Consider a household where there are two children, a girl and a boy. Parents in this household

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Consider a household where there are two children, a girl and a boy.

Parents in this household derive utility from their children’s educational attainment. Suppose that in order to have their children educated, parents have to spend an amount x per month if it’s a girl, and y if it’s a boy. Let the household’s utility be as follows:

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a. If the woman in this household does not work additional hours in her investment project, which can be potentially financed by a microfinance enterprise, then the households’ income is w = 1,100 taka.
Compute the household’s optimal decision in this case.

b. Suppose that she is successful at obtainting a loan from a microfinance institution, in which case she carries out her investment project and brings an additional 700 taka to the household. What would be the household’s optimal strategy?

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Related Book For  book-img-for-question

The Economics Of Microfinance

ISBN: 978-0262513982

2nd Edition

Authors: Beatriz Armendariz ,jonathan Morduch

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