The Total Gains from Trade Within a Price System Is

question 63

Multiple Choice

The total gains from trade within a price system is

• A) the area beneath the market demand curve and above the market clearing price plus the area above the market supply curve and beneath the market clearing price.
• B) the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price.
• C) the area beneath the market demand curve and above the market clearing price minus the area beneath the market supply curve and beneath the market clearing price.
• D) always equal to zero.

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Definitions:

Value of Marginal Product

The additional revenue generated by employing one more unit of a factor of production, holding all other factors constant.

Profit

The financial gain achieved when the revenue earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Wage

Payment to a worker from an employer for labor or services, usually expressed as an hourly, daily, or piece rate.

Marginal Revenue

The change in total revenue from an additional unit sold.