Economic efficiency perspective

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Problem: Peter hires Dave to paint his house orange and blue stripes. Dave agrees to paint the house for a price of $1,500 plus the cost of all supplies. It will take Dave one day to paint Peter's house. The next best price that Peter found was $2,500 plus the cost of supplies. Peter's house is currently worth $100,000. After it is painted, it will be worth $100,400.

Two days later, Dave gets offered $2,000 (plus cost of supplies) to paint Ellen's house, which will also take one day to paint. [So, equal amount of work to paint both Ellen or Dave's houses.]

From an economic efficiency perspective, should Dave breach?

Reference no: EM132456711

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