Question

help with number 1 math please!

Suppose you are an average household in a developing nation. You are always trying to maximize your happiness (utility) by choosing the best possible combination of "food" (X) and number of children (C): max U U(XiX). Your choices of food and children are of course constrained by your level of income in any given period: Y PX + PcC. The price of food (P) is 1 and the "price" of raising children (Pc) is 100 You will live for two periods and your income in each of the two periods are .Period 1 income (Y1) 1,400 Period 2 income (%) . 200 In order to survive (obtain subsistence level consumption) you have to consume at least 500 units of food (min X,- X2-500). Clearly you are facing a difficult problem since your second period income (100) is less than subsistence consumption (500). The only way to increase your setond period income is to have male children that will be able to support you during "old-age" (period 2) (only men work and females leave the family upon marriage]. Suppose the probability of having a male child is biologically 0.5 and the probability that a male child will be able to support you in old age is 0.5. Any male child in good employment will provide support of 200 in period 2. How many children will you choose to have? 1. Give two policies that would reduce the number of children (in this model). 2. How is this problem related to the "missing women" mystery? 3. Xa 900 500 100 500 1400 100 800

Answer 1

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