Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

the question very much so makes sense. you just have to read the latter part. consumer prefers more and likes diversity. heres a link of

the question very much so makes sense. you just have to read the latter part. consumer prefers more and likes diversity.

heres a link of the powerpoint of chapter if needed https://drive.google.com/file/d/1RC4a8SUJq1XdUtQBa6adhK26ZsPw3sYU/view?usp=sharing

and

heres the entire textbook https://drive.google.com/file/d/1sCXbYzE8XeKssC7z1xqGNQ16bwm0f-sY/view?usp=sharing pg 98-122 by the way

image text in transcribed
Suppose a consumer endowed with N hours of labor. Differently from the consumer we studied in week 2, this one does not value leisure. However, she does value the size of her family such that the consumer's utility function is U(C,F), where C denotes consumption, and F denotes the family size. Assume that the preferences over C and F are similar to the preferences over consumption and leisure discussed in week 2. The consumer always prefers more, the consumer likes diversity, and both goods are normal. 3) In a graph with family size F in the x-axis and consumption C in the yaxis, show the indifference curves for these preferences. The consumer receives a real wage w for each hour worked and a real dividend it. If the consumer chooses to have zero children, F = 0, she supplies N hours of labor. However, for each child, the consumer is required to forgo b hours of labor such that the labor income is w(N bF). Note that, since hours worked cannot be negative, F cannot be larger than N/b. b) Write the budget constraint of the consumer. Draw the budget constraint line in a graph with famin size F in the xaxis and consumption C in the yaxis. (You can draw in the same graph of item a) c) Using the graph produced in the items a and b, show the effect of an increase in the non- labor income on the famin size. Recall 'om the Solow model that richer countries are associated with smaller families. Is the effect depicted in the graph in accordance with the Solow model? d) Using the graph produced in the items a and b, show the effect of an increase in real wages on the family size. Assume that the substitution effect is stronger than the income effect. Recall from the Solow model that richer countries are associated with smaller families, but are also associated with high TFP, which implies higher wages. Is the effect depicted in the graph in accordance with the Solow model

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

Lectures On Urban Economics

Authors: Jan K Brueckner

1st Edition

0262300311, 9780262300315

More Books

Students also viewed these Economics questions

Question

Explain the nature of human resource management.

Answered: 1 week ago

Question

Write a note on Quality circles.

Answered: 1 week ago

Question

Describe how to measure the quality of work life.

Answered: 1 week ago

Question

6. Explain the power of labels.

Answered: 1 week ago

Question

10. Discuss the complexities of language policies.

Answered: 1 week ago