Does voluntary exchange create wealth?
a. No, exchange merely shuffles the existing supply of goods and services among people.
b. No, if one person gains, the other party must lose an equal amount.
c. Uncertain, it will increase wealth if it creates more goods and services; otherwise it exerts no impact on the wealth of people.
d. Yes, exchange makes it possible for the trading partners to gain more value from the existing supply of goods and it also makes larger output levels possible.
d. Yes, exchange makes it possible for the trading partners to gain more value from the existing supply of goods and it also makes larger output levels possible.
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Marginal cost is best defined as:
a. a cost that does not vary with the rate of output. b. the difference between fixed and variable cost at any level of output. c. the amount added to total cost when one more unit of output is produced. d. the difference between price and average total cost at the profit-maximizing level of output.
An increase in the average price level of an economy will result in an upward shift of the aggregate expenditure function
a. True b. False Indicate whether the statement is true or false