Should Tiger Woods Mow His Own Lawn? How can people benefit from specialization and trade?

Tiger can mow his lawn in only two hours, but he can also make $10,000 in two hours doing appearances. Tiger has a neighbor, Forrest. It will take Forrest 4 hours to mow Tiger’s lawn. Forrest could also spend those 4 hours working at McDonald’s for $20 total. Should Tiger mow his own lawn?

What is each person’s Opportunity Cost of mowing Tiger’s lawn? LawnWork Opportunity Cost LawnWorkLawn Tiger2 hours$10,000 Forrest4 hours$20 Who has the absolute advantage in mowing lawns? Who has the absolute advantage in working? Who has the comparative advantage in mowing lawns? How do you know? What is the most Tiger should pay? What is the least Forrest should charge?

How ‘bout another example. OpportunityCost Production in 8 hours work MeatPotatoesMeatPotatoes FARMER8 oz.32 oz. RANCHER24 oz.48 oz. Who has the absolute advantage in producing meat? Who has the absolute advantage in producing potatoes? Can they benefit from trading? First you must consider…