Question

Peter Peppermill can choose to work as a custodian for $8 an hour, a teaching assistant for $9 an hour, or a telemarketer for $10 an hour. If Peter only values the jobs based on his wage and he wants to maximize his standard of living, why should he take the telemarketer job according to the law of comparative advantage?

Answer 1

to minimize their opportunity cost.

Step-by-step explanation:

Comparative advantage refer to the ability from Peter to produce goods an services at a lower opportunity cost than others.

We must remember that opportunity cost is the best rejected alternative for a given factor.

In this case Peter labor force can have three possible returns.

If is picks to work as custodian or teaching it will renounce to work as a telemarketer for $10 dollars per hours (best alternative in both cases) Thus it will lose a dollar or even two dollars per hours fro man economic point of view

While working as a telemarketer makes his renounce to a 9 dollars salary (best alternative rejected) Thus it will achieve an econmic gain of 1 dollar per hour.

The potential benefit loss working as telemarketer is less than in the other jobs. It forfeited to less amounts of wages thus; it is comparative advantageous for him to work as telemarketer.