Renee earns $500 per hour in the courtroom as a trial lawyer;she can type up her legal documents at a rate of 80 words per minute.Christopher has no training as a trial lawyer but can type legal documents at a rate of 50 words per minute for a wage of $30 per hour.Based on the theory of comparative advantage:

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, individuals or countries specialize in the activity where they have the lowest opportunity cost. In this case, Renee's opportunity cost of typing documents is $500 per hour as compared to Christopher's opportunity cost of $30 per hour. Therefore, Renee should specialize in courtroom trials where she earns $500 per hour and hire Christopher to type her legal documents as it is a task he can perform more efficiently and at a lower opportunity cost than her.

Renee Earns $500 Per Hour in the Courtroom as a Trial