ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Likewise, customers voluntarily exchange money to purchase his strawberries. If they notice some of his strawberries have defects, they can decide to go elsewhere for their strawberries. Because both parties receive desirable outcomes, this is a voluntary exchange.

Detailed explanation-2: -It is a type of transaction where two parties freely trade goods or services. This occurs in a market economy, which is a type of economy where both participants of an interaction gain a mutual benefit from it and are better off than when they started.

Detailed explanation-3: -Voluntary exchange is a transaction where two people trade goods or services freely, there is no coercive or restrictive force involved in the transaction. Both parties want to make the exchange items, and both parties will benefit from the trade. Voluntary exchange is an essential concept in the free market economy.

Detailed explanation-4: -Smith’s concept of the invisible hand is that as producers and consumers interact under the principle of voluntary exchange, not only is each individual better off, but so is society as a whole. Neither producers nor consumers intended as much, and the government has no influence on the exchanges.