Calculate the opportunity cost for lakisha

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Reference no: EM133596526

Problem

Suppose Zara and Lakisha are law partners writing wills and contracts. They want to maximize the total output of their combined efforts. It takes Lakisha 8 hours to will or 1 hour to write contract. It takes Zara 4 hours towill or 4 hours to contract.

Question 1. Calculate the opportunity cost for Lakisha to write 1 will in terms of contracts given up. To produce 1 will, how many contracts does Lakisha give up? Do the same for Zara. To produce 1 will, how many contracts does Zara give up?

Question 2. Calculate the opportunity cost for Lakisha to write 1 contract in terms of wills given up. To produce 1 contract, how many wills does Lakisha give up? Do the same for Zara. To produce 1 contract, how many wills does Zara give up?

Question 3. Who has the comparative advantage in wills and who has it in contracts? Hint: whoever gives up fewer contracts to make a will has the comparative advantage in wills.

Question 4. Assume both lawyers are hardcore, and work 80-hour weeks. If they each divide their time evenly between wills and contracts, so that each person spends 40 hours on wills and 40 hours on contracts. How many total wills and contracts will they together produce?

Question 5. If instead they each specialize in the task for which they have a comparative advantage, how many wills and contracts will they together produce, and what are the gains from trade?

Question 6. Assume both lawyers are hardcore, and work 80-hour weeks. If they each divide their time evenly between wills and contracts, so that each person spends 40 hours on wills and 40 hours on contracts. How many total wills and contracts will they together produce?

Reference no: EM133596526

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