Question

QUESTION 14
Adam could whack down all the weeds on his estate in one hour at an opportunity cost of $1,000, but it would take 20 hours for a
gardener to do it at a price of $10 per hour. Based on the assumptions, should Adam hire a gardener or cut the weeds himself?
He should hire the gardener because he would save $1,000,
He should hire the gardener because he would save $800
He should cut the weeds himself because he would save $200,
O He should cut the weeds himself because he would save $1,000.

Answer 1

Adam should hire the gardener because because he would save $800

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

Adam has a higher opportunity cost when compared to the gardener. This could be because the gardener specialises in whacking down weeds or because Adam has a better use for his time.

The theory of comparative advantage suggests that an individual should specialise in the production of the good for which he has a less opportunity cost in its production.

Using this logic, the gardener should whack the weeds

The amount Adam would save is $1000 - ($10 x 20) = $800

To learn more about opportunity cost, please check: https://brainly.com/question/13036997?referrer=searchResults