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Mirco economics

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Why does trade of any type take place? Illustrate your answer by reference to each of the following:
Market exchange in which price is determined by Demand and supply. (refer in your answer to producer and consumer surplus)
Exchange between two individuals based on differences in tastes given a fixed endowment of two goods.
International trade

Take a shot, why would trade take place. Hint: under trade, both sides are better off.

what does fixed endowment of two goods mean ? that means i have 5 apples and someone else has 5 oranges. but we both cannot buy any additional apples or oranges? and the last option we have is to trade due to difference in taste??

i am abit confused about part 2.

  • Mirco economics - ,

    Endownment in economics is the value one places on a certain object...

    so in this case, i think fixed endowment just means u wud value the oranges as much as the apples

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