Kelly is an architect and she is trying to decide whether to hire Mike, a draftsman, to assist with her work. Kelly could hire Mike at $20 per hour but it would take him three times as long to complete a task as it takes Kelly. Kelly is able to earn $90 per hour and has more architectural jobs than she is able to handle. Which of the following is true?
A) Kelly should not hire Mike because it would be faster for her to do the work herself.
B) Kelly should do the drafting work herself because she has the lower opportunity cost.
C) Mike should be hired at the $20 per hour wage rate.
D) Mike should be hired, but only if he is paid more than $30 per hour.

Question

Quizplus · Accepted Answer

Kelly should hire Mike because her opportunity cost of doing the work herself is $90 per hour, while hiring Mike at $20 per hour, even if he takes three times longer, is more cost-effective.

Kelly Is an Architect and She Is Trying to Decide