In 2023, agricultural extension services in Region K introduced a drought-resistant strain of millet. Over the following two years, smallholder farmers who adopted the new strain recorded a 30 percent increase in average grain yield per acre. Surprisingly, even though the market price per ton of millet remained unchanged throughout this period, the net annual agricultural income of these adopting farmers decreased substantially.
Which of the following, if true, most helps to resolve the apparent discrepancy described above?
- The new strain of millet requires expensive specialized fertilizers and pest-control treatments that cost farmers significantly more per acre than the extra revenue brought in by the increased crop yield.Cevap
- BFarming households in neighboring regions that did not adopt the new millet strain experienced severe crop losses due to unseasonable weather patterns.
- CConsumer demand for alternative cereal grains in major urban centers grew rapidly during the same two-year period.
- DGovernment subsidies previously awarded to all agricultural producers in Region K were increased to offset rising transportation costs.
- EThe total land area dedicated to cultivating millet across Region K expanded by fifteen percent after the introduction of the new strain.
Cevap
The statement explaining that the new millet strain requires costly specialized fertilizers and treatments whose expenses exceed the extra revenue generated by the higher yield resolves the paradox.
Net income is defined as total revenue minus total expenses. Although higher yield per acre at stable market prices increases gross revenue, high expenditures on specialized fertilizers and pest control increase overall operational costs by a larger amount. This financial imbalance explains how farmers can produce more grain without seeing a net financial gain.
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Net Income vs. Gross Revenue in Paradox Resolution
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