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Card 31 / 100: Explain this statement: "The gains from trade in a case of absolute advantage are obvious, but they can be quite subtle in a case of comparative advantage."
Answer:
If Joe is an expert lawyer while Sally is an expert dentist, it is perfectly obvious that they benefit from Joe trading legal services in exchange for Sally's dental work. But in the text's hypothetical case of Marcia the storekeeper and John the hired help, it's not clear at first why Marcia benefits from hiring someone to do a job she could more quickly herself.
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Dr.Robert MurphyAssociated Scholar
Mises Institute
USA
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Attribution:
Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY
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