APPLYING THE CONCEPTS #3: What is the rationale for specialization
and exchange?
Jasper Johns’ painting False Start sold for $80 million. He is among
the top earning artist.
He could use his considerable paining skills to paint his own house.
▪ If his time as an artist is worth $5,000 a day, then his opportunity
cost of painting his house in one day is that same $5,000.
▪ Suppose a professional housepainter would take ten days and
charge $150 a day.
▪ Although Mr. Johns is more productive, he could earn $5,000 for
his day of work and pay someone else $1,500 for ten days of work
and be $3,500 better off.
People are better off specializing in what they do best and the buying
goods and services from someone else.