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Chapter 3: Q. 50 (page 79)

Explain why voluntary transactions improve social

welfare.

Short Answer

Expert verified

Voluntary transactions improve the situation of both buyers and sellers.

Step by step solution

01

Step 1

Social welfare encompasses the several assistance programs enacted to ensure citizens' overall well-being in a state by availing quality care to individuals and the society at large.

02

Step 2

Voluntary transactions enhances social welfare by enabling suppliers and consumers together to willingly participate in market transactions. When the transactions are forced, market transactions will reduce/ decrease as a result of suppliers and consumers not being able to participate jointly willingly again. This increases both consumer and producer surplus and therefore increases the total surplus.

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