ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A free market is one where voluntary exchange and the laws of supply and demand provide the sole basis for the economic system, without government intervention. A key feature of free markets is the absence of coerced (forced) transactions or conditions on transactions.

Detailed explanation-2: -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-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: -The principle or model of voluntary exchange assumes that people will act based on self-interests. This is an important component of a healthy economy. If individuals in a market economy do not feel that they will benefit from the exchange, they would not be willing to make it.

Detailed explanation-5: -An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. Involuntary conversions are also called involuntary exchanges.