Question

Sophie is willing to sell her used economics textbook for $30. Ruby is willing to pay $60 for the used economics textbook. Sophie and Ruby agree on a price of $45. The gains from trade for Sophie equals ______ and the gains from trade for Ruby equals _______. A. $15, $15 B. $30, $60 C. $0, $30 D. $30, $0

Answer 1

Answer:

The correct answer is option A.

Explanation:

Sophie is willing to sell a textbook for $30, while Ruby is willing to purchase it for $60. Both negotiate and agree on a price of $45.

The gain for Sophie will be the difference between the minimum price she was expecting and the price she gets for the textbook.

Gain for Sophie

= $45 - $30

= $15

The gain for Ruby will be the difference between the maximum price she was willing to pay and the price she actually paid.

Gain for Ruby

= $60 - $45

= $15

So, both of them have a gain of $15 from trade.