Tiger Woods spend» .1 Ins of lime walking around on grass. One of the most talented golfers of all time, he can hit a drive and sink a putt in a way that most casual golfers only dream of doing. Most likely, he is talented at other activities tiv>. For example, let's imagine thai Woods can mow his lawn faster than anyone else. But just because he «wií mow his lawn fast,does this mean lie -Jwuid!
To answer this question, we can use the concepts of opportunity cost and comparative advantage. Let's say that Woods can mow his lawn in 2 hours. In that same 2 hours, he could film a television commercial for Nike and earn $10,1100. By contrast, for rest Cump, the boy next door, can mow Woods's lawn in 4 hours. In that same 4 hours, he could work at McDonald's and earn S20.
In this example. Woods has an absolute advantage in mowing lawns because he can do the work with a lower Input of time. Yet because Woods's opportunity cost of mowing the lawn is $10XXH) and Forrest's opportunity cost is only $20, Forrest has a comparative advantage in mowing lawns.
The gains from trade in this example are tremendous. Rather than mowing his Own lawn. Woods should make tlx- commercial and hire Forrest to mow the lawn. As long as Woods pays Forrest more than $211 and less than 510,000, both ol them are better off.
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