B2 (20 marks). A farmer requires 30 Rupees to invest. in fertilizers and farming equipment. She has 10 Rupees of her own savings to invest. and borrows the remaining 20 from a local rnoneylender using a standard debt. contract. The rate of interest. on the debt. is a 10%. The farmer can choose whether to cultivate wheat. or corn, both of which involve some risk due to environmental conditions. Wheat. cultivation yields a crop value of 60 Rupees with probability a and 30 Rupees with probability % Corn cultivation yields a crop value of 75 Rupees with probability g and 0 with probability g (a) What. are the total expected returns net. of total investment. from wheat. and corn cultivation ? Which crop is more risky ? (b) Calculate the expected returns to the farmer and the moneylender, respectively, net of their investments: from each crop. ((3) Why would the farmer and the rnoneylender disagree about which crop should be planted ? Explain carefully, with the aid of a diagram. (d) What. kinds of economic institutions in the credit market. would you expect. to arise in response to this kind of fundamental problem ? How would you expect such institutions to vary across the formal and informal sectors and why