Essay on Economic notes

Submitted By xjbee
Words: 782
Pages: 4

ECN 340- Chapter 5

The New Home Economics
Family is a “firm”
Transforms inputs and produces the things wanted by the family

The Marriage Contract
Marriage is a legally enforceable contract between two people
It is an open ended contract; not all eventual possibilities are spelled out –Kind of like a prenup
Marriage is much like a constitution
The purpose of dating is to work out provisions of the contract (Some people do not take enough time to do this)
Poorly put together contracts soon leas to dissolution
What are some of the misunderstandings that can occur in a marriage contract?- children, money
What would you include in the contract?- whatever is important to you.
What are the obstacles of taking your spouse to court for breach of the contract? For example suing him for not cutting the grass. (Misunderstanding has to be flexible to some degree)
Divorce is dissolution of the contract, just like a break up of a business (bad choice of a partner.)
Investment in a marriage makes it more difficult to break-up. (eg. Kids, furniture etc)
Living together with the capacity to simply walk out may force the other party to be more considerate

Cost and Benefits of Marriage
1. Costs
Independence
Making decisions in a family (takes more time/ more difficult than it is on your own)
Family decisions require the input from all members eg. Buying a car.
Costs associated with decision making usually means each partner makes executive decisions about an issue
Wives usually decide about the interior of the house and husbands exterior (culturally biased)
Some family members do not get to consume as much of a good as they want eg, the bathroom.
Apportioning the family income is a (huge) cost.
The forgone cost of associating with other people (loosing opportunities)
The forgone choice of a “better” partner
The list could be extended
2. Benefits
Production of children
Family style sex life (one partner)- Less chance of STDs
“Economies of scale in production”-One vacuum cleaner, one washer and dry etc. (saving money)
Less costly to produce one meal for four people then four separate meals for each.
Many public goods; they benefit everyone and do not diminish the enjoyment of others Eg, a picture in the living room may make four or five people happy.
Specialization and trade Eg, one specializes cleaning the house and the other mowing the lawn. Both will be done quicker
These are roles, but these roles mean specialization and efficiency no matter which of the partners takes the job on.
Who should be doing the housework? The person whose opportunity cost is the lowest (who earns the most income)
The roles should be filled according to “opportunity cost”
Whoever can make more money outside the home should work and the other should stay at home.
As women earn more money outside the home we can expect more “home-husbands”
Communication becomes less expensive in a family setting (if they are all in one place)

Spouse Selection
We choose the “best”…