Consider Weiss' model of household production in a marriage between two people a and b with...

 

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Consider Weiss' model of household production in a marriage between two people a and b with wages w, and w, (p. 84), but with constant returns to scale in production. Total household production is Z = √(a + b)(a +t) and both partners face the budget constraint x;= w;h, and time constraint t; +h; = 1 for i=a,b. Solve for Z in the following situations: 1.1 (6 points) Household members have different comparative advantages in market work(wa> w) and the person with the higher market earnings devotes all of her time to market work while the person with lower market earnings devotes all of his time to home production. 1.2 (6 points) All household members have the same comparative advantage in market work (waw) and both partners spend ½ of their time in market work and ½ of their time in home production. 1.3 (4 points) How do the gains from marriage differ in problem 1 from the increasing returns to scale situation examined in class? Be specific about both cases. (1) Consider Weiss' model of household production in a marriage between two people a and b with wages w, and w, (p. 84), but with constant returns to scale in production. Total household production is Z = √(a + b)(a +t) and both partners face the budget constraint x;= w;h, and time constraint t; +h; = 1 for i=a,b. Solve for Z in the following situations: 1.1 (6 points) Household members have different comparative advantages in market work(wa> w) and the person with the higher market earnings devotes all of her time to market work while the person with lower market earnings devotes all of his time to home production. 1.2 (6 points) All household members have the same comparative advantage in market work (waw) and both partners spend ½ of their time in market work and ½ of their time in home production. 1.3 (4 points) How do the gains from marriage differ in problem 1 from the increasing returns to scale situation examined in class? Be specific about both cases. (1)