Question

Suppose that Verania and Josimar are roommates that need to complete some household chores. Vacuuming and washing dishes need to be done. They know from the last time they did these chores that it takes Verania 2 hours to vacuum and 1 hour to wash dishes. It takes Josimar 3 hours to vacuum and 2 hours to wash dishes. Josimar says it does not matter which task each of them performs because Verania is faster at both tasks.
Josimar’s reasoning
a. is wrong. Because Verania has a comparative advantage in washing dishes, she should wash dishes, and Josimar should vacuum.
b. is correct. Because Verania is faster at both tasks, there is no benefit in each volunteer specializing in one task or the other.
c. is wrong. Because Verania has an absolute advantage in both tasks, she should perform both tasks herself.
d. is wrong. Because Josimar has a comparative advantage in washing dishes, he should wash dishes, and Verania should vacuum.

Answer 1

Answer: a. is wrong. Because Verania has a comparative advantage in washing dishes, she should wash dishes, and Josimar should vacuum.

Explanation:

Having absolute advantage in both things does not mean that Verania has a Comparative advantage in both as well.

They should find out which activity they both have a comparative advantage in and focus on that. The activity that costs the least opportunity cost is the one they have a comparative advantage in.

Verania

Opportunity cost of vacuuming = 2 / 1 = 2 hours of washing dishes

Opportunity cost of washing = 1/2 = 0.5 hours of vacuuming

Josimar

Opportunity cost of vacuuming = 3/2 = 1.5 hours of washing dishes

Opportunity cost of washing = 2/3 = 0.66 hours of vacuuming

Verania has a comparative advantage in washing dishes while Josimar has a comparative advantage in vacuuming.