Which one of the following is true of a pure voluntary exchange betwee

Which one of the following is true of a pure voluntary exchange between two parties A and B ?

[amp_mcq option1=”A can exploit B or vice versa” option2=”Both gain; it is a win-win situation” option3=”If A makes profit, it must be at the cost of B” option4=”Both can lose” correct=”option2″]

This question was previously asked in

UPSC CDS-2 – 2021

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A pure voluntary exchange between two parties, A and B, occurs because both parties expect to benefit from it. If either party did not believe they would be better off (or at least not worse off) by exchanging, they would not voluntarily agree to the trade. Therefore, in a pure voluntary exchange, both parties gain; it is considered a win-win situation based on their subjective valuations of the goods or services being exchanged.

Pure voluntary exchange implies mutual benefit and is a win-win situation for the participants.

This principle is fundamental to market economics. Voluntary trade allows resources to move to higher-valued uses according to the preferences of individuals, increasing overall welfare. The concept assumes rationality and perfect information, though real-world exchanges may involve asymmetric information or coercion, deviating from the “pure voluntary” ideal.

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