Gains from trade are maximized at market equilibrium because: Select one: a. only the highest-value buyers...
Gains from trade are maximized at market equilibrium because:
Select one:
a. only the highest-value buyers buy and only the highest-cost sellers sell.
b. only the highest-value buyers buy and only the lowest-cost sellers sell.
c. only the lowest-value buyers buy and only the highest-cost sellers sell.
d. only the lowest-value buyers buy and only the lowest-cost sellers sell.
Homework Answers
Ans.- only the highest-value buyers buy and only the lowest-cost sellers sell.
At market equilibrium price, consumers will buy good only if its value to them is greater than the market price so highest value buyers buy. Only those sellers will sell good whose cost of production is lower than the market price. So, lowest cost-sellers sell at market equilibrium.
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Gains from trade are maximized at market equilibrium
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