When a drought (negative rainfall shock)occurs,farmers tend to put in less effort than they did before to till their farms because:
A) agricultural output falls and even though farmers put in the same level of effort,the effort per hour falls.
B) extra hours of labor and capital usage do not yield much extra output.
C) people work hardest when their hard work yields lower returns.
D) they switch to crops that use less water.

Question

Quizplus · Accepted Answer

When there is a drought, the amount of water available for crops reduces, which reduces the yield from the farm. Consequently, farmers will put in less effort because the extra hours and inputs do not generate much output. For instance, if a farmer puts in extra hours and uses more capital to irrigate their crops, the output will not increase significantly because there is not enough water to ensure the proper growth of the crops. Hence, a drought reduces the marginal returns to labor and capital invested in farming.

When a Drought (Negative Rainfall Shock)occurs,farmers Tend to Put in Less