As a manager of a financial planning business you have two financial planners, Phil and Francis. In an hour, Phil can produce either one financial statement or answer 8 phone calls, while Francis can either produce 4 financial statements or answer 10 phone calls. Does either person have an absolute advantage in producing both products? Should these two planners be self-sufficient (each producing statements and answering phones) or specialize? Be sure to show your work.

Question

bobpursley · Answer

dP/df=1 dFr/df=4
dP/dt=4 dFr/dt=10

So, the value of these services has to be established: Let the value of a telephone call be Vt, and the Value of a financial statement Vf.

So the possible total values in one hours could be:

phil f, Fr t: Vf+8Vt
phil f, Fr f: 5Vf
phil t, Fr f: 4Vf+8Vf
phil t, Fr t: 18Vf

Now if you put in numbers for the two values, you get your answers. For instance, if the value of a statement is 10 dollars, and the value of answering a telephone call 20 dollars, then value of the options are..
100, 50,200, 390 and the answer is they both work the telephones to max value.