Lecture # 5
Should you and your roommate divide household chores evenly?
• There are two interior decorators that can paint and wallpaper. They have 40 hour work
weeks. Martha can paint 20 rooms or wallpaper 5 rooms; Stewart can paint 10 rooms or
wallpaper 8 rooms. (Constant Opportunity Cost)
# Done in 40 Hours
Martha 20 5
Stewart 10 8
# Hours Needed to do 1 Room
Martha 2 8
Stewart 4 5
• Whatever must be given up to obtain some other items; like going to university instead of
working full time.
# Opportunity Cost of 1 Room
Martha ¼ Wallpaper Room 4 Painted Room
Stewart 4/5 Wallpaper Room 5/4 Paint Room • It is useful to put the information into a sentence.
• The ability to produce goods with a smaller quantity of inputs.
• The ability to produce a good with smaller opportunity cost. The comparative advantage
tells us what each party should produce in order to maximize efficiency.
• NEVER does one party have comparative advantage for in both goods.
• Comparative adv