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Homework 1. Economics of Life, Gender, Race, Family Victoria Vernon 1. Define 3 of the following terms economics absolute advantage scarcity comparative advantage rational choice opportunity cost marginal cost household marginal benefit utility 2. The central assumption of economic theory is that humans are rational. What does this mean? 3. Give one example of a cost-benefit decision you have made recently. 4. Kate takes a part-time job and the sacrifice of study time causes her grade point average to fall from 3.5 to 3.0. The grade point average would have stayed at a 3.5 if study time had not been reduced. What is the opportunity cost of having taken the job? 5. Describe your opportunity cost of • going to a party tonight • taking two month off work to travel the world 6. Consider costs and benefits of having a child a. List all possible costs of having a child, including the opportunity costs. b. List all possible benefits of a child. c. For your own decision whether to have a (new) child or not, if you were to place money value on all costs and benefits, would benefits exceed the costs? 7. Consider once again costs and benefits of having a child a. Are benefits in general the same for men as for women? Why? a. Are costs in general the same for men as for women? Why? 8. In a world where women earn more than men, who would have lower opportunity cost of taking a year off to take care of a child? 9. Given the costs and benefits of having an extra child, why do you think people in poor countries tend to have more children than people in wealthy countries? 10. Suppose Zozon Muskabunch can make 12 pizzas or 4 lasagnas every Saturday afternoon, while Zuzu Bunchamusk can make 10 pizzas or 2 lasagnas every Saturday afternoon. a. Who has absolute advantage in pizza? In lasagna? b. Who has comparative advantage in pizza? In lasagna? 11. Give two examples, an example of two variables that are directly related and an example of two variables that are inversely related. Draw your graphs, name each axis. Briefly explain why you think so. 12. Many people believe that women have a comparative advantage in housework whereas men are relatively better at work for pay. To what extent is this presumption justified? Are there biological, psychological or cultural differences between genders that explain this phenomenon (or stereotype)?
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