The appropriate resource constraint, Mathematics

Assignment Help:

Consider a person's decision problem in trying to decide how many children to have. Although she cares about children and would like to have as many as possible, she knows that children are "costly" in the sense that there are costs to their upbringing as well as the time that she will have to take off from work in order to have children. Her utility function over her own consumption (x), her own leisure (l) and the number of children (n) is given by the following utility function:

U(x,l,n) = x1/6l1/6n1/6

For tractability (and to be able to use calculus), we will assume that the number of children, n is a continuous variable (i.e. it can take any nonnegative value, including decimal values like 2.15 etc.). This individual is endowed with a total of T units of time in her life, which she can divide between working, leisure and having children. For having each child, she will have to take time t off from work, during which she will not earn anything. Besides this, there is a per child cost of n for upbringing expenses.

Her wage rate is w; she uses her total income to purchase good x for her own consumption, as well as to provide for the upbringing expenses of her children. Assume that good x is priced at p per unit.

(a) Write the consumer's optimization problem with the appropriate resource constraint, and derive her Marshalian demand for children n.

[Hint: Instead of redoing the whole calculations, can you make use of your results from Problem 1?]

(b) Suppose the government introduces child benefits i.e. for every child she has, the government provides her an amount s. How will this affect her decision on how many children to have i.e. is dn/sn greater or less than 0?


Related Discussions:- The appropriate resource constraint

Liniar Algebra, Assume A and B are symmetric. Explain why the following are...

Assume A and B are symmetric. Explain why the following are symmetric or not. 1) A^2 - B^2 2) (A+B)(A-B) 3) ABA 4) ABAB 5) (A^2)B

Illustration of integration by parts - integration technique, Example of In...

Example of Integration by Parts - Integration techniques Some problems could need us to do integration by parts many times and there is a short hand technique that will permit

What percentage of the soda purchased was cola, 3/5 of the soda purchased a...

3/5 of the soda purchased at the football game was cola. What percentage of the soda purchased was cola? Change the fraction to a decimal through dividing the numerator through

#tnumarancyitle.., what is classification and how can you teach it?

what is classification and how can you teach it?

Excel, do you guys have excel math

do you guys have excel math

Venn Diagram, In a group of 85 people, 33 own a microwave, 28 own a DVD pla...

In a group of 85 people, 33 own a microwave, 28 own a DVD player and 38 own a computer. In addition, 6 people own both a microwave and a DVD player, 9 own both a DVD player and a c

Facts regarding linear equations, To solve out linear equations we will mak...

To solve out linear equations we will make heavy use of the following facts. 1. If a = b then a + c = b + c for any c.  All it is saying that we can add number, c, to both sides

Newtons method , Newton's Method : If x n is an approximation a solution ...

Newton's Method : If x n is an approximation a solution of f ( x ) = 0 and if given by, f ′ ( x n ) ≠ 0 the next approximation is given by

Theory of meta-games, Theory of Meta-games This theory shows to describ...

Theory of Meta-games This theory shows to describe how most people play non zero sum games concerning a number of persons Prisoner's dilemma is an illustration of this. The

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd