Chayanov

Question 1

household farm models introduced to explain…

Answer 1

counterintuitive empirical finding that increase in price of staple didn’t significantly raise marketed surplus

Question 2

chayanov model applies to…

Answer 2

all but agribusiness-operated commercial farms which consume very small share, if any, of own output and supply few, if any, own inputs

Question 3

model was needed to explain economic behaviour of…

Answer 3

1) net surplus producing family farm
- typical of small owner-operated farms of medium productivity

2) subsistence and sub-subsistence household farm
- typical of small scale, low productivity agriculture, operating under marginal conditions and incomplete markets

3) small scale renter and sharecroppers

Question 4

describe chayanov farm household model (1922)

Answer 4

• theory of household maximisation
• trade-off between disutility of work and income required to meet consumption needs
• main factor influencing trade-off is household size and composition of working/non-working members
• predictive power relies on demographics of household

Question 5

assumptions of chayanov farm household model (1922)

Answer 5

• no market for labour
• farm output can be retained or sold
• access to land
• social norm regarding minimum level of consumption

Question 6

explain graph of chayanov

Answer 6

• indifference curves show total utility from combinations of income and leisure
• point b describes amount of income (dY) which the household would need to gain to compensate for loss (dh) in leisure
• any point on indifference curve shows subjective value of work
• point a is equilibrium of point at tangency between indifference curve and production function
• marginal utility of income/leisure tends to 0
• MPL is the subjective value of family time

Question 7

in chayanov, households maximise utility subject to…

Answer 7

• production function
• minimum income
• number of days available to work