Who has the absolute advantage in the lawn care business
Asked by admin @ in Business viewed by 290 People
URGENT PLEASE!! I'LL MAKE YOU BRAINLIST AND 90 POINTS!!!! ECONOMICS
If you recall from earlier lessons, Opportunity Cost is the value of the next best alternative. If you were to ask an economist why they believed LeBron James chose not to attend college and play college basketball they would likeley answer this question by stating that the opportunity cost of college (making millions in the NBA) was too high for James. In this lesson you learned that Comparative Advantage is the ability to produce something at a lower opportunity cost than other producers.Therefore, the Law of Comparative Advantage An individual, firm, region or country with the lowest opportunity cost of producing a good should specialize in that good. You have also learned that Absolute Advantage is the ability to produce something using fewer resources than other producers.
Applying these concepts provide your analysis of who has comparative advantage and absolute advantage according to the scenario facts below:
1. Assume LeBron is both a great basketball player and a great lawn mower. However, LeBron has a young neighbor named Scotty who is willing to mow his lawn.
2. LeBron can mow his lawn in two hours. He could also film a Nike commercial in two hours and make $10,000. So, James' opportunity cost of mowing his lawn is $10,000.
3. Neighbor Scotty can mow LeBron's lawn in four hours. He could also work at McDonald's for four hours and make $8 per hour. So, Scotty's opportunity cost of mowing LeBron's lawn is $32.
Question(s) to answer:
Who has an absolute advantage in mowing the lawn? Who has comparative advantage in mowing the lawn? Could both benefit from a trade? If yes, explain how this could happen. Provide your anwer in thorough and complete sentences