A farmer works on a plot of land owned by a landlord. The figure below illustrates the feasible combinations of free time and bushels of grain. 100 85 X 25 20 12 14 24 Hours of free time Bushels
A farmer works on a plot of land owned by a landlord. The figure below illustrates the feasible combinations of free time and bushels of grain. 100 85 X 25 20 12 14 24 Hours of free time Bushels
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Can you please answer Q4?
![Sharing the Surplus
A farmer works on a plot of land owned by a landlord. The figure below illustrates the
feasible combinations of free time and bushels of grain.
100
85
X
25
20
12
14
24
Hours of free time
1.
Why does the farmer's feasible frontier slope down? Why is it concave?
2.
The farmer's reservation option is a job that pays 20 bushels of grain for 10
hours of work - this option is labeled Z in the figure. What is the name of the curve
running through Z? What does this curve illustrate? Why does it have the shape it
has?
3.
If the landlord knows the farmer's feasible frontier, along with the other
curve given in the figure, then they will make the take-it-or-leave-it offer implied
by point X in the figure. How does this point relate to the distance between the
two curves? How does this point relate to MRS and MRT?
4.
What is the (approximate) surplus in bushels under the landlord's take-it-
or-leave-it offer? How is the surplus split between the farmer and landlord?
Is this allocation efficient? Is it fair? Briefly explain your reasoning.
Bushels](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F716074da-d2fe-4d46-b8ed-3c89634ff1a6%2Ff4ed6601-e3da-480d-8e2e-76e10720175b%2Foqc7rlq_processed.png&w=3840&q=75)
Transcribed Image Text:Sharing the Surplus
A farmer works on a plot of land owned by a landlord. The figure below illustrates the
feasible combinations of free time and bushels of grain.
100
85
X
25
20
12
14
24
Hours of free time
1.
Why does the farmer's feasible frontier slope down? Why is it concave?
2.
The farmer's reservation option is a job that pays 20 bushels of grain for 10
hours of work - this option is labeled Z in the figure. What is the name of the curve
running through Z? What does this curve illustrate? Why does it have the shape it
has?
3.
If the landlord knows the farmer's feasible frontier, along with the other
curve given in the figure, then they will make the take-it-or-leave-it offer implied
by point X in the figure. How does this point relate to the distance between the
two curves? How does this point relate to MRS and MRT?
4.
What is the (approximate) surplus in bushels under the landlord's take-it-
or-leave-it offer? How is the surplus split between the farmer and landlord?
Is this allocation efficient? Is it fair? Briefly explain your reasoning.
Bushels
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education