DocumentlWord Carla Wilson Insert Draw Design Layout Referen

Documentl-Word Carla Wilson Insert Draw Design Layout References Mailings Review View Help Tell me what you want to do u, aixx, x\' a- ..A. . a--. 1 1 Normal ??? 1 No Spac. \" Heading 1 Heading 2 Font Paragraph Styles Identify whether each of the following would increase or decrease the opportunity costs for stay-at-home moms or dads (those who choose not to accept work outside the home). Briefly explain your answers a. Higher unemployment rates Lower average wages. b. c. Higher demand for labor d. Lower income tax rates on wages earned. (ctrlp

Solution

a) Higher unemployment rates will decrease the opportunity cost i.e. even if they don\'t work they will not be losing much. The opportunity cost of work has decreased. For example, if they are out working they might earn a wage of $100. But if the unemployment rates are high the wages will drop and they will earn only $50. The opportunity cost of not working is reduced.  

b) In case of lower average wages, the opportunity cost will decrease and people will tend to remain at home. IF they are not working they are not loosing much i.e. a decreased opportunity cost.

c) Higher demand for labor will increase the wages and increase the cost of wages. If they are not working they are loosing more i.e. a higher opportunity cost for the individuals.

d) At a lower tax rate, they will get to save more and consume more. if they don\'t work they will be loosing more, this will increase the opportunity cost of working.