Academia · Blog · Career counseling · Old blog

Farmer`s dilemma

We have two farmers. They work in a coop mode which they set up to take a loan to buy the equipment needed for their farming needs: tractor, harvester etc. They share the bank loan yearly rates and the machinery equally.

In year X, they obtained the same production and sold it at an almost similar price. Thus they had the money to pay their part of the bank rate.

In year Y, Farmer 1 obtained a high production which he sold at the price from year X. Farmer 2 obtained a smaller production which he sold at a lower price than that from year X. Thus, only Farmer 1 has the money to pay its part of the bank rate. They are faced with the following solutions. Find the solution