ABSTRACT
The central concern of economics is the optimal allocation of scarce resources. Consumers decide how to spend their limited incomes on various goods and services to maximize their well-being. Firms decide how many and what types of goods to produce to maximize their profits. Men and women decide how to allocate their time between market work and time at home to maximize their family’s well-being (see “Part I: Time, Work, and Family,” this volume, for an in-depth discussion of time allocation). Because resources are limited, each choice means that other options are precluded. This concept of opportunity cost is particularly relevant in allocating time given that we all face limits on the number of hours available in a day. Additional time spent in one activity necessarily means reducing the time spent in another activity.
