A city block with 25 residents has a garden in the center. Some
of the residents are very busy, but others have lots of leisure
time. And their preferences also differ: some enjoy yard work,
others don’t. The garden requires a total of 1,000 hours of
work per year—planting, mowing grass, and so on. One resident suggests that each resident should contribute 40 hours
per year to maintain the garden. Another resident, an economist, objects that this will be inefficient.
a. Explain why the economist thinks that the proposal will
be inefficient.
b. Describe how a market in which residents can trade hours
of yard work leads to an efficient allocation of yard work
among residents.