2021 · Q51
Which one of the following is true of a pure voluntary exchange between two parties A and B?
General KnowledgeIndian Economy
- AA can exploit B or vice versa
- BBoth gain; it is a win-win situation
- CIf A makes profit, it must be at the cost of B
- DBoth can lose
Explanation
A purely voluntary exchange takes place only when both parties expect to be better off - otherwise one side would simply walk away. This makes voluntary exchange a win-win, positive-sum transaction by definition. Exploitation of one party by the other, or mutual loss, contradicts the voluntariness of the exchange.