Assume that a lawyer and a secretary have been working together for two years. The lawyer suddenly realizes that he prepares legal briefs and types faster than the secretary. Upon learning this he decides to let his secretary go
Why might this be a mistake?
It might be a mistake if it turns out that the secretary had a comparative advantage in typing over the lawyer. In other words it is very likely and possible that the secretary and type at a lower opportunity cost than the lawyer. By firing the secretary he has confused absolute advantage with comparative advantage.
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The term for an innovative new product or production technology that disrupts the status quo in a market, leading the innovators to earn more income and profits and the other firms to lose income and profits, unless they can come up with their own innovations is called a(n)
a. innovative market change b. disruptive market change. c. productivity market change d. technological market change
Paul and David work for the same company and have the same job title, education, work experience, and are equally skilled at what they do. Paul works the night shift and is paid $60,000 a year, while David works a regular day shift and is paid $55,000 a year. Which of the following is the best explanation for why Paul earns more than David? a Paul has more human capital than David. b David has more human capital than Paul. c Paul has received a compensating differential. d Aside from pay, the night shift is more desirable than the day shift.
a. Paul has more human capital than David.
b. David has more human capital than Paul.
c. Paul has received a compensating differential.
d. Aside from pay, the night shift is more desirable than the day shift.
A firm in a perfectly competitive market:
a. ?can decrease its supply to increase the market price. b. ?can increase its supply to lower the market price. c. ?has to accept the market price for its product. d. ?has to lower the price of its product to sell more output. e. ?can raise the price of its product and sell more output.
Keeping in mind economists' definition of factors of production, which of the following is NOT a factor of production?
A) money B) low-skilled labor C) coal D) an engineer