You are going to model households consisting of two adultsa man and a womanand some

kids. (While families are increasingly diverse, we are just going to focus on these households.)

The adults split their time however they like between home production and the formal labour

market (i.e., working for pay). Let's assume that households care only about efficiency. (This is a

really bad assumption as it means we are ignoring a lot of really important factors like the role

of gender norms. We make the assumption anyway for this test.)

Many places have restrictions on all sorts of gatherings. As a result, whether we are talking

about educating children or feeding families, we are seeing an increase in home production. We

are also seeing a large exodus of women from the formal labour market (either leaving a forpay

jobs or not seeking another for-pay job after the loss of a for-pay job).

[25 Marks] If, in fact this exodus is the efficiency-seeking response of households, what does

this say about productivity, opportunity costs and PPFs for men and women in these

households? Provide your answer in a section labelled

Exodus

[15 marks] King Bob, the King of Boblandia, decides to subsidize childcare. King Bob will pay

half of whatever the family owes to a childcare provider who is not a member of the household.

Explain how this affects opportunity costs and how these changes will affect how household

adults allocate their time. Provide your answer in a section labelled

King Bob