What's The Deal Dirk?

Student Q&A's with Dirk

If a one person has an absolute advantage in producing goods and services over another individual why would they ever want to trade with the other person? Shouldn’t they do everything on their own?

This question asked by Anonymous

One of the most surprising ideas from economics is that comparative advantage trumps absolute advantage. Suppose you are better at writing and researching a paper than the other students in your class but your instructor assigns a group project and assigns one of the weakest students in the class to your group. Should you do the entire paper yourself? You’d be tempted but comparative advantage can help you finish sooner. Even though the other student is slower at researching the topic and writing the report, if they do the research it will free up your time to allow you to focus on the writing. In this case we say that the weaker student has a comparative advantage in research and the stronger student has a comparative advantage in writing. Specialization in what each student is relatively good at allows them to both contribute, and save time, from collaborating.

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