Chapter 3

The focus on this chapter centered on trading and the positive effects it can have to parties involved, explaining the ways that 2 different parties can be affected by it. The main example, the farmer and rancher, showed that even though the rancher was better than the farmer at producing both meat and potatoes than the farmer, they would both benefit from trading with each other rather than limiting themselves and trying to get both products on their own. Although very simple, this example showed how specializing in something that you're good at doing and trading is beneficial overall. There was doubt in the farmer as to how it can help him better, but charts/graphs helped show how trading can help him have more than what he can currently make with his current workload input. And, although one person can have absolute advantage than another in everything, the comparative advantages between them is different unless the opportunity cost between the two parties is the same. Absolute means one can be better overall in output done for what the two of them can make, even so though comparative means that one person can give up less than the other to make the same good. The differences between the two is showed more in later examples. In a scenario with Tiger Woods and his neighbor, participating in a commercial and hiring the neighbor to mow the lawn is better for him overall instead of wasting the time needed to do the commercial by mowing the lawn.