All questions are based on the module resources and your textbook readings. For best results, give your best full answer, mention your readings, use numbers and examples.
- Explain how and why women’s and men’s roles in production changed through history (hunting and gathering, agriculture, colonial period, early industrialization, up to today).
2. What can be the opportunity cost of the following decisions?
- a. Kate takes a part-time job and the sacrifice of study time causes her GPA to fall from 4.0 to 3.0.
- b. You take a year off work in order to take care of a sick family member.
- c. You pay $60 for a cool restaurant meal.
- d. A lawyer who earns $80/hour takes 2 hours off to attend a free lunch.
3. Consider a decision by a couple whether to have a child (or one more child) or not
- a. List all costs of having a child, including opportunity costs.
- b. List the expected benefits of a child.
- c. If mom earns more than dad, who has lower opportunity cost of taking time off work to take care of a child? Explain the tradeoff involved in this decision.
- d. Using your list of benefits and costs, explain why people in poor countries choose to have more children than people in wealthy countries.
4. The central assumption of economic theory is that humans are rational. Rational people make choices by comparing costs and benefits of various alternatives and selecting the one with the highest net benefits. Give one example of a rational cost-benefit decision you have made recently. Describe your costs and benefits. Are you a rational person?
5. Near my house, there is a fast-food restaurant that sells egg muffins for $1.99 apiece. At home, I have a fancy toaster-and-egg-steamer that can produce a virtually identical product. You slice and butter an English muffin, stick it into the toaster slots; scramble an egg, pour it into the egg steamer, and add water to the steamer. Altogether, it takes about 15 minutes of preparation and cleaning. Producing an egg muffin at home costs only around $0.50. Nonetheless, I often find myself stopping by McDonald’s instead. Is it rational to buy the same product for more money at McDonald’s? Explain why.
6. (explain your choice) Pat earns $25,000 per year, and Pat’s spouse, Chris, earns $45,000. They have two pre-school children. Childcare for their children costs $15,000 per year. Pat has decided to stay home and take care of the children. Pat must
- be irrational.
- value spending time with the children by more than $25,000.
- value spending time with the children by more than $15,000.
- value spending time with the children by more than $10,000.
7 . Suppose Clara can either make 12 pizzas or 4 cakes per day, while Karl can make either 5 pizzas or 10 cakes per day. Who has comparative advantage in pizza, and who in cakes? What are their opportunity costs of making one pizza? How can this couple gain by living together compared to living apart? Graph the two PPFs.
8. Some people believe that women have a comparative advantage in housework whereas men have a comparative advantage in work for pay. Are there biological, psychological, historical or cultural differences between genders that may explain this phenomenon?
9. Looking at a large sample of married households, an economist finds that husbands whose wives work earn less on average than husbands whose wives are not in the labor force. I then conclude that I should quit my job to boost my husband’s earnings. What might be wrong with my economic analysis?
- Using the concept of comparative advantage argue IN SUPPORT of the following statement: Spouses should not divide chores equally.
- Using your knowledge of the costs of specialization, argue IN SUPPORT of the following statement: Spouses should divide chores equally.
3. Suppose a woman earns more than her husband. Under what condition would it be rational for her to completely specialize in housework?
4. List and briefly explain as many benefits of cohabitation and marriage as you can think of.
5. Explain what is meant by household production. How much is it worth? How do economists estimate its value?
6. Describe the bargaining approach to decision making.
7. Explain one the following views of the family: Marxist or feminist. You may use your own additional research to answer this question.
8. Give one example of a negative externality and one example of a positive externality that may occur among family members.
- For each situation below, draw a supply and demand diagram in the labor market for math teachers. Assume that the market for math teachers is in equilibrium with current wage rate $30/hour and 1,000 teaching hours are demanded/supplied at this rate. Mark equilibrium wage (PRICE of labor) and work hours (QUANTITY of labor), label your graph. Predict how the following event affects P and Q in the market for teachers (increase, decrease, or no change). Show the corresponding shift on your graph. Mark the new equilibrium.
- a. More high school students choose to take math.
- b. Math become less popular among high school students.
- c. There is an increase in the number of college graduates qualified to teach math.
- d. Fewer college graduates choose teaching as their occupation.
2. Think of the market for construction workers. Come up with at least 6 factors that can shift labor D or S in this market, leading to higher wages. Think of 3 demand side and 3 supply side factors for your answer.
3. Explain marginal product of labor and how it relates to wages. Why are wages different in different countries?
4. Which of the following is the BEST explanation of why some sports players earn astronomical wages? Explain your answer.
- Their physical abilities
- Their ability to attract a large audience
- The prestige of athletes, which appears to be higher than that of other occupations, such as teachers.
- The theory of labor markets cannot explain why some workers earn disproportionate wages
5. Why do some workers belong to unions? How does union members affect wages?
6. Why did Henry Ford pay higher than market wages to his factory workers, and how could his business still be profitable?
- Explain 3 types of unemployment and give examples of each.
2. Suppose you know the following about an economy:
- Population (working age) 120
- Labor Force 80
- # Employed 70
- a. Find the labor force participation rate
- b. Find unemployment rate
- c. Assume in the problem above that 5 of the unemployed became discouraged workers. Calculate new official unemployment rate in this economy.
2. Find current official unemployment rate in the US. Compare unemployment rates by one of the demographic groups – by gender, education, age or state – and comment why you might observe these differences.
3. Explain the tradeoff between fun and wage.
4. What are some of the explanations for declining labor force participation among men? Do the same factors also reduce women’s labor force participation?
5. Consider a family of 2 parents and 2 preschool children. The mother is currently not employed. Describe how the following government subsidies would affect her decision to work and the number of hours she chooses to work?
- a $5 per hour childcare subsidy for families with an employed mother.
- a $500 per month payment to all families with children.
6. The theory of compensating wage differentials predicts that workers in “dangerous jobs” should be paid more than workers in “safe jobs,” everything else equal. However, if we look at data, we find that workers in risky jobs (farm workers, construction workers, etc.) actually earn less than workers in safe jobs (professionals, service providers, etc.) who work in more desirable work environment. What is the most likely explanation among the following? Explain why you chose a particular answer.
- employers have imperfect information and don’t select jobs wisely
- highly paid and poorly paid workers are in noncompeting groups
- firms with desirable working conditions are not hiring low skill labor
- the differential required to compensate for high skill exceeds the differential required for poor working conditions
- Give 3 economic arguments in favor of raising minimum wage to $15/hours.
8. Give 3 economic arguments against raising minimum wage to $15/hours.
- What is “gender pay gap” ? How big this gap is at present? What are the explanations for this pay gap? Explain each briefly.
- Why is it hard to measure the gender pay gap, to the point that some people claim that the numbers lie?
- Explain the term ‘occupational segregation’. What kind of jobs are segregated and why?
- If you were in the government, what two policies would you recommend in order to reduce the gender pay gap? Explain your choices.
- Using the Occupational Handbook, find out what occupations are projected to grow the most in the next 10 years and which jobs are projected to decline. Offer your brief explanation for why these changes – why is the demand for certainly skills going up or down?
- The first column on the Occupation Handbook website shows occupation groups where you can click on a group and find descriptions of a dozen of jobs within each group with different wages. Which occupation groups (or which jobs within an occupation) have the highest earnings? What might be the explanations for high wages in this group?
- Give several reasons why your classmate’s wage may be different from your wage. Explain each briefly.