Question

Let us take three farmers. Each has grown wheat on his field though the production is different (see Column $2$ ). The consumption of wheat by each farmer family is the same (Column $3$ ). The whole surplus wheat this year is used as capital for next year’s production. Suppose, production is twice the capital used in production. Complete the tables.

Farmer $1$ :

	Production	Consumption	Surplus = Production – Consumption	Capital for the next year
Year $1$	$100$	$40$	$60$	$60$
Year $2$	$120$	$40$
Year $3$		$40$

Farmer $2$ :

	Production	Consumption	Surplus	Capital for the next year
Year $1$	$80$	$40$
Year $2$		$40$
Year $3$		$40$

Farmer 3:

	Production	Consumption	Surplus	Capital for the next year
Year $1$	$60$	$40$
Year $2$		$40$
Year $3$		$40$

Compare the production of wheat by the three farmers over the years.

What happens to Farmer $3$ in Year $3$ ? Can he continue production? What will he have to do to continue production?

Accepted Answer

Farmer $1$

Production Consumption Surplus = Production – Consumption Capital for the next year

Year $1$ $100$ $1$ $100$ $40$

Year $2$ $120$ $2$ $120$ $40$

Year $3$ $140$ $40$ $100$ $100$

Farmer $2$

Production Consumption Surplus Capital for the next year

Year $1$ $80$ $40$ $40$ $40$

Year $2$ $40$ $40$ $40$ $3$

Year $3$ $80$ $40$ $40$ $40$

Farmer 3

Production Consumption Surplus Capital for the next year

Year $1$ $60$ $40$ $20$ $20$

Year $2$ $40$ $40$ $0$ $0$

Year $3$ $20$ $40$ $0$ $0$

Comparative study

Farmer $1$ Farmer $2$ Farmer $3$

Year $1$ 100 $80$ $60$

Year $2$ 120 $80$ $40$

Year $3$ 140 $80$ $20$

The production of Farmer $1$ increased from $100$ to $140$ .

The production of Farmer $2$ remains constant at $80$ in all the three years.

The production of Farmer $3$ declined from $60$ to $20$ . He cannot continue production as he himself has to borrow wheat from the market to fulfill his own needs. He cannot generate capital for the next production, so to continue farming he has borrowed money from the informal sources of credit.

Haryana Board Solutions for Chapter: The Story of Village Palampur, Exercise 10: Let's Discuss

Haryana Board Economics Solutions for Exercise - Haryana Board Solutions for Chapter: The Story of Village Palampur, Exercise 10: Let's Discuss

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