Author Question: What is the source of the gains from trade? What will be an ideal ... (Read 73 times)

mp14 · **on:** Jun 29, 2018

What is the source of the gains from trade?

What will be an ideal response?

Question 2

What is the difference between directly holding stock in a company like Apple and investing in a mutual fund that holds Apple stock?

What will be an ideal response?

vickyvicksss · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

As long as people have different opportunity costs of producing goods or services, total output is higher with specialization and trade than if each individual produced goods and services under self-sufficiency. This increase in output is the gains from trade.

Answer to Question 2

Some investors purchase Apple shares directly and hold them in a brokerage account.
Most investors buy pre-mixed pools of assets, called mutual funds.A mutual fund is a pool of money that is collected from many investors. Mutual funds typically invest in hundreds of stocks, bonds, and/or short-term money market instruments.
A-head: INVESTMENT ACCOUNTS
Concept: Brokerage accounts