Question

Kelly is an attorney and also an excellent typist. she can type 120 words per minute, but she charges attorney fees at $100 per hour. todd would like some typing work but can only type 60 words per minute. according to the law of comparative advantage, kelly should hire todd to do her typing if and only if his wage rate is less than

Answer 1

Todd does the same typing work that Kelly does in twice the time. Todd can earn only $50 per hour when compared to Kelly's earning rate. Thus, Kelly can hire Todd only when his wage rate is less than $50/hour.