A boss can type 200 words per minute and sell 2000 units of the company's product in one day. His assistant can type 150 words per minute and sell 1000 units of the company's product in one day. Discuss who has absolute and comparative advantages in the "production" of typing and selling.
What will be an ideal response?
Because the boss can type faster than his assistant, he has an absolute advantage in typing. Because the boss can sell more units in a day, he also has an absolute advantage in selling. The assistant does not have an absolute advantage in either. However, the assistant does have a comparative advantage in typing since she gives up fewer units of sales by devoting her time to typing. Alternatively, the boss has a comparative advantage in selling.
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