Question

Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides, at an opportunity cost of $5 per hour. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides, at an opportunity cost of $5 per hour. How should they divide up the work to achieve the lowest possible opportunity cost

Answer 1

Answer and Explanation:

The computation of the opportunity cost that should be divided to accomplish the lesser opportunity cost is shown below:

For Gary

The Opportunity cost of 10 hours of calculation is

= 10 hours of slides

Now the opportunity for 1 calculation hours would be 1 hour of slide

Thus, the opportunity cost of 1 hour of calculation = 1 hour of slide

For Diane:

The Opportunity cost of 12 hours of calculation would be

= 20 hours of slide preparation

So for one hour it would be

= 20 ÷ 12

= 1.67 hours of slide preparation.