Reference no: EM13922011

According to a recent article in The Atlanta Journal-Constitution (January 29, 2004), "ma- terialism, not necessity, gave birth to dual-income families." In supporting the argument, the author cites the following figures from the Department of Commerce: In 1970 the average wage per job was $6,900, which in 2001 dollars (adjusting for inflation) amounts to $31,500. In 2001, the average wage per job was $35,500. The main thesis of the article is that dual-income families are a result of a shift in consumer preferences toward consump- tion as opposed to leisure time/time spent with the family.

a. Assume the average person worked 250 days during a year both in 1970 and 2001, and that, as reported in the article, only one person worked in the average family in 1970, while both parents did in 2001. Provide a graphical analysis of the typical family's choice between family income and combined parent leisure time that supports the author's argument, relying on the tools presented in class. Be careful in labeling your graph(s), and provide a clear and concise explanation for your graph(s). Note that there are 365 days in a year so that the total parent leisure time that is possible is 730 days (assuming neither spouse works). Assume it is possible for each family member to work anywhere from 0 to 365 days a year (at the going salary rate) if they choose to do so.

b. Assume that in 1971 the average single person worked 220 days per year, while the same person worked 260 days per year in 2001. Moreover, suppose the average daily wage in 2001 dollars was $125 in 1970 and $140 in 2001. Show graphically how the author's argument would not necessarily apply to the average single person (i.e., assume preferences are unchanged). Explain clearly and concisely why the average worker may be choosing to work more in 2001 and carefully label your graph.