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23 December, 11:26

Unskilled workers in a poor cotton-growing region must choose between working in a factory for $6,000 a year and being a tenant cotton farmer. one farmer can work a 120-acre farm, which rents for $10,000 a year. such farms yield $20,000 worth of cotton each year. the total nonlabor cost of producing and marketing the cotton is $4,000 a year. a local politician whose motto is "working people come first" has promised that if he is elected, his administration will fund a fertilizer, irrigation, and marketing scheme that will triple cotton yields on tenant farms at no charge to tenant farmers

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  1. 23 December, 11:41
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    There are two questions regarding here but it is not included in the question.

    For the first question, it asks about how the project would affect the incomes of tenant farmers in the short and long run.

    A cotton farmer would generate a short-run economic income of $60,000 revenue deducted by $10,000 rent, $4,000 marketing cost, $6,000 opportunity cost, resulting to $40,000/yr. In the long run, factory workers would want to transfer into cotton farming, and would thus offer up the rent on cotton farms. The rent would endure to grow until it grasped $50,000 per farm. At that idea the enticement to leave a factory job would no longer happen, because cotton farmers would again be generating zero economic profit.

    For the second question, who would gain the advantage of the arrangement in the long run? How much would they achieve each year?

    The answer is the landowners. Their revenue would grow by $40,000/yr. per 120-acre plot
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