Which of the following best describes voluntary exchange in economics?

• A. An exchange that occurs without any negotiation between parties
• B. A transaction enforced by government regulation
• C. A trade where only one party benefits
• D. A transaction in which both parties expect to gain and participate freely

Answer: (D)

Verified step by step guidance

1. Understand the concept of voluntary exchange: it refers to a transaction where both parties willingly participate because they expect to benefit from the trade.
2. Recognize that voluntary exchange requires mutual consent and the absence of coercion or enforcement by external authorities like the government.
3. Identify that in voluntary exchange, both parties anticipate gaining value, which differentiates it from one-sided or forced transactions.
4. Evaluate each option by checking if it aligns with the key features of voluntary exchange: free participation and mutual benefit.
5. Conclude that the best description is the one stating that both parties expect to gain and participate freely, as this captures the essence of voluntary exchange.