Students are working on an assignment and they are attempting to use their time
ID: 1208016 • Letter: S
Question
Students are working on an assignment and they are attempting to use their time optimally. Barry is a highly analytical person and Jane is a more creative individual. The following chart indicates how long it will take Barry and Jane to complete a task.
Analytical
Creative
Barry
5 Hours
8 Hours
Jane
7 Hours
10 Hours
a. Indicate whether Barry or Jane have an absolute advantage completing (1) analytical tasks and (2) creative tasks.
b. Barry and Jane would like to finish the assignment that their instructor gave to them as soon as possible. Does Barry or Jane have a relative advantage in completing either of the tasks? If so, do you feel that they should focus in on their core competencies and split up the tasks to complete the assignment (assume that the ‘workload’ is 50% analytical and 50% creative).
Analytical
Creative
Barry
5 Hours
8 Hours
Jane
7 Hours
10 Hours
Explanation / Answer
a. Barry has an absolute advantage in completing analytical tasks and creative tasks because it requires less time to complete these tasks as compared with Jane.
b. Relative advantage in completing the tasks can be ascertain by obtaining opportunity cost.
Barry:
5 hours of Analytical work = 8 hours of creative task
1 hour of analytical work = 8/5 or 1.6 hour of creative task
It means opportunity cost of analytical work is 1.6 hours of creative work.
Similarly, 1 hour of creative work = 5/8 or 0.625 hour of analytical work
It means opportunity cost of creative work is 0.625 hours of analytical work.
Jane:
7 hours of analytical work = 10 hours of creative work
1 hour of analytical work = 10/7 or 1.43 hours of creative work
It means Jane has to sacrifice work of 1.43 hours of creative work to complete 1 hour of analytical task. Opportunity cost of analytical work is 1.43 hours of creative work.
Similarly, 1 hour of creative work = 7/10 or 0.7 hours of analytical work.
It means opportunity cost of creative work is 0.7 hours of analytical work.
The person who has less opportunity cost in completing the task of analytical and creative has the comparative advantage in the task completion. It is clearly shown that Jane has lower opportunity cost in completing analytical task while Berry has lower opportunity cost in completing creative task. So, Jane has relative advantage in completing analytical work and Berry has relative advantage in completing creative work.
Yes, they have to split up the taks to complete the assignment and have to do work in which they have their comparative advantage.