Comparative Advantage and Comparative Costs
Gus and Harry are older suburban neighbors, each with a large lawn and a
sizable flower garden. Every Saturday afternoon during the summer, they
reluctantly go out to mow their own lawns and weed their own gardens.
(They'd have their own kids do it but they’ve long moved out of the house.)
Gus always finishes earlier despite the fact that the lawns and gardens are
identical. He can mow in 40 minutes and weed his garden in 80 minutes.
Harry spends two hours mowing and two hours weeding—toiling away long
after Gus has retired to his air-conditioned house to catch the end of the
Cubs ball game on TV. Harry's results look exactly the same as Gus’s; he’s
just slower at the chores. You should have these data clear before you
proceed.
GUS HARRY
Lawn 40 Minutes 120 Minutes
Garden 80 Minutes 120 Minutes
Of course Harry would like to spend less time doing yard work and enjoy
more time on Saturday sentimentally listening to his old Neil Diamond
tapes. Gus would like to enjoy more time watching the ball game. Harry
realizes this After finally completing his yard work one terribly hot
Saturday, Harry comes up with an incredible idea.
He proposes to Gus that they do some swapping of chores next week
Do you think Harry’s idea is a rational one? Can you think of how they
could exchange chores so that both of them will be made better off?