question_answer

  Let us take 3 farmers. Each has grown wheat on his field though the production is different (see column 2). The consumption of wheat by each family is the same (column 3). The whole of surplus wheat this year is used as capital for next year's  production.  Also  suppose production is twice the capital used in production.                   (i) 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 ? Production- Consumption	Capital for the Next Year
Year 1	60	40	-	-
Year 2	-	40	-	-
Year 3	-	40	-	-

(ii) Compare the production of wheat by the three farmers over the years. (iii) What happens to farmer 3 in year 3? Can he continue production? What will he have to do to continue production?

Answer:

                  (i) Farmer 1

	Production	Consumption	Surplus- Production- Consumption	Capital for the Next Year
Year 1	100	40	60	60
Year 2	120	40	80	80
Year 3	160	40	120	120

Farmer 2

	Production	Consumption	Surplus	Capital for the Next Year
Year 1	80	40	40	40
Year 2	80	40	40	40
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	00	00
Year 3	00	40	-40	-40

(ii) Comparison of wheat production of the three farmers over the year was as follows

	Farmer 1	Farmer 2	Farmer 3
Year 1	100	80	60
Year 2	120	80	40
Year 3	160	80	00

Farmer 1 The production of wheat of the first farmer increased from 100 to 160. Farmer 2 The production of wheat of the second farmer was constant at 80. Farmer 3 The production of wheat of the third farmer declined from 60 to 0. (iii) In the third year, the third farmer did not produce any wheat and had to buy it from the market, indicated by the negative sign. He cannot continue production any longer unless he arranges capital, as he has no surplus to invest as capital.