Principles of Economics- Mankiw (5th) 54

Principles of Economics- Mankiw (5th) 54 - 56 PA R T O N E...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
56 PART ONE INTRODUCTION SHOULD TIGER WOODS MOW HIS OWN LAWN? Tiger Woods spends a lot of time walking around on grass. One of the most tal- ented golfers of all time, he can hit a drive and sink a putt in a way that most ca- sual golfers only dream of doing. Most likely, he is talented at other activities too. For example, let’s imagine that Woods can mow his lawn faster than anyone else. But just because he can mow his lawn fast, does this mean he should? To answer this question, we can use the concepts of opportunity cost and com- parative 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 $10,000. By con- trast, Forrest Gump, 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 $20. In this example, Woods’s opportunity cost of mowing the lawn is $10,000 and Forrest’s opportunity cost is $20. Woods has an absolute advantage in mowing
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online