PS1-Q4 - Question
Four
 
 


Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Question
Four
 
 
 Teaching
Economics
101
presents
many
resource
allocation
problems.

We
will
 concentrate
on
the
question
of
how
most
efficiently
to
cover
various
teaching
and
 administrative
tasks.

For
our
purposes,
let’s
imagine
there
are
three
productive
agents
 in
this
process:

a
professor,
a
GSI
and
an
administrative
assistant.
 
 The
administrative
assistant
takes
fifteen
minutes
to
complete
an
administrative
task,
 but
finds
teaching
difficult.

A
single
teaching
task
would
take
the
administrative
 assistant
eight
hours.

The
professor
has
the
opposite
problem.

Teaching
tasks
can
be
 accomplished
in
an
hour,
but
administrative
tasks
prove
extremely
tricky
and
take
four
 hours.

GSIs
take
two
hours
to
complete
a
teaching
task
and
one
hour
to
complete
an
 administrative
task.
 
 (a) What
is
the
opportunity
cost
of
completing
an
administrative
task
for
each
type
 of
agent?

Who
has
the
comparative
advantage
in
completing
administrative
 tasks?
 
 Answer:

The
opportunity
cost
of
one
administrative
task
is
measured
in
the
 potential
number
of
teaching
tasks
a
person
could
otherwise
complete:
 
 Administrative
Assistant:
 
 Professors:
 
 GSIs:
 
 Therefore
the
comparative
advantage
in
administrative
tasks
belongs
to
the
 person
with
the
lowest
opportunity
cost,
which
is
Administrative
Assistants.
 
 
 
 
 
 
 
 (b) What
is
the
opportunity
cost
of
completing
teaching
tasks
for
each
of
the
 productive
agents?

Who
has
the
comparative
advantage
in
completing
teaching
 tasks?
 
 Answer:

The
opportunity
cost
of
one
teaching
task
is
measured
in
the
potential
 number
of
administrative
tasks
a
person
could
otherwise
complete:
 
 Administrative
Assistant:
 
 Professors:
 
 GSIs:
 
 Therefore
the
comparative
advantage
in
teaching
tasks
belongs
to
the
person
 with
the
lowest
opportunity
cost,
which
is
Professors.
 
 (c) Suppose
that
each
agent
has
eight
hours
available
to
work
per
day.

Draw
the
 joint
PPF
for
the
three
agents.

If
there
are
thirty‐four
administrative
tasks
to
be
 completed
each
day,
how
many
would
be
handled
by
the
professor
if
resources
 are
allocated
efficiently.

 
 Answer:

See
the
graph
below.
The
professor
would
spend
all
of
his
or
her
time
 doing
teaching
tasks
(total
of
8
hours
of
teaching
tasks)
 
 
 Now
imagine
there
is
a
significant
increase
in
the
administrative
demands
of
the
course.

 In
order
to
cope
with
the
extra
workload,
the
GSI
is
released
from
various
constraints,
 and
is
immediately
transformed
into
a
Super‐GSI,
four
times
as
productive
as
she
was
 before
(meaning
every
task
takes
her
one‐quarter
of
the
time
it
used
to).

The
super‐GSI
 is
now
twice
as
effective
a
teacher
as
the
professor,
and
is
a
great
deal
more
effective
at
 administration.
 
 (d) Who
now
has
the
comparative
advantage
in
teaching?
Redraw
the
joint
PPF
to
 reflect
the
increased
productivity
of
the
GSI.

If
there
are
now
sixty
 administrative
tasks
to
be
completed
each
day,
how
many
should
be
handled
by
 the
professor?
 
 Answer:

See
the
graph
below.
The
professor
still
has
the
comparative
advantage
 in
teaching.
The
important
thing
to
appreciate
here
is
that
the
GSI’s
productivity
 improvement
does
not
change
her
relative
productivity
in
the
tasks.

Hence,
her
 opportunity
cost
of
producing
a
teaching
task
has
not
changed:


it
is
still
lower
 than
the
professor’s
and
higher
than
the
administrative
assistant’s.
 
 
 
 
 ...
View Full Document

This note was uploaded on 04/20/2010 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

Ask a homework question - tutors are online