Suppose 10 workers jointly own and farm a piece of land. They all consume the farm's output in equal shares. If one worker decides to shirk and cuts her labor effort by 50 percent,
A) her consumption will decrease by 50 percent.
B) her consumption will decrease by greater than 50 percent.
C) her consumption will decrease by less than 50 percent.
D) her consumption will not change.

Question

Suppose 10 workers jointly own and farm a piece of land.  They all consume the farm's output in equal shares.  If one worker decides to shirk and cuts her labor effort by 50 percent,
A) her consumption will decrease by 50 percent.
B) her consumption will decrease by greater than 50 percent.
C) her consumption will decrease by less than 50 percent.
D) her consumption will not change.

Quizplus · Accepted Answer

Since the output is shared equally among all workers, if one worker shirks, the total output decreases slightly, but her share of the output decreases by less than 50% because the reduction in total output is distributed among all 10 workers.

Suppose 10 Workers Jointly Own and Farm a Piece of Land