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:

Production Sector

An economic segment focused on the production of goods and services, including manufacturing and construction.

Consumption Sector

The part of an economy that represents the total spending of consumers on goods and services for personal use.

Labor Services

The work performed by individuals for which they are compensated.

Inflation Rates

Inflation rates measure the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.