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Maximizing Surplus under Coercion
A landowner has exclusive control over a plot of land and can dictate the terms of work to a farmer. The farmer's minimum acceptable level of well-being is represented by a 'reservation indifference curve,' which shows combinations of free time and grain. The 'feasible frontier' shows the maximum amount of grain that can be produced for any given amount of the farmer's free time. The landowner's goal is to maximize their own surplus (the amount of grain they keep). Describe the economic condition that identifies the allocation of free time and grain that maximizes the landowner's surplus, and explain why any other allocation would result in a smaller surplus for the landowner.
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