Imagine that there are two people, in the world: Joe and Bob. Joe and Bob need two things to live: A widgets and B widgets. * Joe can make 10 A widgets in an

Imagine that there are two people, in the world: Joe and Bob. Joe and Bob need two things to live: A widgets and B widgets. * Joe can make 10 A widgets in an hour, and 5 B widgets in an hour. * Bob can make 5 A widgets in an hour, and 4 B widgets in an hour. Joe and Bob need 10 A widgets and 10 B widgets each day to live. They are both lazy, and don't want to work more than they have to. This is obviously a totally contrived model of an economy. Yet, you can work out that if Bob and Joe negotiate, each only pursing his own self-interest, they will eventually decide that Joe should concentrate on making A's while Bob should concentrate on making B's. Bob and Joe both wind up better off than they would be alone, even though Joe is better at everything than Bob! (Work out the math yourself, it's fun.) Thus, the silly assumptions teach us something very serious about trade and comparative advantage.