A used car salesperson would like to sell a badly damaged, malfunctioning vehicle to an unsuspecting customer without revealing the extent of the damage. Because the system of free enterprise facilitates voluntary exchange, she argues both parties will be better off after the sale of the vehicle is finalized. Is she correct? Explain.(1 point)
Responses
She is not correct. Fraud does not exist in a system of free enterprise.
She is not correct. Fraud does not exist in a system of free enterprise.
She is correct. Open opportunity guarantees that the buyer values the car more highly than the money exchanged for it.
She is correct. Open opportunity guarantees that the buyer values the car more highly than the money exchanged for it.
She is correct. By purchasing the car, the buyer reveals that he or she values the car more than the money exchanged for it.
She is correct. By purchasing the car, the buyer reveals that he or she values the car more than the money exchanged for it.
She is not correct. Trade involving fraud does not constitute voluntary exchange.
She is not correct. Trade involving fraud does not constitute voluntary exchange.
The correct answer is: She is not correct. Trade involving fraud does not constitute voluntary exchange.
In a system of free enterprise, voluntary exchange is based on the principle of informed consent, where both parties have access to accurate information about the goods or services being exchanged. In the scenario described, the car salesperson is intentionally withholding vital information about the extent of the damage to the vehicle. This would be considered fraudulent behavior, as it involves misleading the buyer and preventing them from making an informed decision. In a voluntary exchange, both parties should have the opportunity to determine if the trade is mutually beneficial based on complete and truthful information.