When we add just one more agent of each type to an economy, the equilibrium of the trading process will now guarantee that traders of all types benefit in the sense of achieving final utility levels strictly _______________ the ones they could obtain if they remained at their no-trade allocations.
A) equal to
B) greater than
C) less than

Question

Quizplus · Accepted Answer

Adding one more agent of each type increases the number of trading opportunities, which results in higher gains from trade and a Pareto-improvement. Therefore, the final utility levels achieved by all traders will be greater than the ones they could obtain if they remained at their no-trade allocations.

When We Add Just One More Agent of Each Type