You are now asked to model the trade-off between free time and production for an independent farmer named Mamata who owns the land on which she works. If Mamata was able to work 24 hours a day she could produce 4 tonnes of rice (the principal food crop cultivated in West Bengal) each day. You are told that Mamata’s utilitymaximising choice is to work for 8 hours and produce 3 tonnes of rice.
Q6 Use the model of decision-making under scarcity developed in week 3 to show Mamata’s optimal choice of free time and rice production. On this diagram be sure to label and define her feasible frontier, set of indifference curves and optimal choice. (5 marks) Now you are informed that Mamata is no longer an independent farmer. Instead, she works as a bargadar and rents the land on which she works from a landowner and keeps 75% of the rice that she produces (as is the case after the adoption of Operation Barga).
Q7 Using your answer to Q6 as a starting point, show (on a separate model) Mamata’s new optimal choice as a sharecropper. Again, be sure to label and define each of the relevant points and lines on your diagram. List each of the assumptions you made when developing your model. (8 marks)
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Q8 Discuss how the models developed in Q6 and Q7 can be used by economists to evaluate the fairness of economic outcomes? (5 marks)