E.1.6



=Recognize that voluntary exchange occurs when all participating parties expect to gain.=


 * VOLUNTARY EXCHANGE: The process of willingly trading one item for another.**

Voluntary exchange exists in a free market economy with little or no government control. (1) [|This article] describes voluntary exchange as mutually advantageous trade in which both parties benefit and are better off after the trade.
 * The article gives an example of a coffee vender selling a cup of coffee to a customer for $1 as a voluntary exchange.
 * The customer values the cup of coffee higher than $1 and the vender values $1 more than a cup of coffee.
 * The trade benefitted both parties (2).

[|This video] explains the basic origins of voluntary exchange.
 * The video says that each voluntary exchange in a world with scarce resources makes both parties happier without altering the total wealth available.
 * It also emphasizes that more people benefit when they can have voluntary exchanges with a wider audience because there are more options.
 * It also shows that there is no person in charge in a voluntary exchange, as it is a component of the free market, so an economy does not need to be tightly controlled to allow for mutually advantageous transactions (3).

[|This article] explains how voluntary exchange operates within a market economy.
 * Voluntary exchange runs the market economy and transactions are not mandated by the government, but of the free will of the buyer and seller.
 * The distribution of goods is determined by the voluntary exchanges of individual parties and not controlled by the government (4).

[|This slideshow] further explains the role of voluntary exchange within capitalist economies.
 * Both buyer and seller are better off after a transaction than they were before, encouraging exchange in the market without needing government interference.
 * It also introduces the concept of "consumer sovereignty," which means consumers control the economy but also explains how governments can regulate the economy (5).
 * See Economics 2.4 for more on consumer sovereignty

(6)

[|This "Crash Course" video] explains how voluntary exchange works in a market economy and gives many examples of different voluntary transactions.
 * The video says that most markets are based on voluntary exchange and explains that competitive markets are best at allocating resources.
 * Markets incentivize production and control prices based off of supply and demand (7).

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