Assume Lefa Is A Farmer In The Province Of Limpopo. Lefa And His Family Grows Corn. Lefa And His Family Consume

Assume Lefa is a farmer in the province of Limpopo. Lefa and his family grows corn. Lefa and his family consume some of the corn and sells the surplus in the market. From the proceeds, Lefa’s family purchases meat. Assume both corn and meat are normal goods. (a) Due to bad weather, Lefa’s harvest falls far short of its normal level and is sufficient to feed his family let alone to sell any surplus. Fortunately, Lefa’s rich aunt is sending money so that Lefa can afford additional corn and meat. How would the family react to a price increase in corn and meat?

Expert Answer

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If Lefa’s family is already receiving financial assistance from his rich aunt to afford additional corn and meat due to their poor harvest, they would likely react to a price increase in corn and meat by finding it even more challenging to meet their food needs.

Here is how their reaction might be:


Budget Constraint: With the bad weather affecting their corn harvest and forcing them to rely on their rich aunt’s financial support, the family’s budget constraint is already limited. Any increase in the prices of corn and meat would further reduce their purchasing power, making it harder for them to buy enough food to meet their nutritional requirements.

Reduced Consumption: As the prices of corn and meat rise, Lefa’s family may have to cut back on their consumption of these goods. Since both corn and meat are normal goods, people typically consume more of them as their income increases. In this case, the family’s income is supplemented by the aunt’s money, but a price increase means they can afford less quantity of these goods, which could lead to a reduction in their consumption.

Prioritizing Basic Needs: Lefa’s family will likely prioritize meeting their basic needs, such as ensuring they have enough food to eat, over purchasing non-essential items. This means they may have to sacrifice other expenses or desires to afford the essential corn and meat, even if the prices are higher.

Search for Alternatives: In response to rising prices, the family may also explore alternative sources of food or substitutes for corn and meat that are more affordable. They might consider purchasing cheaper food items or look for ways to increase their food self-sufficiency by growing other crops or raising animals.

Hence, a price increase in corn and meat would likely pose a significant challenge to Lefa’s family, given their already strained financial situation due to the bad weather affecting their harvest. They may need to make adjustments to their consumption patterns and prioritize basic food needs while exploring cost-effective alternatives.