Question

Assume that farmers didn't have a contract with a company and he got Rs. 43 per kg for both of the products for the time period of 2011 to 2017. The farmer will have _________ compared to existing system.

• A. Loss of Rs.1920
• B. Profit of Rs. 1680
• C. Profit of Rs. 1920
• D. Loss of Rs. 1680

Hint:

To calculate faster, rewrite the terms:
\[ \text{Difference} = 1770(43 - 45) + 1740(43 - 40) \]
\[ \text{Difference} = -3540 + 5220 = +1680\text{ Rs} \]
A positive result represents a profit, and a negative result represents a loss.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
To determine the difference, we calculate the total earnings under both systems (contract and open market) over the entire 7-year period and compare them to find the profit or loss.
Key Formula or Approach:
- Total Earning (Existing) = \((\text{Total Castor} \times 45) + (\text{Total Cotton} \times 40)\)
- Total Earning (New) = \((\text{Total Castor} + \text{Total Cotton}) \times 43\)
- Net Difference = New Earning - Existing Earning

Step 2: Detailed Explanation:
Let us perform the calculations over the entire 7-year period (2011 to 2017):
- Total Castor = 1770 Kgs, Total Cotton = 1740 Kgs.
- Under the Existing Contract System:
\[ \text{Earning}_{\text{Castor}} = 1770 \times 45 = 79650\text{ Rs} \]
\[ \text{Earning}_{\text{Cotton}} = 1740 \times 40 = 69600\text{ Rs} \]
\[ \text{Total Existing Earning} = 79650 + 69600 = 149250\text{ Rs} \]
- Under the New Open Market System:
- Total quantity = \(1770 + 1740 = 3510\text{ Kgs}\).
- Rate = Rs. 43 per Kg.
\[ \text{Total New Earning} = 3510 \times 43 = 150930\text{ Rs} \]
- Calculating the Net Difference:
\[ \text{Net Difference} = 150930 - 149250 = 1680\text{ Rs} \]
Since the new earning is higher than the existing earning, the farmer will have a profit of Rs. 1680.

Step 3: Final Answer:
The farmer will have a Profit of Rs. 1680 (Option B).