Question

Suppose Sansa and Arya divide their time between making daggers and shields. It takes Sansa 6 hours to make a dagger and 3 hours to make a shield, and it takes Arya 3 hours to make a dagger and 1 hour to make a shield. Sansa and Arya each work 30 hours a week.a.) sansa: 5
Arya: 10
b.) sansa: 2
Arya: 3
c.) sansa
d.) Arya

Answer 1

Answer:

a. Sansa: 5 daggers per week

   Arya: 10 daggers per week

b. Sansa's opportunity cost of making a dagger:  2 shields

   Arya's opportunity cost of making a dagger: 3 shields

c. Sansa

d. Arya

Explanation:

a. The maximum number of products made in a week is determined by dividing their weekly time capacity with the time demanded for each piece. So, to determine Sansa's maximum number, just divide 30 hrs / 6 hrs = 5. The same applies for Arya and shields too.

b. The opportunity cost is determined as the missed benefit when Sansa/Arya opts for one product. So, when Sansa chooses to dedicate 6 hours of her working time to make a dagger, she misses the benefits of having 2 shields, as she was able to make 2 shields for the same time frame (6 hours). The same applies for Arya.

c. Comparative advantage is determined by comparing the opportunity costs associated with each product and competitor. Since Sansa's opportunity cost in making daggers is lower than Arya's (2 shields compared to 3 shields), Sansa has a comparative advantage over Arya in making daggers.

d. Absolute advantage is determined as the ability of an individual to produce the same (or greater) number of output than the competitor, given the same time frame. It is evident that Arya has an absolute advantage over Sansa, as she can create more shields and daggers than her in the same time frame (30 hrs).