Which of the following is TRUE regarding trade? I. Trade creates value by moving goods from people that value them less to people that value them more. II. Trade makes everyone better off. III. The only potential losses from trade come when the seller values the good more than the buyer.
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

I is true because trade involves exchanging goods and services between two parties who have different subjective valuations of those goods and services. By exchanging, both parties receive something they value more than what they give up, creating value.
II is also true because trade creates value, as explained in I, which benefits both parties involved.
III is false because potential losses can occur for many reasons, such as changing market conditions or unexpected events affecting the value of the traded goods.

Which of the Following Is TRUE Regarding Trade? I