The free market maximizes the gains from trade, producing the level of output that maximizes total surplus.

Question

Quizplus · Accepted Answer

The free market encourages individuals to specialize in the goods or services they can produce most efficiently and trade with others, resulting in a total surplus that is greater than what could be achieved without trade. Therefore, the free market maximizes the gains from trade and produces the level of output that generates the maximum total surplus.

The Free Market Maximizes the Gains from Trade, Producing the Level