Trade: A Win-Win Situation
What happens when Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor?
a. only Dale is made better off by trade.
b. both Dale and Terrence are made better off by trade.
c. neither Dale nor Terrence are made better off by trade.
d. only Terrence is made better off by trade.
Answer:
Trade allows both parties to benefit by exchanging goods or services they value less for goods or services they value more. In this scenario, Dale benefits by receiving the service of Terrence's daughter learning to play the guitar, and Terrence benefits by receiving the service of having his kitchen floor tiled. Both individuals gain something they desire through the trade, making them better off compared to not engaging in the trade. The correct answer is b. both Dale and Terrence are made better off by trade.
In this case, Terrence, a tile layer, wants his daughter to learn how to play the guitar, while Dale, a guitar teacher, wants his kitchen floor tiled. Both parties can satisfy their individual requirements and preferences by exchanging services.
Because Dale receives the service of having his kitchen floor tiled, which he sought, he gains from the exchange. This enhances his living situation and saves him the time and work needed to tile the floor himself or hire a professional.
The exchange benefits Terrence since Dale teaches his daughter how to play the guitar, allowing Terrence to realize a lifelong dream. His daughter now has this opportunity.
Therefore, both Dale and Terrence are made better off through the trade. Each party obtains something they value in exchange for providing a service they are skilled in, resulting in a mutually beneficial arrangement.