Asked by Courtney Morris on May 01, 2024
Verified
Total surplus or gains created from trade equal
A) Seller surplus
B) Buyer surplus
C) The summation of seller and buyer surplus
D) Profits earned by a firm
Total Surplus
An economic measure representing the total benefits to consumers and producers, achieved by the difference between the willingness to pay and the actual price paid, plus the cost savings to producers.
Trade
The exchange of goods, services, or both between two or more parties, either within a country or across international borders.
- Comprehend the concept of market surplus including consumer surplus and producer surplus.
Verified Answer
AS
ARSHDEEP SINGHMay 07, 2024
Final Answer :
C
Explanation :
Total surplus or gains from trade is the summation of both seller and buyer surplus. It is the difference between the price buyers are willing to pay and the price sellers are willing to receive for a good or service. This surplus represents the value created from trade for both parties. Therefore, option C is the correct choice. Options A, B, and D are not correct as they only represent one party's benefit or earnings.
Learning Objectives
- Comprehend the concept of market surplus including consumer surplus and producer surplus.