When Two People Engage in Voluntary Trade

question 89

Multiple Choice

When two people engage in voluntary trade,

• A) one will necessarily lose.
• B) both will necessarily lose.
• C) both will expect to be made better off.
• D) each will expect to lose.

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Definitions:

Quantity

The amount or number of a material or immaterial good considered as a unit or in total.

Long-Run Cost Diagram

A graphical representation that shows how the costs incurred by a firm change over time with varying levels of output when all inputs are variable.

Average Cost

The expense per unit, resulting from dividing the aggregate cost of production by the total units produced.

X-Inefficiency

X-Inefficiency occurs when a firm's output is not produced with the minimum possible resources due to factors like organizational slack, lack of competitive pressure, or managerial inefficiency.