Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 3 - Exchange and Markets - Exercises - 3.1 Comparative Advantage and Exchange - Page 63: 1.3

Answer

Pat and Terry run a landscaping firm that cuts lawns and prunes trees. Pat is more productive than Terry at both tasks. Pat should cut lawns and Terry should prune trees if Pat has a comparative advantage in cutting lawns.

Work Step by Step

A comparative advantage is the ability of one individual, group, or nation to produce a good or service at a lower opportunity cost than another person, group, or nation. The opportunity cost is what you sacrifice to get something else. In this case, Pat is more productive at cutting lawn than Terry, and therefore should be the one cutting the lawns because he has a comparative advantage to Terry.
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