Problem 3: Agricultural HouseholdChantal lives with her husband and three children in the village of Gicymbi in Northern Rwanda. Her familyis an agricultural household that produces beans for household consumption and if their production is morethan what they consume, they sell the remaining in the local market of Gicumbi, If they produce less thanthey must consume, her household purchases beans from the local market. In this problem, we will answerhow the welfare of Chantal's household gets affected when price of beans changes.(b) What happens to the well-being (utility) of Chantal's household, i.e., the total effect of a price changein beans is ambiguous. Explain in a few sentences using the concepts of price effect and profit effect.To complete the description of Chantal's household consumption, let us assume they consume two moreitems cassava and maize, which they do not produce. The following table provides the details of theirproduction and consumption. Fill out the rest of the information in Table 1 to answer the followingquestions.Table 1: Production and Consumption of Agricultural HouseholdHouseholdPrice perHouseholdMarketedExpenditureon ItemProduction (inkg (inRWF)ItemConsumptionSurpluskilograms)1000Beans5525800Cassava15Maize20900(c) Using the information in Table 1, calculate the marketed surplus (MS) of beans.(d) Chantal's household is a...i. net buyer of beans.ii. net seller of beans.iii. neither a net buyer nor a net seller of beans.(e) What is the household expenditure on cassava and maize? Also, calculate the total householdexpenditure.(f) Calculate the NBR of Chantal's household and interpret. [Hint: Total expenditure only includesexpenditures on the items they purchase from Gjcymbi, market.](g) [TRUE or FALSE] A 1% increase in beans price decreases the welfare'si. TRUEii. FALSE(h) Last year a swarm of locusts ravaged the agricultural fields of Gicumbi, and thus the beans productionof Chantal's household was very low. This is an example of...i. an idiosyncratic shock.ii. a traditional shock.iii. a covariate shock.iv. a household shock,

Whenever there is a change in the price of a good , the quantity demanded or the quantity supplied…

nusband and illage of Gieuudolih North family s an agricultural household that produces beans for household consumption and if their production is more han what they consume, they sell the remaining in the local market of Gicumbi, If they produce less than hey must consume, her household purchases beans from the local market. In this problem, we will answer now the welfare of Chantal's household gets affected when price of beans changes. b) What happens to the well-being (utility) of Chantal's household, i.e., the total effect of a price change in beans is ambiguous. Explain in a few sentences using the concepts of price effect and profit effect. To complete the description of Chantal's household consumption, let us assume they consume two more

nusband and illage of Gieuudolih North family s an agricultural household that produces beans for household consumption and if their production is more han what they consume, they sell the remaining in the local market of Gicumbi, If they produce less than hey must consume, her household purchases beans from the local market. In this problem, we will answer now the welfare of Chantal's household gets affected when price of beans changes. b) What happens to the well-being (utility) of Chantal's household, i.e., the total effect of a price change in beans is ambiguous. Explain in a few sentences using the concepts of price effect and profit effect. To complete the description of Chantal's household consumption, let us assume they consume two more

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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