When economists are critical of government regulations that prohibit free individuals from making certain kinds of contracts, for example, to purchase a good or service, they will usually invoke the concept of
A)marginal analysis.
B)mutual gains from voluntary trade.
C)inflation-unemployment trade-off.
D)the need for abstraction.
E)externalities.

Question

Quizplus · Accepted Answer

The concept of mutual gains from voluntary trade involves the idea that when individuals are free to make contracts and exchange goods and services, both parties benefit from the exchange. Therefore, government regulations that prohibit certain types of contracts limit the potential for mutual gains from voluntary trade, which is why economists may be critical of such regulations. Marginal analysis is a general concept used in economic decision-making, inflation-unemployment trade-off refers to the relationship between inflation and unemployment, the need for abstraction is a concept used in various fields to simplify complex ideas, and externalities refer to the unintended consequences of economic activity on third parties.

When Economists Are Critical of Government Regulations That Prohibit Free