted to Dilip Mookherjee for several conversations on this subject, and in particular, for allowing me to borrow freely from our joint introduction to A Reader in Development Economics, London: Blackwell (forthcoming), for the purpose of writing this essay.
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