Pat and Chris can spend their nonleisure time working either in the marketplace or at home (preparing dinner, taking care of children, doing repairs). In the marketplace, Pat earns a higher wage, wp= $20, than Chris, wc= $10. a. Show their combined budget constraint and identify who has the comparative in working in the marketplace and who has a comparative advantage in working at home. b. Discuss how living together can affect how much each of them works in the marketplace. Can you think of a shock that would significantly affect their choices? Briefly explain the shock and its effects. Illustrate your answer with a numerical example different from the textbook solution.
Pat and Chris can spend their nonleisure time working either in the marketplace or at home
(preparing dinner, taking care of children, doing repairs). In the marketplace, Pat earns a higher wage, wp= $20, than Chris, wc= $10.
a. Show their combined budget constraint and identify who has the comparative in working in
the marketplace and who has a
b. Discuss how living together can affect how much each of them works in the marketplace. Can you think of a shock that would significantly affect their choices? Briefly explain the shock and its effects. Illustrate your answer with a numerical example different from the textbook solution.
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