Answer:
Davis Florist
a. (Anita, Jerome) __Jerome____ absolute advantage in floral arrangements. __Jerome____ (Anita, Jerome) has an absolute advantage in deliveries.
b. Anita’s opportunity cost of making one floral arrangement is ___0.75__
( 1.33, 0.75, .33, 3) deliveries. Anita’s opportunity cost of making one delivery is __1.33_ (1.33, 0.75, .33, 3) floral arrangements.
c. Jerome’s opportunity cost of making one floral arrangement is ___0.33__(.75,3,1.33..33) deliveries. Jerome’s opportunity cost of making one delivery is 3 (3, 1.33, .75, .33) floral arrangements.
d. (Jerome, Anita)_Jerome____ has a comparative advantage in floral arrangements. (Jerome, Anita)__Anita___ has a comparative advantage in deliveries.
e. Suppose that, initially, both Jerome and Anita spend four hours each day doing floral arrangements and two hours each day doing deliveries. Now suppose they change their tasks, so that each individual does nothing but the task in which she or he has a comparative advantage. How many more floral arrangements and deliveries could they produce each day?
____4_____ additional floral arrangements
____5____ additional deliveries
Explanation:
a) Data and Calculations:
Time it takes Anita to finish one floral arrangement = 30 minutes
Time it takes Anita to make a delivery = 40 minutes
Time it takes Jerome to finish one floral arrangement = 10 minutes
Time it takes Jerome to make a delivery = 30 minutes
b) Absolute Advantage: Jerome will finish 3 floral arrangements (30/10), whereas Anita can only finish 1 in 30 minutes.
c) Anita's opportunity cost is the time it will take her to make a delivery using the same time it takes her to finish one floral arrangement. In 30 minutes time, she can only make (30/40) 0.75 deliveries. Using 40 minutes of making a delivery, she can finish 1.33 (40/30) floral arrangements.
d) Anita's comparative advantage in making deliveries is based on her opportunity cost when compared with Jerome's opportunity cost of making deliveries.
Floral Delivery Total hours
Arrangement
e) Total time spent by
Anita 4 hrs 2 hrs 6 hrs
Jerome 4 hrs 2 hrs 6 hrs
Anita Jerome Total
Number of floral arrangements 8 (240/30) 24 (240/10) 32
Number of deliveries 3 (120/40) 4 (120/30) 7
Anita Jerome
Number of floral arrangements 0 36 (360/10) 36
Number of deliveries 12 (360/30) 0 12
Principal = 1400