Eco 151 The Economics of Gender

Exam 1

Study Guide

Fall 2004

The exam will include 16 multiple choice questions, 3 define and identify questions, and 3 short essay questions. The definition and short essay questions should take about 5 minutes each (30 minutes) while the multiple choice questions should take about 1 minute each. There will be some choice over what definition and short essay questions to answer. Be prepared! Having to recall the material takes time away from writing a response. Focus on the question alone! Adding extra stuff not related to the question will slow you down. Pace yourself! Do not spend 20 minutes of a 55-minute period on one question. You should be ready to define the following and identify its significance in the study of gender economics

scarcity and choice rational choice Laws of Demand/Supply comparative advantage utility & marginal utility

absolute advantage economies of scale market vs. non market work opportunity cost household

elasticity of demand revealed preference the marriage premium (married men) selection bias principal-agent problem

Data QuestionsYou should be familiar with the stylized facts of the data on gender differences between men & women covered in these chapters. In other words, you should be familiar with how men and women compare relatively, and the trends over time (including differences across race). In your book and in class we looked at data trends for marriage, households, and divorce Study Questions--these questions will help you focus on what topics are important in each chapter. Actual exam questions will cover the same content, but the questions may be different. Chapter 1 1. 2. 3. How are the concepts of scarcity, choice and cost related to each other? A central assumption of economic theory is that humans are rational. What does this mean? What is the difference between a positive and normative statement? Why is this distinction important?

Chapter 2

1. 2.
3.

What is a utility function? What do we mean by marginal utility and revealed preference? What is the Law of Diminishing Marginal Utility? How do we use a utility function? What is a household production function? What is the Law of Diminishing Marginal Returns? How do we use a household production function? Why might the prices that women and men pay for similar or identical goods and services vary? How would you show this in a supply and demand diagram? What are the potential advantages and disadvantages of a law banning gender-based price differences from the perspectives of equity or efficiency?

Chapter 3

1. Describe the general trends in marriage in the U.S. Why is the study of marriage important to an economist? would an economist
argue that the benefits are greater than or less than the costs of multi-person household formation? Explain your answer. 2. 3. Why would an economist argue that the gains to marriage outweigh any costs for most adults? (Consider revealed preferences.) Using U.S. census data, we observe that men are the primary or only income-earners in most of the married households. How would you explain those outcomes using the concepts of comparative advantage and the division of labor? Why might men have a comparative advantage and/or absolute advantage in market work? Why might women have a comparative and/or absolute advantage in nonmarket work? (be sure you understand the difference between comparative and absolute advantage)

4. 5. 6.

Describe the principal-agent problem. How does marriage uniquely deal with this problem? How do economies of scale and risk-sharing produce gains for marriage households? Is marriage necessary for either/both of these types of gains? Explain. How would you use a model of the marriage market to predict the impact of a. changes in the sex ratio due to changes in the population of women or men b. changes in the wages of women relative to men c. changes in society attitudes/cultural norms

Chapter 4 1. 2. 3. 4. How do White and Black women differ in terms of marriage and family structure? How have these differences change over time? Describe 3 possible explanations for the trends/difference with respect to race and marriage/family structure. What do we mean by the marriage premium? How is the marriage premium related to the traditional division of labor in U.S. married households? What are some alternative explanations for the marriage premium? How do no-fault divorce laws impact the benefit/cost decision regarding divorce?

5. Given the rising divorce rate, what do revealed preferences suggest about what has happened to the gains to marriage? Describe
possible reasons for this cahnge 6. Consider a married household with a traditional division of labor; i.e. the husband specializing in market work and the wife specializing in nonmarket work. a. How does this arrangement put the wife at an economic disadvantage in the event of a divorce? Is there evidence of this? b. Given (a), how does this affect the decision of a wife to specialize in a marriage household? How does this affect the gains to marriage? c. Given (b), how does the increased possibility of divorce actually make divorce more likely

Readings 1. Consider the pair of articles by S. Landsburg about sons, daughters, and divorce. a. According to U.S. Census data, how does the mix of sons and daughters affect the probability of divorce for a married couple? b. In a rational choice framework, what does this suggest about how parents sons view the benefits/costs of divorce/marriage relative to the parents of daughters? c. What evidence does Landsburg offer regarding the preference for sons versus daughters? Consider the role of the corporate wife as depicted in the divorce case of Gary and Lorna Wendt (Its Her Job Too). How did this case exemplify the advantages and disadvantages to the division of labor in a married household? Construct an economic argument in favor of either Lornas or Garys position.

2.