Answers
1) Limited access to insurance is often a constraint faced by smallholder farmers that hinders agricultural productivity.
TRUE
2) Borrowers are always better off under asymmetric information than symmetric information.
FALSE
3) The Total Poverty Gap is the total income needed to eliminate poverty, normalized by the total income in society.
TRUE
Explanation
1) Limited access to insurance is often a constraint faced by smallholder farmers that hinders agricultural productivity.
TRUE
The small scale farmers face very many constraints in the agriculture value chain. The limited access to insurance by the smallholder farmers reduces their income for land improvement due to reduced access to credit facilities hence reducing the production capability by the farmers. The limited access to insurance also makes the farmers not to move to high value products with great profit margins.
2) Borrowers are always better off under asymmetric information than symmetric information.
FALSE
Borrowers are better under symmetric information where either parties have full knowledge before the transaction. in asymmetric information to the buyers, the lender may expect very few installments and large amounts per installment which maybe could not be met by the lender hence subjecting the borrower to auctioneers. In the event of asymetric information, both parties will have full knowledge on repayments and hence this will lead to less conflicts.
3) The Total Poverty Gap is the total income needed to eliminate poverty, normalized by the total income in society.
TRUE
The poverty gap is used to show the intensity of poverty in the economy. It indicates the average shortfall of a nation’s population from the poverty line. The total poverty gap therefore means the minimum income level that a society needs to secure basic necessities for every individual.
