The aggregate gains from trade in a market is equal to
A)consumer surplus plus profit
B)producer surplus plus consumer expenditure
C)the sum of consumers' and producers' surpluses
D)total revenue plus consumer surplus

Question

Quizplus · Accepted Answer

The aggregate gains from trade in a market are measured by the sum of consumers' and producers' surpluses. Consumers' surplus is the difference between what they are willing to pay for a good and what they actually pay, while producers' surplus is the difference between the price they receive and their willingness to sell. Therefore, the sum of these two surpluses represents the total gains from trade in the market.

The Aggregate Gains from Trade in a Market Is Equal