A Free Market Maximizes the Gains from Trade, the Sum

question 231

Multiple Choice

A free market maximizes the gains from trade, the sum of consumer and producer surplus, meeting all of the following conditions EXCEPT:

• A) all buyers who are willing to pay positive prices are able to receive goods from trade.
• B) the supply of goods is bought by the buyers with the highest willingness to pay.
• C) the supply of goods is sold by the sellers with the lowest costs.
• D) there are no unexploited gains from trade between buyers and sellers.

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Definitions:

Joint Products

Multiple products that are produced from the same process or material inputs, where separation of the products occurs at a split-off point.

Common Input

Resources used in the production process that are shared among different products or services.

Nonproductive Time

Periods when production or work is not being done, often due to machine downtime, maintenance, or breaks.

Bottleneck Operation

A stage in a production process that causes a slowdown due to limited capacity, affecting the overall efficiency and output of the process.