Gains from trade are maximized when:

Question

Quizplus · Accepted Answer

Gains from trade are maximized when the market price is equal to the equilibrium price. At the equilibrium price, both the buyer and the seller gain the maximum possible benefit or surplus from the trade, leading to the maximization of gains. If the market price is higher or lower than the equilibrium price, one party gains at the expense of the other, leading to a suboptimal outcome. Option D is incorrect as additional trades that have not been completed do not necessarily maximize gains from trade.

Gains from Trade Are Maximized When