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A Gain from Trade occurs when a unit is sold for a price greater than the unit of the good is worth to a seller and, simultaneously, bought for a price less than the good is worth to a buyer. Consider the first 2 units of the good that would be sold in this market (the vertical red line on the graph). which answer choices are correct for the graph given bellow?

A Gain from Trade occurs when a unit is sold for a price greater than the unit of the good is worth to a seller and, simultaneously, bought for a price less than the good is worth to a buyer. Consider the first 2 units of the good that would be sold in this market (the vertical red line on the graph). which answer choices are correct for the graph given bellow?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A Gain from Trade occurs when a unit is sold for a price greater than the unit of the good is worth to a seller and, simultaneously, bought for a price less than the good is worth to a buyer.

Consider the first 2 units of the good that would be sold in this market (the vertical red line on the graph).

which answer choices are correct for the graph given bellow?

If Kai and Mint sold one unit each to Gob and Yam at a price of $6, the trade would be mutually beneficial. At a price of $6, Gob would benefit by $3 because she is paying $6 for a unit of the good which is worth $9 to her. At a price of $6, Kai would benefit by $4 because she is getting $6 for a unit of the good which is worth $2 to her. For the first 2 units of the good there is potential gain from trade of $7 for each of the 2 units. For the first 2 units of the good sold the difference between the value to buyer and seller is $9 each. This means there is a potential gain from trade of $9 per unit. If the first 2 units of the good were exchange at a price of $7, Gob and Yam would be better off by $3 each-the difference between what the units are worth to them and the price they paid. If the first 2 units of the good were exchange at a price of $7, Kai and Mint would be better off by $3 each-the difference between what the units are worth to them and the price they received. If the first 2 unit of the good were exchanged at a price of $6, the potential gain from trade of $7 for each of the units exchanged in divided so that both the buyer and the seller get a portion of the total gain. At a price of #6 more of the potential gain goes to the buyers. At a price of #6 more of the potential gain goes to the sellers.
Transcribed Image Text:If Kai and Mint sold one unit each to Gob and Yam at a price of $6, the trade would be mutually beneficial. At a price of $6, Gob would benefit by $3 because she is paying $6 for a unit of the good which is worth $9 to her. At a price of $6, Kai would benefit by $4 because she is getting $6 for a unit of the good which is worth $2 to her. For the first 2 units of the good there is potential gain from trade of $7 for each of the 2 units. For the first 2 units of the good sold the difference between the value to buyer and seller is $9 each. This means there is a potential gain from trade of $9 per unit. If the first 2 units of the good were exchange at a price of $7, Gob and Yam would be better off by $3 each-the difference between what the units are worth to them and the price they paid. If the first 2 units of the good were exchange at a price of $7, Kai and Mint would be better off by $3 each-the difference between what the units are worth to them and the price they received. If the first 2 unit of the good were exchanged at a price of $6, the potential gain from trade of $7 for each of the units exchanged in divided so that both the buyer and the seller get a portion of the total gain. At a price of #6 more of the potential gain goes to the buyers. At a price of #6 more of the potential gain goes to the sellers.
Ouantity Demanded 12 Market Demand Price Ying Som Fon Nam Gob Yam 10 1. 2 4 4 10 4. 21 5 26 3 7 29 3 10 5 36 5 10 10 40 1 7 12 11 10 48 1 Market Supply 6 -Market Demand Quantity Supplied Market Price Boom 1 Oly Cartoon Mint Supply 42 34 31 24 21 Apple Kai 10 10 6 11 10 10 8 4 3 3 3 5 3 2 5 14 4 9 4 1 2 02 units 10 20 30 40 의의으
Transcribed Image Text:Ouantity Demanded 12 Market Demand Price Ying Som Fon Nam Gob Yam 10 1. 2 4 4 10 4. 21 5 26 3 7 29 3 10 5 36 5 10 10 40 1 7 12 11 10 48 1 Market Supply 6 -Market Demand Quantity Supplied Market Price Boom 1 Oly Cartoon Mint Supply 42 34 31 24 21 Apple Kai 10 10 6 11 10 10 8 4 3 3 3 5 3 2 5 14 4 9 4 1 2 02 units 10 20 30 40 의의으
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