Which economic goal is best represented by an exchange between a buyer and seller at an outdoor food stand?

• A. Price stability
• B. Economic security
• C. Economic equity
• D. Economic efficiency

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the economic goals listed: Price stability refers to keeping prices steady over time; Economic security involves protecting individuals from economic risks; Economic equity relates to fairness in economic transactions; Economic efficiency means resources are allocated in a way that maximizes total benefit without waste.
2. Step 2: Analyze the scenario: An exchange between a buyer and seller at an outdoor food stand is a voluntary transaction where both parties agree on a price, indicating resources are being allocated through market mechanisms.
3. Step 3: Connect the scenario to the economic goals: Since the transaction is voluntary and mutually beneficial, it reflects the idea of maximizing gains from trade, which is the essence of economic efficiency.
4. Step 4: Contrast with other goals: This exchange does not primarily focus on stabilizing prices, providing security, or ensuring fairness, but rather on making efficient use of resources through trade.
5. Step 5: Conclude that the economic goal best represented by this exchange is economic efficiency, as it highlights the effective allocation of resources through voluntary market transactions.