Lorenzo and Neha are partners at an architecture firm. They are trying to determine which of them has a comparative advantage in building the 50 models required for a sales pitch to a prospective client.
Lorenzo can build 10 models per hour. For other activities, he can bill clients $500 per hour. Lorenzo's opportunity cost of building models is $50 per model.
Neha's opportunity cost of building models is 20% higher than Lorenzo's. However, as the junior partner, her billing rate is 15% lower. Based on all of these facts, Lorenzo has a comparative advantage in building models.