Econ416PS3

Econ416PS3 - Theory of Economic Development Econ 416,...

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Theory of Economic Development Econ 416, Spring 2010 Problem Set 3 NOTE: Please provide short answers to each question in the space provided! Due at the beginning of lecture on April 27th 1. In deciding how many children to have, suppose that each couple weighs the costs and benefits of having children and selects the number of children that maximize the net private benefits (where net private benefits is equal to the private benefits minus the  private costs). (a) Given the benefit and cost functions below, please draw a vertical line through the graph at the number of children where the couple’s net private benefits are maximized. (Label this point A). Make sure you show why you selected this point on the graph. 
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(b) Now suppose that this couple lives in a country where the government provides free health care and education for all children. Thus each additional child raises 
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Econ416PS3 - Theory of Economic Development Econ 416,...

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