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laborexam2f03 - Midterm 2 There are t en short-answer...

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Economics 421 Fall 2003 Lich-Tyler Midterm 2 There are ten short-answer questions worth 4 points apiece. There are four long-answer questions worth 15 points apiece. The space provided should be sufficient to answer each question. If you must use more space, clearly indicate that the answer is continued onto the back side of the page. Pace yourself, and good luck. Short answer questions (20 minutes) 1. According to the two-person model of household production, what will you never find both household members doing? 2. In each hour, Count Dracula can earn $18 in the market, or he can produce 9 units of household production (new vampires). His wife (Countess Dracula) can earn $15 or generate 5 units of household production. If one specializes in the market, which will it be? If one specialized in household production, which will it be? 3. According to the Nash-bargaining model, what mathematical expression does the household maximize? Define all the variables used. 4. Which of the three models of joint decision-making predict income- pooling ? Which does not? 5. Explain positive assortative matching and negative assortative matching . Under what circumstances is each optimal?
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Econ. 421 Midterm, page 2 of 6 6.
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