ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Davis Florist has two employees, Anita and Jerome, and two tasks that need to be completed, floral arrangements and floral delivery. It takes Anita 30 minutes to finish one floral arrangement and 40 minutes to make a delivery. It takes Jerome 10 minutes to finish one floral arrangement and 30 minutes to make a delivery. Each worker works six hours per day.
- Who has the
absolute advantage in making floral arrangements? - Who has the absolute advantage in making deliveries?
- Draw the
comparative advantage table. Calculate theopportunity cost of each task for each student. - Who has the comparative advantage in floral arrangements?
- Who has the comparative advantage in deliveries?
- Suppose that, initially, both Jerome and Anita spend four hours each day doing floral arrangements and two hours each day doing deliveries. Now suppose they change their tasks, so that each individual does nothing but the task in which she or he has a comparative advantage. How many more floral arrangements and deliveries could they produce each day?
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Step 1: Defining Absolute and Comparative Advantage
VIEW Step 2: Finding the Workers' Absolute Advantage.
VIEW Step 3: Drawing the comparative advantage table and finding the opportunity cost.
VIEW Step 4: Finding the workers’ comparative advantage
VIEW Step 5: Arrangements and Deliveries done before and after.
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