Xavier and Kim are partners at a management consulting firm. They are trying to determine which of them has a comparative advantage in creating the 25 slides required for a sales pitch to a prospective client.
Xavier can create 20 slides per hour. For other activities, he can bill clients $400 per hour. Xavier’s opportunity cost of creating slides is ($20, $15, $0.06, or $0.05)per slide.
Kim’s opportunity cost of creating slides is 35% higher than Xavier’s. However, as the junior partner, her billing rate is 30% lower. Based on all of these facts, (Kim or Xavier) has a comparative advantage in creating slides.
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