Maya can afford a monthly budget of £200 for treats and electricity. Assume that both are normal goods.
Suppose that the prices are £20 per unit for electricity and £10 per treat. Draw a diagram showing Maya’s budget constraint and feasible consumption set. Explain your answer. Your diagram should measure number of treats along the horizontal axis and number of units of electricity along the vertical axis. (8 marks)
Reproduce your diagram for Question 1 and add an indifference map comprising at least three indifference curves. Show the point of Maya’s utility maximization given her monthly budget and the prices of electricity and treats. Explain why this is a unique point. (10 marks)
Now suppose that Maya’s income increases such that she can afford a monthly budget of £300 for electricity and treats. Reproduce your diagram for Question 2 and show how the increase in her budget changes her point of utility maximisation. Explain your answer. (10 marks)
Finally, suppose that the price of electricity falls to £10 per unit whilst the price of treats is unchanged. Reproduce your diagram for Question 3 and show the effect of the price change on her point of utility maximisation. Make sure you illustrate and explain both the substitution effect and the income effect. (12 marks)
Word limit: 600 words
Part B (60% of the marks)
Write an essay on the following topic:
‘The role of women’s work in the household is often undervalued, but society tends to realise this only in times of crisis.’ Discuss this statement by using relevant household theories and referring to material from the article below. (60 marks)
Lewis (2020) ‘The Coronavirus Is a Disaster for Feminism’, The Atlantic, March 19.
Word limit: 1500 words
All articles and data sets for use with TMAs can be accessed in the Assessment tab, see ‘Files for use’ sections for each TMA.
Student notes
Part A draws mainly on Chapter 2, Section 2. The questions assess your understanding of some of the main components of the neoclassical theory of consumption. The online tutorials on indifference curves will also provide useful guidance. You are asked to draw a number of diagrams, which should be fully labelled. Always include a brief explanation of your diagrams.
Question 1 requires a careful explanation of the feasible consumption set and budget constraint. Ensure you explain this in your own words and use the example of Maya.
For Question 2, make sure that you show the point of utility maximisation in the diagram and explain why it is a unique point.
For Question 3, you have to show the change in Maya’s budget, so think carefully about what is being measured on the axes of the diagram you draw: this will help you to work out how to illustrate an increase in Maya’s budget.
For Question 4, you have to show the change in the price of electricity on the diagram. You also have to indicate clearly on the diagram how we can conceptually isolate the substitution and income effects and explain this in words.
Part B
Part B, the essay question, asks you to draw on the different theories of household decision making outlined in Chapter 4 and examine how they help explain the evidence in the article provided. Materials in Chapter 3 are also relevant to the question.
Make sure you develop a clear and structured argument in your answer. You will gain more marks for covering a selected area of material in more depth than a superficial treatment of a wide range of material. So, for example you might wish to focus on two or three models of household decision making in your essay. You can always show a breadth of understanding by mentioning other models when discussing the evidence.
The key to writing a good essay is to be clear in your explanation of the terms you use, the theories you cover and how they relate to the evidence you select from the article. Remember to focus on using economic theory to help you to establish the points you wish to make. In addition, it is important that when you interpret evidence you always explain which theory supports your interpretation, which does not and for which reasons. This will allow you to compare the various theories on which you choose to focus. Section 5.3 of Chapter 4 offers an example of how evidence from a case study can be analysed in the light of different economic theories.
