Answer to Question #250626 in Economics of Enterprise for fatine

Question

1. Suppose that in the year 2015 the number of births is temporarily high. How does this boom in population affect the price of babysitting services in 2020 and 2030? (Hint: five-year-olds need babysitters, while 15-year-olds can be babysitters.)

Answer 1

A temporary boom in number of births in the year 2015 will demand more babysitting services in short run. In 2020- All the babies born in year 2015 would be approx. 5 years old and would require babysitting services. This would increase the demand of baby sitters and shift demand curve upwards from D to D'. This will raise the wages of baby-sitter and will increase the equilibrium number of babysitters. In 2030-All the babies born in year 2015 would be approx. 15 years old and would no longer require babysitting services.This would decrease the demand of baby sitters and shift demand curve downwards. As a result, the wages of baby-sitter will reduce and will decrease the equilibrium number of babysitters.