Voluntary Exchange
Definition
Voluntary exchange refers to the act of individuals or businesses willingly trading goods or services with each other, without any external force or coercion.
Analogy
Voluntary exchange is like a swap meet where people come together to trade items they no longer need. Everyone involved in the exchange agrees to the terms and willingly gives up something they have for something they want.
Related terms
Market equilibrium: The point at which the quantity demanded by consumers matches the quantity supplied by producers.
Barter system: A system of exchange where goods or services are directly traded for other goods or services without using money.
Specialization: When individuals, businesses, or countries focus on producing a specific good or service in which they have a comparative advantage.
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