5 - (b On the same graph graph the budget lines of Jane and...

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ECON 4616 In-Class Exercises NAME: Prof. Francisca Antman Exercise 5 Household Production Jane’s hourly wage is $60 and the marginal value of her time in the household is $30 per hour. Joe’s hourly wage is $50 and the marginal value of his time in the household is $20 per hour. Jane and Joe can each work for 10 hours per week total in the labor market or household sector. (a) Evaluate the following argument: “Jane should spe cialize in the production of household goods since she is more productive in that sector than Joe.”
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Unformatted text preview: (b) On the same graph, graph the budget lines of Jane and Joe while single and Jane and Joe while married. Be sure to label all relevant points on the graph. In addition, label (i) the point of complete specialization as well as the segments of the married budget line where (ii) Jane divides her time between home and the labor market and (iii) Joe divides his time between home and the labor market. (c) With reference to your graph, explain how marrying improves the options available to both Jane and Joe....
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