When market exchange occurs voluntarily in a competitive market

Question

Quizplus · Accepted Answer

In a competitive market, the price is determined by the intersection of supply and demand. This ensures that the quantity demanded matches the quantity supplied, maximizing the sum of consumer surplus and producer surplus. This means that both buyers and sellers benefit from the exchange and no surplus is eliminated. Option A is not correct because every choice involves an opportunity cost. Option D is incorrect because both buyers and sellers benefit. Option E is incorrect because exchange confers a net benefit to participants.

When Market Exchange Occurs Voluntarily in a Competitive Market