Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

11. Consider a couple's decision about how many chil- dren to have. Assume that over a lifetime a couple has 200,000 hours of time to

image text in transcribed
11. Consider a couple's decision about how many chil- dren to have. Assume that over a lifetime a couple has 200,000 hours of time to either work or raise children. The wage is $10 per hour. Raising a child takes 20,000 hours of time. a. Draw the budget constraint showing the trade-off between lifetime consumption and the number of children. (Ignore the fact that children come only in whole numbers!) Show indifference curves and an optimum choice. b. Suppose the wage increases to $12 per hour. Show how the budget constraint shifts. Using income and substitution effects, discuss the impact of the change on the number of children and lifetime consumption. c. We observe that, as societies get richer and wages rise, people typically have fewer children. Is this fact consistent with this model? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Routledge To Global Political Economy Conversations And Inquiries

Authors: Ernesto Vivares

1st Edition

1351064525, 9781351064521

More Books

Students also viewed these Economics questions

Question

8. What values do you want others to associate you with?

Answered: 1 week ago