Question
Comparative Advantage. Berry and Yates run a Fantasy football service. Suppose on a given day, these two are going to focus on only two tasks:
Comparative Advantage. Berry and Yates run a Fantasy football service. Suppose on a given day, these two are going to focus on only two tasks: Answering email and writing player reports. It takes Berry 4 hours to answer 20 emails while Yates can do it in 3 hours. It takes Berry 2 hours to write 2 player reports while Yates can do 2 of them in 1 hour.
a) Suppose that the two of them decide it is "fair" to have each person work half of
their 12 hour day on each task. So Berry and Yates each spend 6 hour answering
emails and 6 hours writing reports. Find the total amount of emails answered
and reports written by the business that day with this labor division.(2points)
b) Calculate the opportunity cost of each task for each person. Use this information
to decide who has the comparative advantage in each task. (1 point)
c) Show that if the time on each task is allocated between the two people based on comparative advantage, more emails are answered and more reports are written. (Hint: a person does not have to devote all of one's time to one task.) (2points)
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