Economics for Managers

I recently got an A on my comprehensive final in BA 5000: Economics for Managers. In an effort to afford a better environment for learning, I am posting my answer to one of four essay questions. Here it is for your benefit in its entirety, verbatim:

Give an example of how opportunity cost is used to solve for comparative advantage. Provide numbers and clearly illustrate the link between opportunity cost and comparative advantage.

Colin (me) and Ryan must achieve the highest level of inebriation as fast as possible. However, we have limited time and resources. Colin can drink five Budweisers per hour or four Red Bull & Vodkas per hour. Ryan can drink four Budweisers per hour or six Red Bull & Vodkas per hour. In the time it takes me to pour one Budweiser into my face, I could have drank 4/5 a RBV. Therefore, my opportunity cost of drinking one Budweiser is 4/5 RBV. In the time it takes Ryan to slam one Budweiser, he could have sucked down 1.5 RBV's. Since I am sacrificing less RBV consumption, my opportunity cost of chugging Budweiser is lower and I have the comparative advantage over Ryan at drinking Budweiser. Comparative advantage is realized when one has a lower opportunity cost at any given action, production, etc. than another. In the time I can kill one RBV, I could have downed 1.25 Budweisers. Ryan's opportunity cost of drinking one RBV is 2/3 Buds, which is lower and he has the comparative advantage at drinking Red Bull & Vodkas. So, in a society of scarcity and limited resources where we must get as drunk as possible as fast as possible, I should swill Budweisers and Ryan should suck down Red Bull Vodkas.

I hope you learned something.