(a) Show that in an economy with extensive possibilities for perfect crop insurance, fixed-rent tenancy must be dominant irrespective of whether potential tenants are risk-averse or risk-neutral.

(b) Show that in an economy where risk is a major factor, where tenants are risk-averse, and where the inputs of the tenant can be costlessly monitored by the landlord (and verified in court), sharecropping will be preferred to fixed-rent tenancy.

(c) In this question, why did we add the extra qualification that inputs can be verifiable? What happens if we drop this assumption? Study Appendix 1 to this chapter to find out.