Question: It can be more than one answer fA Gain from Trade occurs when a unit is sold fora price greater than the unit of the

It can be more than one answer

It can be more than one answer \fA Gain from Trade occurswhen a unit is sold fora price greater than the unit ofthe good is worth to a seller and, simultaneously, bought for a

\fA Gain from Trade occurs when a unit is sold fora 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 rst 2 units of the good that would be sold in this market (the vertical red line on the graph). O If Kai and Mint sold one unit each to Gob and Yam at a price of $6, the trade would be mutually beneficial. O 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. O 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. O For the first 2 units of the good there is potential gain from trade of $7 for each of the 2 units. O 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. O 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. O 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. O 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. O At a price of #6 more of the potential gain goes to the buyers. O At a price of #6 more of the potential gain goes to the sellers

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