Question

Gains from marriage

Consider a couple with the following characteristics: the total time available to each spouse is T = 18, which can be divided between the market and the household sectors. The spouse i has market productivity wi = 6, and household productivity hi = 4, whereas spouse j has market productivity wj = 3, and household productivity hj = 5.
a. How much do they jointly produce of C (market good) and G (household-produced good), when each spouse fully specialises in the sector he or she is more productive?

Answer 1

Spouse i will fully specialize in the market sector and produce C, while spouse j will fully specialize in the household sector and produce G. The total output will depend on time allocation and productivity.

Step-by-step explanation:

To determine how much the couple jointly produces of the market good (C) and the household-produced good (G), we need to compare the productivity of each spouse in the respective sectors.

Since spouse i has higher market productivity (wi = 6), they will fully specialize in the market sector and produce C. Spouse j, with higher household productivity (hj = 5), will fully specialize in the household sector and produce G.

Therefore, the couple will jointly produce C in the market sector and G in the household sector. The total output will depend on the time allocated to each sector and the productivity of each spouse in that sector.