?Jack’shourly wage is $20 and the marginal value of his time in thehousehold is

Question

?Jack’shourly wage is $20 and the marginal value of his time in thehousehold is $10 per hour. Jill’s hourly wage is $30 and themarginal value of her time in the household is $15 per hour. Whowill specialize in the household and who will specialize in thelabor market? ?Jack’shourly wage is $20 and the marginal value of his time in thehousehold is $10 per hour. Jill’s hourly wage is $30 and themarginal value of her time in the household is $15 per hour. Whowill specialize in the household and who will specialize in thelabor market?

Explanation / Answer

For this problem you are looking for the value of what theyare producing vs the value of what they are giving up. So i'll calculate both and then you'll see which one is a morebeneficial arrangement. If Jack works and Jill stays in the household, Jack makes 20$and Jill's benefit to the household is 15$. So you add the two upand subtract what both are giving up, Jill 30$ and Jack 10$ torecieve a net benefit of 35-40 or -5$ per hour. If Jack works in the household and Jill works, Jack'sbenefit to the household is 10$ and Jill makes 30$. So you onceagain add the two up and subtract what both are giving up, Jack 20$and Jill 15$ to recieve a net benefit of 40-35 or 5$ perhour. Hope this helps. So it is fiscally responsible for Jill to work and Jack tomaintain the household.

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