In a developing country, there is a poor household that owns a small land on which they grow corn. They eat part of the corn and sell the rest of it. The value of corn a household produces (when valued at the market price) is the equivalent of 30 percent of its income or consumption expenditure and the value of the corn it consumes (when valued at the market price) is the equivalent of 80 percent of its consumption expenditure. A) Is the household a net buyer or net seller? B) By how much does the household’s real purchasing power increase /decrease if the price of corn rises 20 percent? Calculate.

A) To determine if the household is a net buyer or seller of corn, we need to compare how much they consume with how much they produce.

The household produces corn equivalent to 30% of its income. This is the total value of corn it could sell.

The household consumes corn equivalent to 80% of its consumption expenditure.

If the consumption (80%) is greater than the production (30%), the household is a net buyer, because it consumes more than it produces and needs to buy the difference. On the other hand, if the production is greater than the consumption, it's a net seller. Since 80% (consumption) is more than 30% (production), the household is a net buyer of corn.

B) To find out how the household’s real purchasing power is affected by a 20% increase in the price of corn, let's calculate the difference in expenditure and income due to the price change.

The household consumes corn worth 80% of its consumption expenditure. If the price of corn increases by 20%, then the cost of consumption increases by 20%. So, the new cost of consumption is 80% + (20% of 80%), which is 80% + 16% = 96% of its consumption expenditure.

The household sells corn worth 30% of its income. With a 20% increase in the price, the income from corn also increases by 20%. 

So, the new income from corn is 30% + (20% of 30%), which is 30% + 6% = 36% of its income.

Now let's compare the percentage increases: 

The consumption cost increased from 80% to 96% of the household's expenditure, which is a 16% increase in terms of their expenditure. The income from production increased from 30% to 36% of their income, which is a 6% increase in terms of their income.

Since the household is a net buyer, the increase in consumption cost (16%) outweighs the increase in income (6%), meaning the real purchasing power of the household decreases. The net effect on their purchasing power is a decrease of 16% - 6% = 10%.

In terms of the household’s real purchasing power, if we assume their income and expenditure to be 100 units each for simplicity, they would spend an additional 16 units on consumption but only gain an additional 6 units from sales, resulting in a net loss of 10 units in real purchasing power due to the price increase of corn.