I am working on this question related to chapter 3 in Mankiw Microeconomics book

Question

I am working on this question related to chapter 3 in Mankiw Microeconomics book. I am having a tough time grasping the process of economics. So I'm listing the question and would like someone to describe the process to calculate this question.

1.Gary and Diane must prepare a presentation. 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 calculations and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides.

a.How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? My inclination is to divide the amount of time each can do and find the average? So it would take them 11 hours for the calculations and 15 hours to produce the slides?? Is this the correct thought process?

b.How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? Here - does Diane have the lower opportunity cost as she is realizing less time to complete the project because it takes less time for Gary to produce calculations and slides? So she has the comparative advantage?

c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides? The only other solution I can apply here is: Gary is quicker at both calculating and preparing slides, but Diane is only slightly slower in preparing calculations but much longer at preparing slides - so give the slides to Gary and the calculations to Diane? How do I present this?

Explanation / Answer

Solution :

a) Gary takes 10 hours to do the calculation and 10 hours to prepare 50 slides

In one hour gary would do 1/10 of the calculation and 5 slides can be completed by Gary in one hour.

Diane takes 12 hours to do the calculation and 20 hours to prepare the slides

In one hour diane would do 1/12 of the slide and 2 1/2 slides can be completed by Diane in one hour .

If they divide the work equally i.e Gary does half the calculations and half of slide work and Diane does the other half .

Then combining both Gary and Diane the combination will do in 5+6 = 11 hours for the calculation work

Gary takes 10 hours to do 50 slides and Diane takes 20 hours to do 50 slides

In one hour Gary does 5 slides and Diane does 2.5 slides in one hour.

If the work of slides are divided equally then Gary takes 5 hours to do 25 slides and Diane takes 10 hours to do 25 slides. Hence if 50 slides are divided equally the combination requires 15 hours to do the slides.

b) Gary takes 20 hours to complete the project and Diane takes 32 hours to complete the project . Diane is taking more time to complete the project , hence Gary has the comparative advantage .

c) Diane and Gary have the same opportunity cost of $ 5 per hour . It is better to give Diane calculations and Gary preparing slides .

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