Opportunity cost of building models

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Reference no: EM131204115

Alex and Becky are partners at an architecture firm. They are trying to determine which of them has a comparative advantage in building the 50 models required for a sales pitch to a prospective client.

Alex can build 10 models per hour. For other activities, he can bill clients $400 per hour. Alex's opportunity cost of building models is per model. Becky's opportunity cost of building models is 30% lower than Alex's. However, as the senior partner, her billing rate is 25% higher. Based on all of these facts, has a comparative advantage in building models.

Reference no: EM131204115

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