Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than:
A)Elsie is the only one that gains from the trade.
B)Elmer is the only one that gains from the trade.
C)Elsie and Elmer are both made better off by the trade.
D)Both Elmer and Elsie are made worse off by the trade.

Question

Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than:
A)​Elsie is the only one that gains from the trade.
B)​Elmer is the only one that gains from the trade.
C)​Elsie and Elmer are both made better off by the trade.
D)​Both Elmer and Elsie are made worse off by the trade.

Quizplus · Accepted Answer

Elsie gains because she gets pies in exchange for milk and butter that she may not have been able to sell otherwise. Elmer gains because he gets the milk and butter that he would have had to purchase otherwise. Therefore, both parties benefit from the trade, making choice C the correct answer.

Elsie Owns a Dairy Farm and Elmer Is a Baker