Al has a comparative advantage as its opportunity cost of paneling is lower at 0.67 per hour as compared to Ken. Ken has a comparative advantage as the opportunity cost of producing drywall is lower at 1 hour as compared to Al. Assuming there are 10 walls to panel (10 paneling jobs) and 8 dry walls to build (8 dry wall jobs) what is the monetary savings if Ken and Al specialize in their respective comparative advantages

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Al has a comparative advantage as its opportunity cost of paneling is lower at 0.67 per hour as compared to Ken.

Ken has a comparative advantage as the opportunity cost of producing drywall is lower at 1 hour as compared to Al.

Assuming there are 10 walls to panel (10 paneling jobs) and 8 dry walls to build (8 dry wall jobs) what is the monetary savings if Ken and Al specialize in their respective comparative advantages?

Time to complete 1 unit
Worker
Wage
Paneling
Dry Wall
Al
($9/br)
6hrs
4hrs
Ken
($10/hr)
5hrs
5hrs
Transcribed Image Text:Time to complete 1 unit Worker Wage Paneling Dry Wall Al ($9/br) 6hrs 4hrs Ken ($10/hr) 5hrs 5hrs
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