Tim Values Treats for His Dog at $10 Per Box

question 231

Multiple Choice

Tim values treats for his dog at $10 per box, and John values them at $6 per box. If the price of dog treats is $3 per box but only one box is available between these two buyers, then gains from trade will be maximized when:

• A) Tim buys the treats.
• B) John buys the treats.
• C) either buys the treats, since they both value them more than the market price.
• D) consumer surplus is equal to $3.

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Definitions:

Indifference Curve

A graph showing different combinations of two goods that provide equal levels of satisfaction and utility to an individual.

Slope

A mathematical concept that describes the steepness or incline of a line on a graph, often used in economics to depict rate changes such as the rate of price changes in demand or supply curves.

Indeterminate

A term used to describe a situation or outcome that is not clearly defined or decided, often due to multiple variables affecting it.

Ice Cream Sandwiches

Frozen desserts consisting of ice cream placed between two layers of cookies or cake.