When market exchange occurs voluntarily in a competitive market, _____.

Question

When market exchange occurs voluntarily in a competitive market, _____.​

Quizplus · Accepted Answer

In a competitive market, price is determined by the intersection of supply and demand. At this price, both consumers and producers receive surplus benefits from the exchange. Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual market price, while producer surplus is the difference between the market price and the minimum price a producer is willing to accept. The sum of these two surpluses is maximized in a competitive market, resulting in an efficient allocation of resources.

When Market Exchange Occurs Voluntarily in a Competitive Market, _____