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Comparative Advantage.

5.10.2010

An electronics teacher once told my high school class that he only buys parallel wired Christmas lights (which are more expensive), because it wasn't worth his time to find and replace the single failed bulb in a string of serial lights. There's another half to this equation of comparative advantage. People are not always earning income with their free time. Often, the choice is between spending money and not spending it.

I earn a good salary as a technologist. But it's a fixed salary; working 16 hours in a day doesn't get me twice as much money for that day. It's still worthwhile for me to spend an hour taking bottles and cans back for their Oregon deposit ($10, on a good day).

I have a friend who has very little free time. She attends to school for a graduate degree, works in her chosen industry, and also has her own small business. The small business is so successful that she could fill up all her extra hours earning extra money. She does not take bottles and cans back to for their deposits, since she earns more for an hour of work.

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Tags: economics

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