Answer to Question #236977 in Macroeconomics for Ettie

Question

Economics

Suppose you are the coach of a team consisting of two players, Bill and Ted. Each player has 60 minutes to be allocated to either right position or left position. Note: at all times there must be one player in right position and one player in left position.

For Bill, every minute allocated to right position yields 0.2 points and every minute allocated to left position yields 0.4 points. For Ted, every minute allocated to right position yields 0.3 points and every minute allocated to left position yields 0.6 points.

a) Construct a diagram illustrating the production possibilities frontier for each of these individuals. Be sure to label each axis appropriately and identify relevant intercept values.

b) Who has the absolute advantage in right position? Who has the absolute advantage in left position?

c) Who has the comparative advantage in right position? Who has the comparative advantage in left position?

d) To maximize the probability of winning, how must you allocate your resources?

Answer 1

a.

Points on either side will be given by points yield multiplied by the maximum available time to be allocated to either of the players

Therefore,

Bill can make a maximum of 0.2 $\times$ 60 = 12 points in the right position and 0.4 $\times$ 60 = 24 points in the left position.

Ted can make a maximum of 0.3 $\times$ 60 = 18 points in the right position and 0.6 $\times$ 60 = 36 points in the left position.

b.

the player with absolute advantage in right position is Bill

the player with absolute advantage in left position is Ted

Basis of the answer: Ted yields the points more efficiently using the available time as compared to Bill.

c.

the player with comparative advantage in right position is Bill

the player with comparative advantage in left position is Ted

d.

Bill 24 minutes

Ted 36 minutes