Question

1. Two employees (Molly and Jim) must conduct a data analysis project on the success of a firm’s marketing efforts and then write a report of their findings for consideration by the firm’s board. If the first employee, Molly, worked completely alone, she could finish the data analysis component of the project with 30 hours of work and could write the report with an additional 10 hours of work. If Jim worked alone, he would take 48 hours of work to conduct the data analysis and then 12 hours to write the report. Assume that both employees need to contribute to the project, that there would be no benefits to having two people work on the same part of the project (data analysis and writing), and that working on the two parts are independent (i.e. there is no benefit to working on both parts).
2. 1. Which employee has the absolute advantage in conducting the data analysis? Explain.
   2. Which employee has the absolute advantage in writing the report? Explain.
   3. Which employee has the comparative advantage in conducting the data analysis? Explain.
   4. Which employee has the comparative advantage in writing the report? Explain.

Answer 1

A) Molly has the absolute advantage in conducting the data analysis.

because molly can produce a product or service at a lower absolute cost per unit using a smaller number of inputs or a more efficient process than jim by conducting the data analysis. molly take 30h and jim take 48h so molly take 18h less than jim.

B) Molly has the absolute advantage in writing the report.

because molly can produce a product or service at a lower absolute cost per unit using a smaller number of inputs or a more efficient process than jim by in writing the report. molly take 10h and jim take 12h so molly take 2h less than jim.

C) Jim has the comparative advantage in conducting the data analysis.

Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. so here jim opportunity cost are low than molly in conducting the data analysis.

D) Jim has the comparative advantage in writing the report.

Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. so here jim opportunity cost are low than molly in writing the report.