Labour Supply 2. (a) (b) (C) Sarah and Luke are a two-person household. Sarah's market hourly wage is $20, and she can produce $60 of household production each hour. Luke's market hourly wage is $50, and he can produce $25 of household production each hour. This household chooses work schedules to maximize utility. When it does this, what specialisation within the household is not expected to happen? Analyse and support your answer with a diagram. Note: They each have 100 hours per week to allocate to either market work or home production. (7 marks) A few years later Sarah is promoted at work, experiencing a wage rise, and Luke's productivity at home increases due to new appliances. Now Sarah's Wage is $50 per hour and she can produce $60 of household production each hour. Luke' hourly wage is $50 per hour and he can produce $60 of household production each hour. Explain the effect of the new conditions on specialisation outcomes in this household. Support your answer with a diagram. (7 marks) Can your analysis in parts (a) and (b) of this question assist in explaining changes in labour force participation and hours of work of women in the past decades? Explain yes or no, and why in a few sentences. (7 marks) [Question 2: 21 marks]