Kevin is the CEO of a large firm and a homeowner who pays a landscaper to maintain his lawn rather than do it himself.Kevin has determined that he can earn more in the hour it would take him to work on his lawn than he must pay his landscaper.This scenario is an example of which principle of economics?

Question

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This scenario illustrates the principle of comparative advantage, which suggests that individuals should specialize in the activities in which they have a lower opportunity cost and trade with others to increase their overall wealth. Kevin determines that his time is more valuable spent elsewhere, and thus hires a landscaper to tend to his lawn. This benefits both Kevin, who can focus on higher-paying activities, and the landscaper, who earns a wage for performing a service.

Kevin Is the CEO of a Large Firm and a Homeowner