Question

Jullie and Scott are deciding how to split their household chores. Julie suggests that they each do half of the chores to make it fair for both of them. Scott replies that in his econ class he learned about opportunity costs and they should instead each specialize in one chore. Scott can clean 10 loads of laundry or 8 bags of trash per week. Julie can clean 12 loads of laundry or 15 bags of trash per week.

1. Calculate the opportunity costs for laundry and trash for Julie and Scott.( calculating 4 different opportunity costs)

2. Julie seems to be better at both chores compared to Scott, explain why she will be better off by specializing and trading with Scott.

3. If instead Scott could clean 5 loads of laundry and 4 bags of trash per week, should they still specialize or would splitting everything in half be more reasonable suggestion?

Answer 1

Answer 1:

Opportunity cost is the cost incurred for doing one work by leaving another work in terms of other work.

	Laundry	Opportunity cost of Laundry in terms of Trash	Trash	Opportunity cost of Trash in terms of Laundry
Scott	10	(8/10=0.8)	8	(10/8=1.25)
Julie	12	(15/12=1.25)	15	(12/15=0.8)

Answer 2:

Julie is better in doing both chores but if she will specialize in doing Trash (because her opportunity cost of doing Trash is less than Opportunity cost of Laundry) then she will be better off by trading with Scott. Opportunity cost of Scott is less in doing Laundry, so Scott wil secialize in Laundry and will do 10 laundry. Julie will do 15 Trash and if they will trade then if she will trade 1 Trash=1 Laundry she will be better off as compared to if they will do half of each.

Before Specialisation (Half work each):

	Laundry	Trash
Scott	5	4
Julie	6	7.5(assuming fractioning is possible)
Total	11	11.5

After specialisation:

	Laundry	Trash
Scott	5	5
Julie	5	10
Total	10	15

After specialization Laundry is decreased by 1 but Trash increased by 3.5.

Answer 3:

If Scott could clean 5 laundry and 4 Trash then

Before Specialisation (Half work each):

	Laundry	Trash
Scott	2.5	2
Julie	6	7.5(assuming fractioning is possible)
Total	8.5	9.5

After specialisation:

	Laundry	Trash
Scott	3	2
Julie	2	13
Total	5	15

After specialization Laundry is decreased by 3.5 but Trash increased by 5.5.