Answer:
In this scenario, <u>LISA</u> has both an absolute advantage in food preparation, and <u>LISA</u> has a comparative advantage in food preparation.
Assume that initially, Sam and Lisa are splitting both tasks for a large number of events. Then they decide to start shifting some work according to the principle of comparative advantage. In particular, the person with the comparative advantage in food preparation will take over preparing food for one more event, and the other person will use the freed-up time to get more clients. As a result, the total number of events for which food is prepared will remain unchanged, but the number of new clients will increase by <u>1</u>.
Before they were getting 3 new customers since Sam got 2 and Lisa 1, but since Sam will only look for clients, then the total number of clients will be 4 (or 1 more).
Explanation:
It takes Sam 12 hours to prepare the food for an event and 3 hours of effort to get each new client.
- Sam's opportunity cost of preparing food = 12/3 = 4 new clients
- Sam's opportunity cost of getting new clients = 3/12 = 0.25 of food preparation
For Lisa, it takes 10 hours to prepare food for an event and 5 hours to get a new client.
- Lisa's opportunity cost of preparing food = 10/5 = 2 new clients
- Lisa's opportunity cost of getting new clients = 5/10 = 0.5 of food preparation
Answer:
The effect on Morgantown's overall profit is $140,000 decrease in Morgantown's profits
Explanation:
In order to calculate the effect on Morgantown's overall profit we would have to make the following calculations:
Contribution margin per unit for Lock Division = Selling price – Variable costs = $40 - $22 = $18
Contribution lost by lock division if Cabinet division buys from outside = $18 * 10,000 = $180,000
Cost per unit saved by Cabinet division = $40 - $36 = $4
Total cost saved by cabinet division = $4 * 10,000 = $40,000
Net decrease in profit = Contribution lost – Cost saved = $180,000 - $40,000 = $140,000
Therefore, the effect on Morgantown's overall profit is $140,000 decrease in Morgantown's profits.
I think the Dollar will appreciate against the Euro.
Higher interest rate will create stronger currency because investor now became really interested to invest in that country.
As for the amount it will be 4 % x the difference in strength now.
<span>First offer expected utility = $50,000
Second offer expected utility = $50,000
This requires you to know the meaning of "expected utility" which is quite simply the sum of every possible outcome multiplied by the probability of the outcome. So let's take a look at the job offers and see what their expected utility is.
First offer.
100% chance of $50,000 = $50,000
So the first offer has an expected utility of $50,000
Second offer
50% chance of $20,000 = $10,000 ; John didn't get the bonus.
50% chance of $20,000 + $60,000 = 50% of $80,0000 = $40,000 ; John got the bonus.
Expected utility = $10,000 + $40,000 = $50,000
So the second offer also has an expected utility of $50,000.</span>
