ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a free trade agreement, a group of countries agrees to lower their tariffs or other barriers to facilitate more exchanges with their trading partners. This allows all countries to benefit from lower prices and access to one another’s resources.

Detailed explanation-2: -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.

Detailed explanation-3: -What is voluntary exchange? Voluntary exchange 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-4: -A voluntary trade is one in which both parties gain an individual benefit from making the exchange. A person who selects a TV at an electronics store and purchases it is gaining a TV that is more valuable to them than the money they spent on it.

Detailed explanation-5: -Voluntary trade benefits all parties because it maximizes their freedom within the context of economic transactions. Specialization is a market economics concept that focuses on the production of one type of product by an economy.