Question

In: Economics

1.1 With an hour, Paul receives a wage of $40 or he could produce home goods...

1.1 With an hour, Paul receives a wage of $40 or he could produce home goods worth $20. With an hour, Liz receives a wage of $20 or she could produce home goods worth $40. They have a total of 10 hours available.

f. If they produce $200 worth of home goods together, and they are an efficient couple, how much do they produce in total in the market?

1.2 The children of Paul and Liz are at college. With an hour, Paul still receives a wage of $40, or he could produce home goods worth $20. Liz, however, is not as productive at home anymore. With an hour, she produces only $5 worth of home goods. Liz's market skills have depreciated as well. Now, if she works, she receives only $15 an hour.

a. Who will specialize in the market now?

b. Imagine each of them works 5 hours in the market and 5 hours at home. Are they being efficient? Prove it with a graph.

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Expert Solution

Rahul Sunny answered 1 year ago
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