You are investigating an emerging new labor market for women. Try to wrap your head around the economics of SugarBabies and SugarDaddies. There are a number of issues you need to try to understand:

economics of SugarBabies and SugarDaddies:

  1. Who is supplying the labor in this labor market? Who is supplying the “goods” in the related service market?
  2. Is this supply rising? What factors are driving demand and supply up? How does it affect rising college debt?
  3. Who is the employer in this labor market? Who is the consumer in the service market?
  4. How are services like SeekingArrangment driving up the demand for SugarBaby services (see the video here).

Write a 250-word memo to explain the market for SugarBabies. Identify the information in the questions below and present your research as a 1-page write-up for your advertising firm. The goal is to identify whether this is a growth market and who uses such services.

  1. Using economic intuition developed in class, describe the labor and goods/services markets for SugarBabies. Who supplies labor; who demands that labor? Who supplies the goods/service; who demands it?
  2. Economic reasons for increasing labor supply in these markets most likely include one of the following. Which is it and explain.
  • Growing college debt.
  • Satan.
  • Growing employment opportunities for women.
  1. The economic reasons shifting SugarBaby demand most likely include one of the following. Which is it and explain.
    -Computerization like that replaces the need for SugarBabies, lowering the wages and number of SugarBabies in the market.

Sample Solution