Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

study pp. 6-7 of my notes. Suppose Zara and Lakisha are law partners writing wills and contracts. They want to maximize the total output of

image text in transcribed
study pp. 6-7 of my notes. Suppose Zara and Lakisha are law partners writing wills and contracts. They want to maximize the total output of their combined efforts. It takes Lakisha 6 hours to write a will or 3 hours to write a contract. It takes Zara 5 hours to write a will or 6 hours to write a contract. a. Calculate the opportunity cost for Lakisha to write I will in terms of contracts given up. To produce I will, how many contracts does Lakisha give up? Do the same for Zara. To produce I will, how many contracts does Zara give up? (4 points) Lakisha's opportunity cost for producing I will is 2 contracts. Zara's opportunity cost for producing I will is 5/6 contracts. b. Calculate the opportunity cost for Lakisha to write 1 contract in terms of wills given up. To produce 1 contract, how many wills does Lakisha give up? Do the same for Zara. To produce 1 contract, how many wills does Zara give up? (4 points) Lakisha's opportunity cost for producing one contract is 1/2 wills. Zara's opportunity cost for producing one contract is 6/5 wills. c. Who has the comparative advantage in wills and who has it in contracts? Hint: whoever gives up fewer contracts to make a will has the comparative advantage in wills. (4 points) Zara has the comparative advantage in wills. Lakisha has the comparative advantage in contracts. d. Assume both lawyers are hardcore, and work 80-hour weeks. If they each divide their time evenly between wills and contracts, so that each person spends 40 hours on wills and 40 hours on contracts. How many total wills and contracts will they together produce? (4 points) In total, Lakisha and Zara will produce 44/3 wills (In my work shown, I wrote the mixed fraction form of 44/3). In total, Lakisha and Zara will produce 20 contracts. e. If instead they each specialize in the task for which they have a comparative advantage, how many wills and contracts will they together produce. How many more wills and contracts do they together produce because they specialize and trade? (4 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Organizational Behavior And Management

Authors: John Ivancevich, Michael Matteson

6th Edition

0072436387, 978-0072436389

More Books

Students also viewed these Economics questions