Which of the following statements is a valid economic conclusion based on this information?

Sam and KC should each spend about half their time on tax returns and sales calls.

It would be best for Sam to work only on making sales calls.

KC’s time would be best spent on sales calls.

Sam’s time would be best spent on tax returns

To answer this question, it is necessary to understand a concept that economists call the cost of opportunity. Opportunity cost is a way of measuring the monetary loss that a person has when giving up a task to perform another task. For example, to make a sales call Sam fails to make 0.1 tax return. Similarly, for San to make a tax return, he fails to make .25 sales call.

So, to produce 30 sales call, Sam stops making 3 return taxes. Also, to make 28 return taxes, San ceases to make 7 sales call. In other words, the opportunity cost of producing Sam's tax returns is greater than the opportunity cost of making sales calls. Thus, the cost-of-opportunity analysis shows that for Sam, producing sales calls is more efficient.

ogorwyne ogorwyne · Answer 2 · 2022-02-07T13:58:51+01:00

The economic conclusion that would be best here is that It would be best for Sam to work only on making sales calls.

The concept of absolute advantage

This is the that businesses or firms should specialize on what they are able to do best.

According to the graph table here, Sam makes 10 calls and only has 1 tax return as the opportunity cost for the sales call.

This is a better option compared to the rest.