The figure presents a farm bargaining model where Thabo owns a farm, Musa is a farmer with quasilinear preferences who wishes to negotiate under voluntary exchange a sharecropping arrangement to use the farm. If Musa does not rent the farm, Thabo gets nothing. Thabo has take-it-or-leave it bargaining power. If no sharecropping agreement is reached, then Musa has access to a reservation amount of 7 bushels grain. Assume that the government imposes a new law that limits working hours to 4 hours a day, while requiring that total

pay is at least 14 bushels 

Based on this information, which one of the following statements is correct?

A. The new outcome F is Pareto efficient.

• B. Only Thabo receives economic rent at F
• C. As a result of the new law, Thabo and Musa have more bargaining power.
• D. The change from D to F is not a Pareto improvement
• E. Point F is on the new contract curve
   

Bushels of grain Musa's reservation lindifference curve 42 39 M K 29 23 20 C X E 18 N 14- D H 7 0 9 12 15 20 24 Musa's hours of free time N