A free market maximizes the gains from trade, the sum of consumer and producer surplus, meeting all of the following conditions EXCEPT:
A) all buyers who are willing to pay positive prices are able to receive goods from trade.
B) the supply of goods is bought by the buyers with the highest willingness to pay.
C) the supply of goods is sold by the sellers with the lowest costs.
D) there are no unexploited gains from trade between buyers and sellers.

Question

Quizplus · Accepted Answer

A free market maximizes gains from trade when goods are allocated to those who value them most (highest willingness to pay) and are supplied by those who can produce them at the lowest cost, ensuring no unexploited gains. However, not all buyers willing to pay positive prices will necessarily receive goods, as the market prioritizes those with the highest willingness to pay.

A Free Market Maximizes the Gains from Trade, the Sum