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Alternative wage

Consider a sharecropper whose contract calls for him to receive ¾ of the output produced in the farm on which he works. Suppose that the value of the marginal product of labor on the shared cropped land is given by 80-L. Where L stands for hours of work . The alternative wage that he can receive elsewhere is 40 rupees. Assume that there are no risks and that the cropper can independently decide who much to work on the land. How much the sharecropper work in the sharecropper land? How much he would work if we owned the land or rented for a fix fee? Explain any difference.

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Solution Summary

The sharecropper and his productivity are assessed.