Answer to Question #165102 in Microeconomics for Kay

Question

Suppose that in the year 2005 the number of births is temporarily high. How might this

baby boom affect the price of babysitting services in 2010 and 2020? (Hint: 5-year-olds

need babysitters, whereas 15-year-olds can be babysitters.)

Answer 1

Solution:

The baby boom experienced in the year 2005 will lead to a massive increase of 5-year-olds in the year 2010. As such, this will subsequently increase the number of babies requiring babysitting services, consequently raising the demand for babysitting services. This means that more babysitters will be needed to attend to this increased number of babies. Therefore, this will increase the price of babysitting services due to the increased demand for babysitters. The large influx of 5-year-olds will create a large supply, while the small number of babysitters or lack of enough babysitters will create a huge demand for babysitting services resulting in a price increase.

The baby boom experienced in the year 2005 will lead to a large number of babysitters in the year 2020. This is because the large number of babies born in 2005 would have grown to the age of 15 years qualifying them for the babysitter’s role. There will be a few 5-year-olds in the year 2020 requiring babysitting services, while babysitting services will have a large number of babysitters willing to babysit. As such, the prices for babysitting services will fall or go down due to the lack of demand for babysitting services.