Mark values his drum set at $800 and Ella values her guitar at $1,000. Suppose that Mark trades his drum set for Ella's guitar.
A) This trade makes Ella worse off by $200.
B) This trade makes Mark better off by $200.
C) Mark must value Ella's guitar for at least $1,000, and Ella must value Mark's drum set for at least $800.
D) This trade creates value by moving the guitar and drum set to people who value them more.

Question

Quizplus · Accepted Answer

This trade creates value by moving the guitar and drum set to people who value them more. Both Mark and Ella are willing to exchange something they value less (the drum set/guitar) for something they value more (the guitar/drum set). Therefore, this trade is mutually beneficial, and creates value by moving these items to people who value them more.

Mark Values His Drum Set at $800 and Ella Values