You are a manager of a division of a company that is responsible for the final assembly of two computer products, modems and keyboards. You manage two employees, Julio and Chenyu, who each work 8 hours per day. Currently you have assigned both Julio and Chenyu to spend the first 7 hours of the day assembling keyboards and the last hour assembling modems. Julio can assemble 2 modems per hour and 14 keyboards per hour. Chenyu is more highly skilled in both activities. She averages 3 modems per hour and 15 keyboards per hour.

1. How many modems and keyboards are being assembled under the current work assignments?

2. What are Julio’s opportunity costs for assembling modems and keyboards? What are Chenyu’s? Does either employee have a comparative advantage in assembling one of the products?

3. Devise a way of reassigning the work activities between the two employees that keeps the number of modems being assembled the same as before but increases the number of keyboards.

4. What are potential reasons why you might not want to change the work assignments (assume that more assembly of either or both products is desirable)?