--%>
Assignment Help - homework help

Advantage in production of two products

Explain by giving example of an absolute advantage in production of two products?

E

Expert

Verified

A CPA can paint her house faster and better than a painter.  She earns $50 per hour as accountant and can hire a painter for $15 per hour.  The CPA can do the painting job in 30 hours; it takes the painter 40 hours. Should she hire the painter?  On economic grounds, the opportunity cost is greater for the accountant to paint her house.  She is better off to specialize in accounting rather than sacrifice 30 x $50, or $1500, to paint her house, when she can hire the painter for 40 x $15, or $600.  The accountant will gain, and the painter will also gain because he is very inefficient in accounting.  It may take him 10 hours to prepare his tax return which would mean 10 x $15, hours or $150, in opportunity cost, whereas the accountant could probably complete the forms in 2 hours for a cost of $100.  This example shows that even if a person (the accountant) has an absolute advantage in production of two products (painting and accounting), it is still advantageous to specialize and trade.  The same is true for nations.

   Related Questions in Business Economics

  • Q : Introduction of the term Cost of

    Give a brief introduction of the term Cost of retained earnings?

    		•
  • Q : What will be produced in all economic

    What will be produced in all economic systems?

    		•
  • Q : Demand supply Newspaper item: “Due to

    Newspaper item: “Due to lower grain prices, consumers can expect retail prices of choice beef to begin dropping slightly this spring with pork becoming cheaper after midsummer,” the Agriculture Department predicted. “This reflects increasing supply,” the department said. Does the statement use th

    		•
  • Q : Decreases in opportunity costs of

    The opportunity costs of production and consumption for most resources and goods tend to be decreased by: (w) private monopoly power. (x) price floors. (y) intense competition. (z) price ceilings. Hey friends pleas

    		•
  • Q : What are economic resources What are

    What are economic resources? What are the major functions of the entrepreneur?

    		•
  • Q : Initial systematic and popular

    The initial systematic and popular description of capitalism was explained in: (1) Sir Thomas Mun’s England’s Treasure by Foreign Trade. (2) Joseph A. Schumpeter’s Capitalism, Socialism, and Democracy. (3) John Maynard Keynes’

    		•
  • Q : Discuss the economic aspects of ticket

    Discuss the economic aspects of ticket scalping also identifying the gainers and losers?

    		•
  • Q : Production possibility frontier

    Question: Scenario: You have been hired as the economics adviser for the newly elected State Premier. On your first day, the Premier introduces you to the new Minister for Health

    		•
  • Q : Briefly state the pros and cons of

    Briefly state the pros and cons of Corporation?

    		•
  • Q : Utilitarianism of Jeremy Bentham The

    The utilitarianism of Jeremy Bentham is generally closely akin to the philosophies of: (1) Epicurianism and hedonism. (2) pragmatism and instrumentalism. (3) asceticism and stoicism. (4) dialecticism and materialism. (5) fundamentalism and predestinat

    		•