James and Linda Must Prepare a Presentation for Their Marketing

question 214

Essay

James and Linda must prepare a presentation for their marketing class. As part of their presentation, they must do a marketing plan and prepare 40 PowerPoint slides. It would take James 5 hours to do the required plan and 5 hours to prepare the slides. It would take Linda 6 hours to do the plan and 10 hours to prepare the slides.
a. How much time would it take the two to complete the project if they divide the writing of the marketing plan equally and the development of the slides equally?
b. How much time would it take the two to complete the project if they use comparative advantage and specialize in writing the marketing plan or preparing slides?
c. If James and Linda have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize?

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Definitions:

Expected Utility

A concept in economics and finance that represents the average outcome when individuals are faced with uncertain decisions, often used in the context of risk and decision making.

Warranties

Guarantees provided by the seller or manufacturer, asserting that a product will meet specified criteria of performance over a certain period, and offering remedies in case of failure.

Moral Hazard

A situation where one party engages in risky behavior or fails to act in good faith because another party bears the consequences of that behavior, often seen in insurance and financial sectors.

Incentives

Incentives or disincentives that encourage people or organizations to behave in specific manners.